I sure hope to God that John Fogerty has his guitar warmed up. What this says to me is that Bernanke doesn't have a clue how bad the problem is, and is trying to inflate Wall Street's problems away. I imagine Bernanke must have pee'd his pants a few times by now. But that's what he gets for not providing regulatory oversight. "B-52" Ben and The Maestro might just got down as the two worst Fed chiefs ever(yeah, even worse than Arthur Burns). Once Obama takes office, can he fire Bernanke? Or does he have to wait until 2010 to get rid of him?
So if I bring the pink slip for my 1993 Ford van over to the Fed, will they loan me the wholesale or the retail bluebook value? Also, can I continue to drive the van since they have the pink slip as collateral, or do I have to leave it in their lot?
Capital keeps falling on my head
And I simply redirect it to my fav-o-rate
Hard commodi-ty
Oil keeps on rising and
Financials keep on falling...
Capital keeps falling on my head
I'm telling bernanke man to stop it right a-way
Stop issu-ing-debt
People keep on panicking
They don't know what's the matter...
There is no light at the end of the tunnel, save the approaching train. With no solution in sight gold should skyrocket, the dollar will go to freefall and commidities will soar.
with stocks dropping and home values dropping I think McCain is right on with that SocSec private accounht plan. NOT!
This mind numbingly awful. The Fed thought in Dec that $30-50B Taf would be enough to right the sinking ship. It's now upped the ante to $200B, and it's now a fully open ended commitment.
The Fed is doing all it can now. I guess we will see if the banks can crete solvency from long term liquidity. I do not think the Fed is taking everything for collateral otherwise we would not see places like Citi still looking for capital eleswhere. This is not printing money but more of tring to contain the downward slope.
What does liquidity "mean" here? If a Bank has $100 in cash, but is on the hook to re-pay $10,000 worth of commitments, does "liquidity" just help slow down the glide-slope to Chapter 7?
Oh, and by the way, it seems $10,000 worth of commitments is for items that are known to be largely worthless in the marketplace.
So the big money center banks and some regional and local "go-go" banks got in big trouble with subprime, cdos, cmos, etc and now they have a solvency problem. The FED is twisting the yield curve back into it's proper form to help them make money.
So what about the regional banks who didn't get too involved in all this mess? The lower rates help them too. And they weren't insolvent in the first place.
All the Fed can do is lend and lower the FFR rates to waht is expected by the market, any monitization and the dollar is toast. The problem the Fed is coming into is that the amount of default that is being predicted in assets they are accepting.
The markets opened down, but have been trending up since. I don't know who's buying, but they've got some juice (and are trying hard to defy the technicals).
The impact on the TAF isn't going to have much impact.
Banks balance sheets in the 70's and 80's were mostly reserve contrained. In other words, changing reserve requirements had a dramatic impact on M1-M3. With the TAF auction and the collapse of the shadow banking system (ABCP, SIV, ARS/VRDO) M1-M3 has grown about as much as it can without the banks going to the equity market for more regulatory capital.
News story today about big banks hitting up SWF and others to raise capital. Combine that with the statement by one SWF that the "well" wasn't big enough to save Citi and you can see how constrained banks are. The need enough to both grow the balance sheet to absorb the further collapse of the shadow banking system (money market funds anyone?) and to offset future losses.
The biggest impact of the TAF was to equalize deposit rates among banks. I'm guessing a large increase in the TAF will push all short-term deposit rates below the Federal Funds rate (bastards). Why borrow money from your depositor at 3% if the Fed is willing to throw you money at those rates.
The funny thing is that credit unions (who are generally over-capitalized, my credit union regulatory capital ratio is 14% while my bank is 6%) have no access to the TAF and are still paying high deposit rates. I'm guessing we'll see a flood of deposits from banks to credit unions and an increase in using credit unions as a source of funding for HELOCs and home loans. But, maybe not. Credit Unions can't offer corporate accounts and maybe Joe and Jane don't have a lot sitting in passbook savings accounts.
I don't fully understand the $100B in repos. I'm guessing they will be selling Treasuries held in the SOMA and buying more MBS. That should help satisfy the markets demand for Treasuries and offset some of the pressure on MBS.
Essentially the Federal Reserve is taking on risk because the market is unwilling to do so.
We'll probably get a cut next meeting, which is going to put further downward pressure on the dollar and upward pressure on the commodities.
But the inflation worry is going to work against the Fed. The Fed needs people holding in-the-bank-cash to buy securities off the banks balance sheets at close to par. That would free up the balance sheet for new lending.
As a holder of in-the-bank cash I'm not going to demand even steeper discounts on stocks and bonds if I believe that inflation is going to eat up a good part of the yield.
I've got cash, do you?
NEW YORK (Reuters) - Washington Mutual Inc (WM.N: Quote, Profile, Research) and other lenders have approached private-equity firms and sovereign-wealth funds to discuss cash infusions, according to the Wall Street Journal, citing people familiar with the situation.
Since the bubble wasn't in the stock market directly, it will fight kicking and screaming, pulled down slowly with the lagging indicator of corporate earnings.
This is much worse for the average joe, since he'll keep buying overpriced, propped up stocks, for longer and longer in his 401k.
The poor returns won't be all at once, but in a slow, frog in boiling water, fashion.
Retirement will come and he'll say....hmmmmmm.....my returns were no where near what I thought they were going to be......must be my own investment strategy......oh well.
So what about the regional banks who didn't get too involved in all this mess? The lower rates help them too. And they weren't insolvent in the first place.
Looks like an opportunity to me.
You have to ask yourself, if the regional banks were locked out of the bread-and-butter home loans and HELOCs by the likes of CFC, who were they lending to?
Construction loans? CRE? Small busines loans?
How good are those loans in a recession?
I'm not saying there isn't an opportunity, but there's no shortage of opportunities for cash holders right now.
MP and CB, I am stunned to see the clock at 12:00:00. I suspect you have underestimated BB's and wall street's ability to delay the inevitable. Conjure Bag, your pronouncements are a mainstay of this blog.
Among other things, the Fed is probably trying to get the spread back down on agency (aka. "agony") mortgage-backed securities. AAA-rated GSE securities are acceptable not only at the TAF but also for the old-fashioned daily open-market operations.
This "ups" the implicit Government guarantee of GSE securities. After all, the Government isn't going to let the Fed become insolvent, are they?
The Fed does these TAF's so that banks can avoid the stigma of going to the discount window and having their names in public as being in trouble, hence avoiding any messy panics or runs on the banks.
The Fed has been doing this for months, and the auctions are now up to $200 billion dollars.
Based on the principle that two people can keep a secret if one is dead........WHERE THE HELL ARE THE INVESTIGATIVE AND FINANCIAL REPORTERS? This information is not available? There's no clerks or secretaries who want to make some extra coin to spill the beans on who is borrowing $200 BILLION dollars to stay afloat?
So much for our transparent financial system. Ten years ago we would have ridiculed a government that did this to bail out its banks. Now it's just reported on the financial news as if it were just another quarterly earnings report. Ho hum, TAF to $200 billion. Whatever. How is copper doing?
Good regional banks at 4 times earnings, utilities with dividend yields of 8%, that kind of good.
You and me both.
I've got my toe in on the utility stocks and I may double down if when yields get to 6%.
Having a Fed that flutters with every shift in the wind isn't helping. Utilities got trashed in the 70's.
I like the regional banks but I'd like to see some hits to earnings from CRE and small business loans so I can get an idea of the strength of the balance sheets.
"Now Ned, those girls are gonna tell different lies than your lies. And when your lies aint the same as their lies, well I aint gonna hurt no woman. Im gonna hurt you. Not gentle like before, but bad." Little Bill Dagget
The Fed is working on what we used to call the Boiling Frog approach. Put a frog into boiling water and he will just jump out-- put him in cold water and heat it slowly and he will get boiled! So-- just keep the info flow slow and everybody gets boiled instead of jumping out. Works every time, doesn't it Enron!!
TheFinancialNinja - your charts are scary. But if debt=money, they should both be liquid. I suggest debt=obligation, money=covered debt. and covered debt=obligation herein lies the problem: obligations no longer = debt.
Last year, Chilcot, 21, bought the $15,000 car - a sweet ride with tinted windows and custom chrome rims, and a loan with $370 monthly payments that he could not afford on his $12 hourly wage at Home Depot. By the fall, facing mounting credit-card debt, student loans, and rent, he stopped paying the car bills.
"I ran around smiling for 20 minutes when they took the car away," Chilcot said. "It was a relief."
Just a guess, but I can imagine the increased TAF is an "oh s#%#" moment for the fed, and it may be related to several Carlyle-esque unwinds.
If the banks start selling margin call paper quickly, like the recent article suggest, you would see the catastrophe everyone here is looking for. With the larger TAF, the banks can flip the paper over to the fed and get the cash, averting a further unhinge-ment, or whatever bloomberg would call it.
This all assumes the banks are willing to take mark-to-market risk on the paper they flip into the TAF, which is a big assumption.
I think it will end the way it was intended to end - whether it works out well for you or me or within our preferred time scale isn't a concern of theirs.
Marcus,
I'm with you on the "misinformation" sequencing.
I find myself, on an an almost daily basis lately, needing to "debrief"
the "media facts" which are routinely asserted as truths. The spin to maintain the global fanancial spin is self serving, indeed. No paranoia here,
just saying....
During college, my best car was an 8 year-old, Olds Delta 88 with a 455ci "rocket" engine (this was when we had odd-even gas days). It cost $300, and i bught it from a little old man. The smallest part on the car cost more than $300 to fix/replace.
The thing that really impresses me is the way Hank Paulson personally gets out his checkbook and pushes the market above the flatline on a day like today so his friends can have an hour or so to bail out.
Surprisingly though, relatively few people died in the Hindenburg disaster. Some lucky people were able to just ride the flaming frame of the ship as it fell. It was the panic jumpers who were killed.
Trail - I picked up BBT a couple of weeks ago on just that theory - P/E was closer to 9:1, and the yield was ~6%, but still, nice theory. Purportedly not full of "subprime" garbage...we'll see.
Chris - I drive a BMW, but it's 22 years old with 250k on the clock and I only paid $1500 for it. The schaedenfreud just keeps coming for me...everywhere I look.
I have to agree with Sebastian that stocks are a reasonable investment. With the 10-year at 3.5% a PE of 30 is pretty reasonable, even without accounting for the fact that company earnings are partially hedged against inflation. Of course if we go into Great Depression 2 they'll lose money but they won't lose as much as other investments.
Seems like the TAF is useful to A) a few banks that need liquidity and will survive, and B) Banks that will definitely fail, so as to fail while the Fed is holding the shaky overvalued paper.
For B), it's useful for the rich investors to offload part of their losses onto the Fed, that is, onto everyone via inflation, as the Fed will have to print a bit more money.
Thus the rich investors take $100 of value out of your pocket. $100 here, $250 there, $90 here, $300 there....etc., (ad a bunch more).
James Grant, in the February 22nd issue of his Interest Rate Observer quoted an stategist at CLSA (Christoper Wood) who opined in the Financial Times that the Fed is taking the "garbage collateral nobody else wants to take". Grant's associate Ian McCulley related that: "A bank can borrow against 85% of par value of a AAA rated CDO, and 80% of par value of a NON
(my emphasis) AAA CDO".
Good God!! Isn't AAA wobbly enough these days without loaning 80% of the "par value" of some cowpie? I appreciate the liquidity argument, but we don't stand a chance in hell of getting the Country's $$$ back!
All- if you can put on C-Span and watch the fireworks on Housing, Mozilo, etc. Susan Wachter is absolutely on fire and reaming everyone in sight, including an economist sitting next to her! And greenspan of course.
Of course if we go into Great Depression 2 they'll lose money but they won't lose as much as other investments.
I want to lose money! Where can I sign up?
But can you guarantee that I'll lose less money than other investments? See, I'm okay with losing money, but it has to be less money than I could lose on other investments.
Mozillo is toast. If he were a made man, the Bush Admin would have had him in for a meeting with the President, or George Bush. He could then ignore testifying before Congress based on the claim that everything he knows is covered by Executive Privilege.
Since his car was taken away, Chilcot has started walking to work at his new job - as a car salesman at a dealership in Plymouth.
When asked whether he tries to caution people against buying a car they can't afford based on his recent experience, Chilcot chuckled: "Not really. You become pretty shameless pretty quick when the paycheck comes."
conjure is a small creature or metaphysical entity that hangs out with a person who posts here, named mp.
he (conjure) or "it" speaks metaphorical truth for, thru, and with, mp having made alarmingly brilliant, and at times omniscient observations.
conjure "bags" have their source in voodoo as in mojo..they are composed of magical talisman like objects which are unmentionable for those about to eat lunch.
now for what i really think... mp is a bright, well informed investment banker , who, suffering from agoraphobia and a propensity for reclusiveness attributes his brilliance to an imaginary friend named conjure.
Ben's brilliance always amazes me. As I see it he has it figured out this way. Lower interest rates will prevent a "recession"; lower interest rates also lower the value of the dollar; the drop in the value of the dollar raises the price of oil and gas; higher prices for gas bring on a recession. Whee. It's circular and it's brilliant.
You left out the parts about Conjure's diet, personal habits and proclivities. Full disclosure is important - don't ignore the ugly bits (the Market did that, and look what happened to them).
Back in 2003, when South Florida's economy was booming, officials at a small West Virginia bank deep in the heart of economically ravaged coal-mining country looked south and saw an opportunity for growth that was missing at home.
That's how Ameribank, began it's charged down the path towards self disturction.
The privately owned bank's year-fourth-quarter results showed troubled loans account for $42 million, or almost 31 percent, of its $136 million assets. Ameribank lost $10.1 million in 2007, $7.3 million in the fourth quarter alone, according to Bauer Financial. Its capital, or cushion against operating losses, is only $9.6 million, down from $17.4 million at the end of 2006.
Do you think this bank is on FDIC's troubled list?
Seriously, folks, the S&P is at a PE of 20 now, right? If earnings are cut in half, a PE of 40 with an inflation hedge is still a reasonable tradeoff against a 3.5% 10 year Treasury. OTOH, if the real economy of services and goods continues to function against a backdrop of collapsing values in Finance, Insurance, and Real Estate, there's a huge potential upside. If you want to bet that most investors will run in terror from investing in the production of stuff with real value and instead buy Treasuries below the inflation rates, effectively to support a pointless war in Iraq and the forthcoming inevitable bailout of the financials, you may be right. But I've never been strong on counting on that kind of stupidity.
Parsons is up now, trying to explain the "Culture" of Citi, and why bonuses were deserved.
This is an example of the greater kind of lie.
This goddamned criminal should come right out and tell the truth: "We are robbing shareholders blind while ignoring our fiduciary duties to our company, the consumers of our products, and our country's economy. We are following the George Bush/Dick Cheney theory of business. Next week, we're forming our mercenary army.
Listening to these guys infront of congress, listening to the fed, listening to the Kudlows, is just playing into their strength.
It's like a cheating husband who smooth talks his wife into believing what she wants to believe.
Like they line from the movie: "who are you going to believe, me, or your lying eyes?
They have what they have not from what they do, but from what they say and make others believe.
Just like the wife, who after throwing away 30 years of her life tolerating his cheating ways, finally capitulates and gives up on him. But now it's too late as she has thrown her youth away and is now a lonely old maid.
So goes average joes who keep the faith with their 401k's, and will only captiulate when it's too late.
"...if the real economy of services and goods continues to function against a backdrop of collapsing values in Finance, Insurance, and Real Estate, there's a huge potential upside."
The real economy of services and goods is going to be pole-axed in about 2 quarters when the effect of permanent $100+ oil prices trickles down.
Everything from airline tickets to shoelaces is about to become so expensive people won't know whether to shit or go blind.
Actually I haven't yet gone long. I've been in corporate bonds for ages. But now that there's substantial inflation risk a bond-intense portfolio has a big risk factor. And, apart from financials, stocks have done fine recently, and there are excellent reasons to expect them to continue to.
It's one thing to say "don't buy now, we're heading into a panic". Maybe prices will be a lot better in July. But can anybody give any reasons, apart from threats of GD2, that stocks away from the RE bubble are a bad long-term buy?
I guess I would have to agree that stocks are a better investment than long duration bonds at this point. Long duration bonds could easily lose 50% fairly quickly. Stocks may only lose 20-40% and take longer to do it.
Cash will probably outperform both in the short run, though. Especially if you went to cash last week. A positive performance compared to cash is an important component of my definition of a good investment.
For the last 6 months or so conjure bag has had a global financial meltdown clock. When it reached 12:00:00 the countdown was over. About a month ago conjure said the clock was at 11:59:59 and that would be the last update because "if you don't know what time it is....". I guess MP decided to come back and give a final hint for those that didn't know what time it was/is,
So, if conjure is correct (and he has been eerily accurate for quite some time) you should expect a "totally new financial landscape" or something to that effect.
I don't believe conjure thinks Citi is currently accurately valued either.
There is nothing that says that all forms of investments can't lag.
If you were a Japanese long term investor where should you have been over the last 20 years? Just because their rates were at less than 1%, didn't mean that their stocks were relatively undervalued.
Sometimes things are broken and there are just no good alternatives.
Well? Wouldn't October, 1987 have been an "insane" time to buy stocks? August, 1998? October, 2002?
I'm not sure about your dates, so, I'm assuming they're bottoms. August, 1987 would have been an "insane" time to buy stocks. Same with June, 1998, August, 2002, and Feb. 1929.
But, then, this isn't like those situations, is it?
I said last night on PM, let it settle. When things go into uncharted phase, market participants get edgy. The market is looking for a new resting place.
A drop in the excess capital mandate to 25 percent from 30 percent for Fannie Mae would free up enough capital to support up to $86 billion in its $721 billion portfolio, Citigroup's Bradley Ball said in a March 6 research note.
For Freddie Mac, a lower mandate could result in $72 billion of purchases for its $717 billion portfolio, he said.
"Well? Wouldn't October, 1987 have been an "insane" time to buy stocks? August, 1998? October, 2002?"
Yes if you sold them at the top.
If you bought at the bottom of the crash of 1998 and held on till today, you would be lagging behind anyone who bought longterm treasuries at the same time.
Another old wives tale...."those who sold at the bottom and went all cash lost out big time."
False: Yes they would have missed out on the big run up, but they would be ahead now 11 years later.
(Dow hit 7731 in Oct 98. That is an average annual return of 4.5% to today's DOW(excluding dividends) if you went ALL IN on that very exact day.
Those who went all cash on that day aren't behind, especially if they didn't keep buying overpriced stock during the 2000 bubble and last summer's DOW 14000.
I don't get it. Here is an extract from one of the 3 statements today:
With this series of term RP transactions and the expansion of the Term Auction Facility that was also announced by the Federal Reserve, other adjustments will be made by the Open Market Trading Desk in order to maintain a level of reserves consistent with trading at rates around the operating objective for the overnight federal funds rate. These adjustments may include Treasury bill redemptions, reverse repurchase agreements, Treasury bill sales, and changes in the sizes of conventional RP transactions.
In that same statement they say they will conduct a single tranche Repo of 28 day for $15B.
Then in the 3rd statement today:
On Friday, March 7, 2008, the Federal Reserves System Open Market Account will sell $10 billion of Treasury bill holdings for settlement on Monday, March 10.
So they are pulling out $10B permanently ( incidentally ADDING to the Tbills out there - the treasury will be pleased:-) ) and putting out $15B on a revolving 28 day basis. What the heck is the point of this, ignoring the addition of $5B to the slosh ?
Separately we'll have to monitor whether they do remove the TAF additions from the slosh - recently the average slosh has increased to $53B - it ought to be down to $30B I reckoned.
Are they speaking with forked tongue in the first statement when they said they will maintain reserves out there so that the FFR stays at 3.0 ?
Curious yellow ? These guys are too clever by half for me at the moment.
The Tan Man is having a difficult time explaining why he was selling shares at the same time the company was borrowing to buy stock back. He can justify one or the other, but not both. He has fallen back on the argument that what he did was perfectly legal, which is true, but not an answer to the question Waxman asked.
Average Joe said: "Give me the "good time" to buy Japanese stocks for the longterm.
(I predict your answer will be "we are no Japan")"
We're no Austria, Brazil, Russia or China, either.
The U.S. is the only country for which there is reasonably-adequate current and historical economic and stock-market data available for serious analysis, so that's where my focus is. I'm telling you that U.S. stocks are at the best long-run valuation levels since 2002, and a screaming buy.
But can anybody give any reasons, apart from threats of GD2, that stocks away from the RE bubble are a bad long-term buy?
The economy is sinking into a deep recession, corporate earnings are entering a long valley, and very few stocks pay any dividends. So, your only ability to profit in stocks is if you can find a greater fool willing to buy your shares, after things have got much worse.
You know, it's ridiculous how many new stock market gurus are born every day.
Look at your historic charts. In environments like this, you're a fool to pay much more than 2X earnings growth on a P/E basis (i.e., PEG ratio). Let's say earnings growth over the next 2-3 years will be 6-7% annually, at best. Why would you pay a P/E above 12-14? Stocks may become a decent buy at some price. But not here and now.
Keep It Simple, I'm Stupid writes:
The Tan Man is having a difficult time explaining why he was selling shares at the same time the company was borrowing to buy stock back.
He could point out that his tanning salon wouldn't accept CFC shares as payment....
(Seriously, isn't "I needed the $100M in cash to support my lifestyle" the standard response in these situations? Or "I needed to diversify my retirement holdings in case our stock collapsed...," oh, wait a minute, that one's not so good I suppose....)
Sebastian'sWorld said: "It's uesless to argue with the obtuse."
I'm just going by the evidence of long-term valuation data and not irrationally and emotionally reacting to news and blog headlines. If thinking straight and taking the long view makes me obtuse, so be it.
""The U.S. is the only country for which there is reasonably-adequate current and historical economic and stock-market data available for serious analysis""
And housing never goes down.....
And you should never fight the fed.....
You have just proven my point.
You offer no argument other than justifying your view of the future by your view of the past.
Everyone who overpaid for a house did so because "no one loses money buying ahouse over the long term."
You are as wrong as all those who missed this housing bubble.
They judged the future based upon what has happened in the past.
Average Joe said: "And housing never goes down.....
And you should never fight the fed.....
You have just proven my point.
You offer no argument other than justifying your view of the future by your view of the past."
And you're complaining that I'm not defending claims that I never made, LOL!
The subject is "stock valuations." If you get the data (SP500 historical stock data and SP500 peak as-reported TTM EPS) and calculate the valuations you'll see that the market is very reasonably priced, even undervalued.
But you won't do that, and that makes me obtuse.))
Richard Parsons: We thought about exactly the question you asked, and we did decide that we should pay failing executives as much money as successful ones.
Richard Parsons: Asking about our risk models is a good question, and it is worthy of a hearing before a different committe, so that I don't have to answer questions today.
I pictured you in a Shelby.
Angry Saver | 03.07.08 - 11:21 am | #
That is my "I'm gonna loose my license car" . I built a Unique Cobra replica 8 years ago. My daily driver is a 97 PURPLE Neon with the requisite dents and 232k. Still uses 1 qt every 1500 miles. Gotta keep my expenses to a minimum...But I happen to be cheap...
There are always dumbasses. The sign of a decadent system is that it encourages them, even counts on them...
Bob Dobbs | Homepage | 03.07.08 - 11:36 am | #
Bob,
Don't get me wrong...I have no sympathy for the lenders,dealers etc. The idiots that sold this shit are reaping the absolute lack of used car sales now...
The Rep. who talked about Paulson and the center for responsible lending...man... what the hell, thats so small compared to... anyway... screw that... i have to go puke.... blehhh!!
compensation consulting... disgusting cncept. what's so complicated about figuring out what to give someone? you negotiate with the person and you look at peers.. plus consultants are conflicted inherently. i like this girl who is speaking, she's grilling the whole conflict-of-interest of these consultants, they are WORSE than home appraiser.
About half an hour ago when one of the directors said "but the shareholders could have sold too". That was disgusting smoke screen. The point is fiduciary duty means to maximize per share value regardless who who owns/trades the shares
Issa cracks me up. I guess you could reword his last thought as: "You are only now being paid for the successful and utter and total screwing of the folks you put into mortgages that they obviously couldn't afford. I applaud you and don't have a problem with these actions."
Rep. Elijah Cummings (D-MD): Let's talk about Conutrywide's customers so that we can put a human face on this. I've spent the last hour and a half looking at your orange mug, and it very clearly is not a human face.
those TALENTED people who didn't see how mass-availability of option ARMs is a bad thing?????????????????????????????????????????????????????????????????????
Seriously folks, does anyone believe the Republicans any more? I'm not saying that the Dems don't have their own baggage, but next to these turncoat dissemblers, they look like...
...well, actually, they look like my namesake, Marcus Aurelius.
My favorite so far (paraphrasing)from one of the CEO's to a sceptical observaton: "I have a number of responses to that, but I won't repeat them here."
fair economist = clueless
inflation hedge - stocks were at 7x in the seventies before inflation blew off the top. If you have been in corproate bonds you have had it handed to you with spreads blowing out. Stocks are at best fair value (as buffet says) and that is if you belive the yoeld curve is reasonable which it isn't. we have peak margins and artificailly low yields (being offset BTW by rapidly expanding credit spreads/risk premium for your DCFs). One way or the other companies - no wait employees - are screwed. They either take it on the margin or they take it on the top line because no one can afford to buy thier products as everything is inflating except wages. That doesn't sound like a buy and hold strategy for stocks to me - not to mention lower secular growth rates for the US economy broadly. why is a 15 multiple the right multiple? why not 11. If you think 30 is reasonable you need to get your head checked.
I'm waiting--in vain--for the questioning to head in this direction:
Mr. Mozilo, in your prepared remarks you indicate that (1) mortgage underwriting standards need to be relaxed and (2) investors need to be guaranteed that the loans will be repaid.
It goes without saying that your own company would profit handsomely from originating and servicing such loans.
Two questions, sir:
Who do you envision making such a guarantee of repayment?
Would you be willing to make a portion of your proceeds from your stock sales over the past few years--$150 million, let's say--available to a guarantee fund backing mortgages made under the loosened underwriting guidelines you are recommending?
... are you sufficiently compensated... are you due more...well would you say that a trillion dollars would be enuf or too much?
mozillo
answer
...well i don't know..i cant say, i don't want to put limits on the system... tax rates as compensation goes up is not my concern....the concern of congress..
(my comment...greed knows no limit, thank God for Buffet and Gates, entrepreneurs with a conscience)
100% chance, nearly, of a Fed Funds Rate cut to 2.25% on 3/38 based upon the current futures market. My, how close we are to 0%. How much pain are we in for when we get down to 1% or less and this doesn't stop. That will be what we call capitulation.......
paraphrasing from the current congressional hearings
rep paul kanjorski
question
when you saw that 18 percent of the new home owners were failing to make the first mortgage payment didn't you realize that the loan qualifications procedure was deficient?
mozillo
answer
well these mortgages were mixed together in tranches of larger securities and there was no way for us to know about this.
(my comments, really...go to jail, go directly to jail,,,do not pass go)
Are you aware of this: Poole is an influential Fed official who voted against the central bank's emergency rate cut of three quarters of a percentage point on January 22. He does not currently sit on the rate-setting Federal Open Market Committee, however, and he is retiring from the Fed shortly after next month's meeting.
Sebastian wrote "The U.S. is the only country for which there is reasonably-adequate current and historical economic and stock-market data available for serious analysis, so that's where my focus is. I'm telling you that U.S. stocks are at the best long-run valuation levels since 2002, and a screaming buy"
Sebastian, you should take a look at a LONG term P/E vs time chart!
P/E's reached market lows of 5 to 7 in 1921, 1932 and 1981. Take a look at what happens in BEAR markets!
The fallacy with looking at 2002 is:
1) effect of 1990's buble in .net stocks
2) precluding natural drop to historical lows P/E by Greenspan bubble in real estate market
Therefore: market P/E's are over long term average of 14, and NOWHERE near historical lows for bear markets.
OT: Goldman says $200 dollar a barrel oil coming to a tv near you.
When Bush took office....
Wasn't oil like 24 bucks a barrel? When do "we the people" say enough is enough?
Chimpy Mcflysuite talks on tv with s*** all over his face...like we don't know where his heads been... where are the crowds with torches and pitch forks? Do we have to wait until gas is $5 or $10 dollars a gallon and unemployment hits 20%? ...some have talked about Guns and Ammo...and I brushed that off as silly talk...well i am starting to become a believer.
OT: Goldman says $200 dollar a barrel oil coming to a tv near you.
When Bush took office....
Wasn't oil like 24 bucks a barrel? When do "we the people" say enough is enough?
Chimpy Mcflysuite talks on tv with s*** all over his face...like we don't know where his heads been... where are the crowds with torches and pitch forks? Do we have to wait until gas is $5 or $10 dollars a gallon and unemployment hits 20%? ...some have talked about Guns and Ammo...and I brushed that off as silly talk...well i am starting to become a believer.
Anonymous | 03.07.08 - 2:33 pm |
I think he's trying to convey that giving Cuba the benefit of the doubt is a bit too crazy, and I guess I'd agree with the president...but what do i know..
guns and ammo is not an insurance policy against our problems
for 1/10th the money spent trying to secure oil fields in iraq we could be energy independent!!!!
problem is haliburton, exxon mobil et al might have to share under the "new" energy rubric and they don't like that.
for less than 1 trillion dollars we can create a hydrogen energy infrastructure. the source for the electricity (to split H2O into H and O is hydro electric dams, clean coal, geothermal, nuclear, wind, solar...anything we can get our hands on.
and all cars burn hydrogen (internal combustion engine i.e. like BMW etc) or go electric (hydrogen electric fuel cell...nasa)
the masters at the top are standing in the way....vote like your life depended on it...and that of your childre
I just pulled my property tax assessment for 2008 out of my mailbox. According to the city of Minneapolis, the assessed value of my duplex dropped from $272,000 to $251,500.
Fair Economist writes:
I have to agree with Sebastian that stocks are a reasonable investment.
True. If by "reasonable" you mean "insane".
Marcus Aurelius | 03.07.08 - 11:49 am | #
Depends on the stock. Chevron at 9.8x trailing, 2.4x Bv and a 2.6% yield doesn't look to hateful. XOM, COP simalarly priced. RIG at under 10x trailing and owning the biggest fleet of deep drilling rigs (i.e the only place we will likely find significant amounts of oil is in deep water, and if you want to get to it you have to come to RIG, good luck trying to scuba dive down to 6000' of water and then drill a hole 10,000' into the seabed) looks pretty attractive to me.
First!
Copying my comment from previous thread:
So some banks, at least, are awash in easy money. But they don't want to spend it.
I don't see how gold doesn't blow through $1,000 as a result of this.
2, how appropriate.
long gold, short the World baby!
I sure hope to God that John Fogerty has his guitar warmed up. What this says to me is that Bernanke doesn't have a clue how bad the problem is, and is trying to inflate Wall Street's problems away. I imagine Bernanke must have pee'd his pants a few times by now. But that's what he gets for not providing regulatory oversight. "B-52" Ben and The Maestro might just got down as the two worst Fed chiefs ever(yeah, even worse than Arthur Burns). Once Obama takes office, can he fire Bernanke? Or does he have to wait until 2010 to get rid of him?
Uh... banks don't exactly have much collateral left... What happens after its all been pledged to the TAF facility?
Really Scary Fed Charts: March
So if I bring the pink slip for my 1993 Ford van over to the Fed, will they loan me the wholesale or the retail bluebook value? Also, can I continue to drive the van since they have the pink slip as collateral, or do I have to leave it in their lot?
Capital keeps falling on my head
And I simply redirect it to my fav-o-rate
Hard commodi-ty
Oil keeps on rising and
Financials keep on falling...
Capital keeps falling on my head
I'm telling bernanke man to stop it right a-way
Stop issu-ing-debt
People keep on panicking
They don't know what's the matter...
"I don't see how gold doesn't blow through $1,000 as a result of this."
It's up a bit in the 980s. On the other hand, I cannot, repeat CANNOT, reach kitco.com. Either their server's down, or they're swamped.
There is no light at the end of the tunnel, save the approaching train. With no solution in sight gold should skyrocket, the dollar will go to freefall and commidities will soar.
with stocks dropping and home values dropping I think McCain is right on with that SocSec private accounht plan. NOT!
This mind numbingly awful. The Fed thought in Dec that $30-50B Taf would be enough to right the sinking ship. It's now upped the ante to $200B, and it's now a fully open ended commitment.
This won't end well.
Cheers,
I may go buy some physical silver tomorrow.
The Fed is doing all it can now. I guess we will see if the banks can crete solvency from long term liquidity. I do not think the Fed is taking everything for collateral otherwise we would not see places like Citi still looking for capital eleswhere. This is not printing money but more of tring to contain the downward slope.
Bob Dobbs,
Kitco's been swamped all week.
Cheers,
Look out below. Dow 11918.60, down 1%.
Cheers,
ha ha ha ha ha ha ha ha ha ha oh oh oh oh my stomach is killing me.
I can't stop laughing.
OOOOO-Joe, come out and playyyyyy.
OOOOO-Joe, come out and playyyyyy.
(remember "The Warriors")
Carlyle creditors selling off its assets, willy nilly:
The Associated Press
This lovely article shows just how far outside housing this has spread...
Defaults soar on auto loans in pattern likened to mortgage crisis - The Boston Globe
you should get a good idea on words 15 and 16 of the second paragraph...
"I ran around smiling for 20 minutes when they took the car away," Chilcot said. "It was a relief"
Looks like Obama will have to spend $2 Trillion after Ben devalues the dollar.
Somebody help me understand this.
What does liquidity "mean" here? If a Bank has $100 in cash, but is on the hook to re-pay $10,000 worth of commitments, does "liquidity" just help slow down the glide-slope to Chapter 7?
Oh, and by the way, it seems $10,000 worth of commitments is for items that are known to be largely worthless in the marketplace.
I'd rather see them "lend" money through the TAF and repo's then watch the Fed Funds rate go any lower than the 3rd level of hell.
This was written 3 years ago. did anybody in banking read it or did they and laughed? sickening....
Home prices up in fourth quarter, deceleration evident - MarketWatch
So the big money center banks and some regional and local "go-go" banks got in big trouble with subprime, cdos, cmos, etc and now they have a solvency problem. The FED is twisting the yield curve back into it's proper form to help them make money.
So what about the regional banks who didn't get too involved in all this mess? The lower rates help them too. And they weren't insolvent in the first place.
Looks like an opportunity to me.
All the Fed can do is lend and lower the FFR rates to waht is expected by the market, any monitization and the dollar is toast. The problem the Fed is coming into is that the amount of default that is being predicted in assets they are accepting.
The markets opened down, but have been trending up since. I don't know who's buying, but they've got some juice (and are trying hard to defy the technicals).
The market doesn't need no freakin rate cut.
"The FED is twisting the yield curve back into it's proper form to help them make money."
Excellent! Everybody deserves a bonus!
Shorter Fed: Don't worry, Wall Street, your bonus checks are in the mail.
AMBAC FINL GROUP 6.72\t-9.43\t91506
This is bad?
Try LewRockwell.com have bought from them in the past very easy. They should open 8AM Calif. time. Hit the Gold button on the upper right croner.
SPECIAL CONJURE CLOCK UPDATE
Conjure Clock
12:00:00
Ben Bernanke's moment in history has arrived. Is he up to it? Stay tuned.
Its even hitting college students.
the death of a nation, welcome to Rome.
College loans see subprime fallout - The Boston Globe
holy shit....cb says times up!
"mp | 03.07.08 - 10:11 am | # "
CR's clock is a bit fast
I do I get on this TAF deal? I'll take my used big flat panel and my SUV off EBay and offer 'em that for collateral.
Will they take the recordings I'm making of all the talking heads saying, "We'll see improvement in the second half of the year?"
Spring forward isn't until Sunday morni
MDBullDawg
Re: your link at 9:46 am...I imagine that there will soon be many used Lincoln SUVs on the market.
Who will want them?
Regards,
The impact on the TAF isn't going to have much impact.
Banks balance sheets in the 70's and 80's were mostly reserve contrained. In other words, changing reserve requirements had a dramatic impact on M1-M3. With the TAF auction and the collapse of the shadow banking system (ABCP, SIV, ARS/VRDO) M1-M3 has grown about as much as it can without the banks going to the equity market for more regulatory capital.
News story today about big banks hitting up SWF and others to raise capital. Combine that with the statement by one SWF that the "well" wasn't big enough to save Citi and you can see how constrained banks are. The need enough to both grow the balance sheet to absorb the further collapse of the shadow banking system (money market funds anyone?) and to offset future losses.
The biggest impact of the TAF was to equalize deposit rates among banks. I'm guessing a large increase in the TAF will push all short-term deposit rates below the Federal Funds rate (bastards). Why borrow money from your depositor at 3% if the Fed is willing to throw you money at those rates.
The funny thing is that credit unions (who are generally over-capitalized, my credit union regulatory capital ratio is 14% while my bank is 6%) have no access to the TAF and are still paying high deposit rates. I'm guessing we'll see a flood of deposits from banks to credit unions and an increase in using credit unions as a source of funding for HELOCs and home loans. But, maybe not. Credit Unions can't offer corporate accounts and maybe Joe and Jane don't have a lot sitting in passbook savings accounts.
I don't fully understand the $100B in repos. I'm guessing they will be selling Treasuries held in the SOMA and buying more MBS. That should help satisfy the markets demand for Treasuries and offset some of the pressure on MBS.
Essentially the Federal Reserve is taking on risk because the market is unwilling to do so.
We'll probably get a cut next meeting, which is going to put further downward pressure on the dollar and upward pressure on the commodities.
But the inflation worry is going to work against the Fed. The Fed needs people holding in-the-bank-cash to buy securities off the banks balance sheets at close to par. That would free up the balance sheet for new lending.
As a holder of in-the-bank cash I'm not going to demand even steeper discounts on stocks and bonds if I believe that inflation is going to eat up a good part of the yield.
I've got cash, do you?
NEW YORK (Reuters) - Washington Mutual Inc (WM.N: Quote, Profile, Research) and other lenders have approached private-equity firms and sovereign-wealth funds to discuss cash infusions, according to the Wall Street Journal, citing people familiar with the situation.
WaMu, other lenders seek private equity cash: report
| Reuters
"Conjure Clock
12:00:00"
Time to party likes it's 11:59:59
Whoo-hoo!
I guess we can see where all that new Fed liquidity is going---to prop up the stock market!! Yeah!!
Par-tay!
The big TAF push is to help the result "utterly unhinged" MBS market and to dress up the Balance Sheets once again for the 10 Q's.
But these quarter ends are the nervous periods. lots of itchy margin call trigger fingers. The next 3 weeks will be interesting.
Since the bubble wasn't in the stock market directly, it will fight kicking and screaming, pulled down slowly with the lagging indicator of corporate earnings.
This is much worse for the average joe, since he'll keep buying overpriced, propped up stocks, for longer and longer in his 401k.
The poor returns won't be all at once, but in a slow, frog in boiling water, fashion.
Retirement will come and he'll say....hmmmmmm.....my returns were no where near what I thought they were going to be......must be my own investment strategy......oh well.
Kett 82,
Na bro, just bid for the rims... there is always a need for the cutom rims....
havent you seen the 1K cars with the 5K rims in your town...
So what about the regional banks who didn't get too involved in all this mess? The lower rates help them too. And they weren't insolvent in the first place.
Looks like an opportunity to me.
You have to ask yourself, if the regional banks were locked out of the bread-and-butter home loans and HELOCs by the likes of CFC, who were they lending to?
Construction loans? CRE? Small busines loans?
How good are those loans in a recession?
I'm not saying there isn't an opportunity, but there's no shortage of opportunities for cash holders right now.
Kicker,
Opportunities for cash holders?
Opportunities to what? Keep your cash under your matress?
MP and CB, I am stunned to see the clock at 12:00:00. I suspect you have underestimated BB's and wall street's ability to delay the inevitable. Conjure Bag, your pronouncements are a mainstay of this blog.
Among other things, the Fed is probably trying to get the spread back down on agency (aka. "agony") mortgage-backed securities. AAA-rated GSE securities are acceptable not only at the TAF but also for the old-fashioned daily open-market operations.
This "ups" the implicit Government guarantee of GSE securities. After all, the Government isn't going to let the Fed become insolvent, are they?
mp and conjure bag:
Thank you for providing the countdown. As an old friend used to (metaphorically) say, it is always important to "know what time it is."
We are witnessing a Hindenburg-style event, where we are not only in flames, but the flames themselves are destroying our buoyancy.
We burn and fall simultaneously-- Capital is being destroyed, while the value of the remainig capital is ever lower.
The old double-whammy. Remember all that talk of a soft landing? Ah, those were the days.
For the neophytes who just started on this board a few months ago, and who see contant references to it... What is the Conjure Clock?
Here's my question:
The Fed does these TAF's so that banks can avoid the stigma of going to the discount window and having their names in public as being in trouble, hence avoiding any messy panics or runs on the banks.
The Fed has been doing this for months, and the auctions are now up to $200 billion dollars.
Based on the principle that two people can keep a secret if one is dead........WHERE THE HELL ARE THE INVESTIGATIVE AND FINANCIAL REPORTERS? This information is not available? There's no clerks or secretaries who want to make some extra coin to spill the beans on who is borrowing $200 BILLION dollars to stay afloat?
So much for our transparent financial system. Ten years ago we would have ridiculed a government that did this to bail out its banks. Now it's just reported on the financial news as if it were just another quarterly earnings report. Ho hum, TAF to $200 billion. Whatever. How is copper doing?
Fed's actions are based on the assumption that foreign CBs will follow the Fed's lead, right?
Oh boy...
In 1933 FDR tried a 'bank holiday'. Maybe we are almost there again.
So, what will the New America look like?
Opportunities for cash holders?
Opportunities to what? Keep your cash under your matress?
Let's see....
Tax free munis were yielding 5% a day or so ago
Regulated utilities have dividend yields of almost 6% with earnings yields of 8%.
MBS paper is being sold with 30% hair cuts.
These are great yields. The only wild-card is inflation.
Kicker:
The only wild-card is misinformation.
The only wild-card is misinformation.
I'll bite, explain...
Kicker - I'm with you, but I'm keeping some powder dry because I think it will get even better.
Good regional banks at 4 times earnings, utilities with dividend yields of 8%, that kind of good.
If you think anyone either,
a) Knows what they are doing, at this point, or;
b) Is telling the truth about 'a', or;
c) will let you have the information that will point you in a direction that will benefit you, at their expense,
you are mistaken.
We're no longer discussing the difference between truth and lies. We're talkin' 'bout the difference between the little lies and the big lies.
Bob Dobbs - kitco.com working okay for me. Another bullion website you can try is Live gold prices, silver price charts & gold news.
Somebody decided Dow 12000 represented a bargain, I suppose.
O-Joe, is that you buyin all those stocks, you scamp?
Good regional banks at 4 times earnings, utilities with dividend yields of 8%, that kind of good.
You and me both.
I've got my toe in on the utility stocks and I may double down if when yields get to 6%.
Having a Fed that flutters with every shift in the wind isn't helping. Utilities got trashed in the 70's.
I like the regional banks but I'd like to see some hits to earnings from CRE and small business loans so I can get an idea of the strength of the balance sheets.
"Now Ned, those girls are gonna tell different lies than your lies. And when your lies aint the same as their lies, well I aint gonna hurt no woman. Im gonna hurt you. Not gentle like before, but bad." Little Bill Dagget
Agreed.
This current mess may rhyme with certain past periods....but it is unique enough to guarantee that NO ONE knows how it's going to pan out.
Look around at who is holding the cards now...it ain't exactly the USA fan club.
This will be the century of resource wars.
Kp:
Got milk?
Yup its all contained...
Entering the repossession lane
Defaults soar on auto loans in pattern likened to mortgage crisis - The Boston Globe
CR:
Time to change the name of the blog to Unmitigated Risk.
The Fed is working on what we used to call the Boiling Frog approach. Put a frog into boiling water and he will just jump out-- put him in cold water and heat it slowly and he will get boiled! So-- just keep the info flow slow and everybody gets boiled instead of jumping out. Works every time, doesn't it Enron!!
Milk is out of my price range. I drink rain water.
TheFinancialNinja - your charts are scary. But if debt=money, they should both be liquid. I suggest debt=obligation, money=covered debt. and covered debt=obligation herein lies the problem: obligations no longer = debt.
IB:
I'm going out on a limb, here, but we're not dealing with a frog. We're dealing with a scalded gorilla. Got a lid for that pot?
Gotta love Friday's.
Well Marcos, nope, no lids and we probably need a bigger pot.
If I have to be a Marcos, I want to be Imelda.
Re: borkafatty | 03.07.08 - 10:51 am | #
[Sheesh!]
Last year, Chilcot, 21, bought the $15,000 car - a sweet ride with tinted windows and custom chrome rims, and a loan with $370 monthly payments that he could not afford on his $12 hourly wage at Home Depot. By the fall, facing mounting credit-card debt, student loans, and rent, he stopped paying the car bills.
"I ran around smiling for 20 minutes when they took the car away," Chilcot said. "It was a relief."
Time to reinstitute debtor's prison!
Then people would be encouraged to pay their bills!
"Fed Acts to Boost Liquidity"
or
"Boost Acts to Drain Fed Credibility"
The Fed is selling bills to drain $10 bln from the market (and get $10 bln in bills into the market).
4822 | 03.07.08 - 10:57 am |
21 years old with a 400.00 month car payment. What a dumbass. I have no sympathy. Let em walk or buy a dirt cheap used car like I have...
Chris
4822:
We are gonna need a lot more Australia's
Just a guess, but I can imagine the increased TAF is an "oh s#%#" moment for the fed, and it may be related to several Carlyle-esque unwinds.
If the banks start selling margin call paper quickly, like the recent article suggest, you would see the catastrophe everyone here is looking for. With the larger TAF, the banks can flip the paper over to the fed and get the cash, averting a further unhinge-ment, or whatever bloomberg would call it.
This all assumes the banks are willing to take mark-to-market risk on the paper they flip into the TAF, which is a big assumption.
This won't end well.
Cheers,
Misean | 03.07.08 - 9:35 am | #
Define 'end'... Define 'well'.
I think it will end the way it was intended to end - whether it works out well for you or me or within our preferred time scale isn't a concern of theirs.
Marcus,
I'm with you on the "misinformation" sequencing.
I find myself, on an an almost daily basis lately, needing to "debrief"
the "media facts" which are routinely asserted as truths. The spin to maintain the global fanancial spin is self serving, indeed. No paranoia here,
just saying....
During college, my best car was an 8 year-old, Olds Delta 88 with a 455ci "rocket" engine (this was when we had odd-even gas days). It cost $300, and i bught it from a little old man. The smallest part on the car cost more than $300 to fix/replace.
When it broke down, I walked away.
I am with you 4822..sheesh! is right. 21 year old dumb ass.
The thing that really impresses me is the way Hank Paulson personally gets out his checkbook and pushes the market above the flatline on a day like today so his friends can have an hour or so to bail out.
That's true grit and integrity.
A new "small lie" from Marketwatch:
MARKET SNAPSHOT
Stocks pull out of Friday tailspin
After payrolls and Fed actions, stocks move sharply lower before a dramatic bounce-back.
Pull out of Friday tailspin? it's not even freekin' noon, yet.
Truth or lie?
Buy?
Sell?
Hold.
Cash.
Marcus,
Misinformation.
Check.
end--Utterly unhinged markets.
well--little misery for the innocent.
Cheers,
Surprisingly though, relatively few people died in the Hindenburg disaster. Some lucky people were able to just ride the flaming frame of the ship as it fell. It was the panic jumpers who were killed.
Hindenburg Omen - Wikipedia, the free encyclopedia
Then again, the ship was not very far up in the sky when it exploded.
DOW 12000 alert. Man the barricades! This line must not fall!
Cheers,
Trail - I picked up BBT a couple of weeks ago on just that theory - P/E was closer to 9:1, and the yield was ~6%, but still, nice theory. Purportedly not full of "subprime" garbage...we'll see.
Cobradriver,
Let em walk or buy a dirt cheap used car like I have...
I pictured you in a Shelby.
ok sounds cool, but what does this mean, in English?
Chris - I drive a BMW, but it's 22 years old with 250k on the clock and I only paid $1500 for it. The schaedenfreud just keeps coming for me...everywhere I look.
I have to agree with Sebastian that stocks are a reasonable investment. With the 10-year at 3.5% a PE of 30 is pretty reasonable, even without accounting for the fact that company earnings are partially hedged against inflation. Of course if we go into Great Depression 2 they'll lose money but they won't lose as much as other investments.
Seems like the TAF is useful to A) a few banks that need liquidity and will survive, and B) Banks that will definitely fail, so as to fail while the Fed is holding the shaky overvalued paper.
For B), it's useful for the rich investors to offload part of their losses onto the Fed, that is, onto everyone via inflation, as the Fed will have to print a bit more money.
Thus the rich investors take $100 of value out of your pocket. $100 here, $250 there, $90 here, $300 there....etc., (ad a bunch more).
I was just reading about the Ambac $1.5 Billion cash grab, when it dawned on me:
Stock value used to be based on P/E ratios. Now, we value them on P/L (Price vs. Leverage) ratios.
Sheesh.
"21 years old with a 400.00 month car payment. What a dumbass. I have no sympathy. Let em walk or buy a dirt cheap used car like I have..."
What about the people who let him have the loan? Because they wouldn't hold it, it'd be securitized and sent out far, far away....
There are always dumbasses. The sign of a decadent system is that it encourages them, even counts on them...
James Grant, in the February 22nd issue of his Interest Rate Observer quoted an stategist at CLSA (Christoper Wood) who opined in the Financial Times that the Fed is taking the "garbage collateral nobody else wants to take". Grant's associate Ian McCulley related that: "A bank can borrow against 85% of par value of a AAA rated CDO, and 80% of par value of a NON
(my emphasis) AAA CDO".
Good God!! Isn't AAA wobbly enough these days without loaning 80% of the "par value" of some cowpie? I appreciate the liquidity argument, but we don't stand a chance in hell of getting the Country's $$$ back!
All- if you can put on C-Span and watch the fireworks on Housing, Mozilo, etc. Susan Wachter is absolutely on fire and reaming everyone in sight, including an economist sitting next to her! And greenspan of course.
Can I have a loan to go buy a real economy? Maybe a nice green one with good jobs and ponies for everyone....
Of course if we go into Great Depression 2 they'll lose money but they won't lose as much as other investments.
I want to lose money! Where can I sign up?
But can you guarantee that I'll lose less money than other investments? See, I'm okay with losing money, but it has to be less money than I could lose on other investments.
Alert to reserve members of the PPT:
"The eagle has left the nest and the badger plays checkers with his brother."
I repeat
"The eagle has left the nest and the badger plays checkers with his brother."
I have to agree with Sebastian that stocks are a reasonable investment.
Okay, AOTC, stop posting under other people's aliases.
Fair Economist writes:
I have to agree with Sebastian that stocks are a reasonable investment.
True. If by "reasonable" you mean "insane".
Cramer writing at about 10:45 AM EST that the Fed had bought $50b in agency paper this morning. That was the rally.
Can't find confirmation of that anywhere else.
Stocks are getting more reasonable as we speak..
The sixth sense:
Staring Mozilla as Bruce Willis.
"I see Red People"
Fall back! We need to regroup!
Prepare Gasparano! Hand him an Ambac AND MBIA rumor!
Cheers,
Mozilo et al grilling now starting on C-SPAN. They are actually make them testify under oath....
Mozillo is toast. If he were a made man, the Bush Admin would have had him in for a meeting with the President, or George Bush. He could then ignore testifying before Congress based on the claim that everything he knows is covered by Executive Privilege.
Actually, chuck prince formerly of $hitigroup right now boasting all of his accomplishments...
Since his car was taken away, Chilcot has started walking to work at his new job - as a car salesman at a dealership in Plymouth.
When asked whether he tries to caution people against buying a car they can't afford based on his recent experience, Chilcot chuckled: "Not really. You become pretty shameless pretty quick when the paycheck comes."
The closing statement speaks volumes.
over_educated
answer to your question above
conjure is a small creature or metaphysical entity that hangs out with a person who posts here, named mp.
he (conjure) or "it" speaks metaphorical truth for, thru, and with, mp having made alarmingly brilliant, and at times omniscient observations.
conjure "bags" have their source in voodoo as in mojo..they are composed of magical talisman like objects which are unmentionable for those about to eat lunch.
now for what i really think... mp is a bright, well informed investment banker , who, suffering from agoraphobia and a propensity for reclusiveness attributes his brilliance to an imaginary friend named conjure.
Morticia! The markets are rallying, down! We're losing money hand over fist! (No offense, Thing. BTW: You need a manicure).
Ben's brilliance always amazes me. As I see it he has it figured out this way. Lower interest rates will prevent a "recession"; lower interest rates also lower the value of the dollar; the drop in the value of the dollar raises the price of oil and gas; higher prices for gas bring on a recession. Whee. It's circular and it's brilliant.
On Cspan, that is.
mock turtle:
You left out the parts about Conjure's diet, personal habits and proclivities. Full disclosure is important - don't ignore the ugly bits (the Market did that, and look what happened to them).
Stocks are getting more reasonable as we speak..
The only stocks I'd buy are NON-dollar stocks. They give you some protection vs. the constant erosion of value of the dollar.
Back in 2003, when South Florida's economy was booming, officials at a small West Virginia bank deep in the heart of economically ravaged coal-mining country looked south and saw an opportunity for growth that was missing at home.
That's how Ameribank, began it's charged down the path towards self disturction.
The privately owned bank's year-fourth-quarter results showed troubled loans account for $42 million, or almost 31 percent, of its $136 million assets. Ameribank lost $10.1 million in 2007, $7.3 million in the fourth quarter alone, according to Bauer Financial. Its capital, or cushion against operating losses, is only $9.6 million, down from $17.4 million at the end of 2006.
Do you think this bank is on FDIC's troubled list?
West Palm Beach Business: News, stock quotes, financial, Real Money, health care, real estate | The Palm Beach Post
Marcus Aurelius
you are right i did omit some "things"
but i just don't know how much over_educated can handle in one session.
by the way, i guess i owe misean a "hey you were right"
i done well in silver...got wacked in palladium.
Seriously, folks, the S&P is at a PE of 20 now, right? If earnings are cut in half, a PE of 40 with an inflation hedge is still a reasonable tradeoff against a 3.5% 10 year Treasury. OTOH, if the real economy of services and goods continues to function against a backdrop of collapsing values in Finance, Insurance, and Real Estate, there's a huge potential upside. If you want to bet that most investors will run in terror from investing in the production of stuff with real value and instead buy Treasuries below the inflation rates, effectively to support a pointless war in Iraq and the forthcoming inevitable bailout of the financials, you may be right. But I've never been strong on counting on that kind of stupidity.
Parsons is up now, trying to explain the "Culture" of Citi, and why bonuses were deserved.
This is an example of the greater kind of lie.
This goddamned criminal should come right out and tell the truth: "We are robbing shareholders blind while ignoring our fiduciary duties to our company, the consumers of our products, and our country's economy. We are following the George Bush/Dick Cheney theory of business. Next week, we're forming our mercenary army.
Fair Economist, you shouldn't have gone long.
Listening to these guys infront of congress, listening to the fed, listening to the Kudlows, is just playing into their strength.
It's like a cheating husband who smooth talks his wife into believing what she wants to believe.
Like they line from the movie: "who are you going to believe, me, or your lying eyes?
They have what they have not from what they do, but from what they say and make others believe.
Just like the wife, who after throwing away 30 years of her life tolerating his cheating ways, finally capitulates and gives up on him. But now it's too late as she has thrown her youth away and is now a lonely old maid.
So goes average joes who keep the faith with their 401k's, and will only captiulate when it's too late.
Now it's O'Neil talking about merrill lynch's heroic behavior during 9/11.
Excuse me while I go puke.
Chris-forgot to add sarcasm off
I hope they have a Paddy-wagon waiting outside.
"...if the real economy of services and goods continues to function against a backdrop of collapsing values in Finance, Insurance, and Real Estate, there's a huge potential upside."
The real economy of services and goods is going to be pole-axed in about 2 quarters when the effect of permanent $100+ oil prices trickles down.
Everything from airline tickets to shoelaces is about to become so expensive people won't know whether to shit or go blind.
The silver charts look like the housing bubble though, this newbie is hesitant to jump in....
O'Neil is now claiming to be unable to comment due to pending litigation. Where the F have I heard this before?
And that everything he "earned" was prior to 2007.
It's contained.
O'Neil's shill - head of the "Compensation Comittee" - is now claiming, among other things, that "everyone else was doing it, too."
Ode to the DOW (a haiku)
Twelve thousand goodbye
It was sweet but gotta go
Maybe next decade...
mock turtle: Thanks.
Fianlly, my youth misspent playing Dungeons and Dragons has come in handy.
So what is the "clock" mp's Conjure keeps referring to?
Actually I haven't yet gone long. I've been in corporate bonds for ages. But now that there's substantial inflation risk a bond-intense portfolio has a big risk factor. And, apart from financials, stocks have done fine recently, and there are excellent reasons to expect them to continue to.
It's one thing to say "don't buy now, we're heading into a panic". Maybe prices will be a lot better in July. But can anybody give any reasons, apart from threats of GD2, that stocks away from the RE bubble are a bad long-term buy?
Tan Man takes the stage. MF looks like an old baseball glove.
The tanned one is making his statement right now.
Did the tan man (Choked)just have a hard time stating he waived his consulting agreement of 37.5 million..too funny
Fair Economist, it is all about the E in P/E. When the consumer is tapped out the velocity of money slows and those pesky Earnings go down.
His skin and the woman's coat behind are simply STUNNING together.
FE:
I guess I would have to agree that stocks are a better investment than long duration bonds at this point. Long duration bonds could easily lose 50% fairly quickly. Stocks may only lose 20-40% and take longer to do it.
Cash will probably outperform both in the short run, though. Especially if you went to cash last week. A positive performance compared to cash is an important component of my definition of a good investment.
For the last 6 months or so conjure bag has had a global financial meltdown clock. When it reached 12:00:00 the countdown was over. About a month ago conjure said the clock was at 11:59:59 and that would be the last update because "if you don't know what time it is....". I guess MP decided to come back and give a final hint for those that didn't know what time it was/is,
So, if conjure is correct (and he has been eerily accurate for quite some time) you should expect a "totally new financial landscape" or something to that effect.
I don't believe conjure thinks Citi is currently accurately valued either.
Fair economist,
There is nothing that says that all forms of investments can't lag.
If you were a Japanese long term investor where should you have been over the last 20 years? Just because their rates were at less than 1%, didn't mean that their stocks were relatively undervalued.
Sometimes things are broken and there are just no good alternatives.
in response to: "Fair Economist writes:
I have to agree with Sebastian that stocks are a reasonable investment."
Marcus Aurelius said: "True. If by "reasonable" you mean "insane"."
Well? Wouldn't October, 1987 have been an "insane" time to buy stocks? August, 1998? October, 2002?
If you don't have a long-term benchmark by which to gauge whether stocks are reasonably or unreasonably valued, where does that leave you?
Sebastia
Sebastian:
Give me the "good time" to buy Japanese stocks for the longterm.
(I predict your answer will be "we are no Japan")
So what is the "clock" mp's Conjure keeps referring to?
over_educated | 03.07.08 - 12:22 pm | #
Economic Doomsday.
BTW, mp, (if such a person really exists) may not be an IB, seems likely this figment of Conjure's imagination is a business investor.
Fair Economist,
If you're gonna subtract major market segments from stock returns why not subtract oil companies too. What then are the market returns?
Well? Wouldn't October, 1987 have been an "insane" time to buy stocks? August, 1998? October, 2002?
I'm not sure about your dates, so, I'm assuming they're bottoms. August, 1987 would have been an "insane" time to buy stocks. Same with June, 1998, August, 2002, and Feb. 1929.
But, then, this isn't like those situations, is it?
Waxman is going on the offensive.
Anonymous,
I said last night on PM, let it settle. When things go into uncharted phase, market participants get edgy. The market is looking for a new resting place.
Plus hedgies are getting margin calls.
Cheers,
Misean: Watching it.
Go Waxman.
A drop in the excess capital mandate to 25 percent from 30 percent for Fannie Mae would free up enough capital to support up to $86 billion in its $721 billion portfolio, Citigroup's Bradley Ball said in a March 6 research note.
For Freddie Mac, a lower mandate could result in $72 billion of purchases for its $717 billion portfolio, he said.
Easier GSE capital may spur $158 bln purchases-Citi
| Reuters
Increase conforming limits, lower capital requirements. Makes perfect sense.
Check it out.
Temporary Open Market Operations - Federal Reserve Bank of New York
A pure MBS transaction @ 2.84%
Carlyle? TMA? CITI?
Monkeyzillo Live
Error
It's uesless to argue with the obtuse.
And as Bradley can attest, hardly anyone sees a need for excess capital these days - least of all Citi.
Auto da fe.
"Well? Wouldn't October, 1987 have been an "insane" time to buy stocks? August, 1998? October, 2002?"
Yes if you sold them at the top.
If you bought at the bottom of the crash of 1998 and held on till today, you would be lagging behind anyone who bought longterm treasuries at the same time.
Another old wives tale...."those who sold at the bottom and went all cash lost out big time."
False: Yes they would have missed out on the big run up, but they would be ahead now 11 years later.
(Dow hit 7731 in Oct 98. That is an average annual return of 4.5% to today's DOW(excluding dividends) if you went ALL IN on that very exact day.
Those who went all cash on that day aren't behind, especially if they didn't keep buying overpriced stock during the 2000 bubble and last summer's DOW 14000.
I don't get it. Here is an extract from one of the 3 statements today:
With this series of term RP transactions and the expansion of the Term Auction Facility that was also announced by the Federal Reserve, other adjustments will be made by the Open Market Trading Desk in order to maintain a level of reserves consistent with trading at rates around the operating objective for the overnight federal funds rate. These adjustments may include Treasury bill redemptions, reverse repurchase agreements, Treasury bill sales, and changes in the sizes of conventional RP transactions.
Statement Regarding System Open Market Account Activity - Operating Policy - Federal Reserve Bank of New York
In that same statement they say they will conduct a single tranche Repo of 28 day for $15B.
Then in the 3rd statement today:
On Friday, March 7, 2008, the Federal Reserves System Open Market Account will sell $10 billion of Treasury bill holdings for settlement on Monday, March 10.
Statement Regarding Sale of Treasury Bills from System Open Market Account - Operating Policy - Federal Reserve Bank of New York
So they are pulling out $10B permanently ( incidentally ADDING to the Tbills out there - the treasury will be pleased:-) ) and putting out $15B on a revolving 28 day basis. What the heck is the point of this, ignoring the addition of $5B to the slosh ?
Separately we'll have to monitor whether they do remove the TAF additions from the slosh - recently the average slosh has increased to $53B - it ought to be down to $30B I reckoned.
Are they speaking with forked tongue in the first statement when they said they will maintain reserves out there so that the FFR stays at 3.0 ?
Curious yellow ? These guys are too clever by half for me at the moment.
-K
Oompa, oompa, oompa-dee-do
I stole your money, now what will you do?
Oompa, oompa, oompa-dee-dee
Just you watch, we all will walk free.
Oompa, oompa, oompa-dee-die
That's til the subprime borrower's try
Oompa, oompa, oompa-dee-dum
Deadbeats will kill us, and that's when we're done!
Stinky writes:
Check it out.
http://www.ny.frb.org/markets/om...mo/dmm/ temp.cfm
A pure MBS transaction @ 2.84%
Carlyle? TMA? CITI?
I'm probably not the only one who would be grateful for an explanation of this.
Thanks for C-Span link, crispy&cole!
The Tan Man is having a difficult time explaining why he was selling shares at the same time the company was borrowing to buy stock back. He can justify one or the other, but not both. He has fallen back on the argument that what he did was perfectly legal, which is true, but not an answer to the question Waxman asked.
Average Joe said: "Give me the "good time" to buy Japanese stocks for the longterm.
(I predict your answer will be "we are no Japan")"
We're no Austria, Brazil, Russia or China, either.
The U.S. is the only country for which there is reasonably-adequate current and historical economic and stock-market data available for serious analysis, so that's where my focus is. I'm telling you that U.S. stocks are at the best long-run valuation levels since 2002, and a screaming buy.
Sebastia
I don't know why the link is broken. Just have to cut n paste.
I guess it's the first special term transaction referred to in SK's post.
The economy is sinking into a deep recession, corporate earnings are entering a long valley, and very few stocks pay any dividends. So, your only ability to profit in stocks is if you can find a greater fool willing to buy your shares, after things have got much worse.
You know, it's ridiculous how many new stock market gurus are born every day.
Look at your historic charts. In environments like this, you're a fool to pay much more than 2X earnings growth on a P/E basis (i.e., PEG ratio). Let's say earnings growth over the next 2-3 years will be 6-7% annually, at best. Why would you pay a P/E above 12-14? Stocks may become a decent buy at some price. But not here and now.
Stinky, my man: Explain this transaction to me and I'll send you a bar of my favorite Mennon anti-perspirant.
Keep It Simple, I'm Stupid writes:
The Tan Man is having a difficult time explaining why he was selling shares at the same time the company was borrowing to buy stock back.
He could point out that his tanning salon wouldn't accept CFC shares as payment....
(Seriously, isn't "I needed the $100M in cash to support my lifestyle" the standard response in these situations? Or "I needed to diversify my retirement holdings in case our stock collapsed...," oh, wait a minute, that one's not so good I suppose....)
oompa, oompa, oompa-de-do
Republicans are whores!
What are you?
regarding these hearings:
So the congressmen act as the defending attornies for the bankers present?
Is that how it works?
Sebastian'sWorld said: "It's uesless to argue with the obtuse."
I'm just going by the evidence of long-term valuation data and not irrationally and emotionally reacting to news and blog headlines. If thinking straight and taking the long view makes me obtuse, so be it.
S.
""The U.S. is the only country for which there is reasonably-adequate current and historical economic and stock-market data available for serious analysis""
And housing never goes down.....
And you should never fight the fed.....
You have just proven my point.
You offer no argument other than justifying your view of the future by your view of the past.
Everyone who overpaid for a house did so because "no one loses money buying ahouse over the long term."
You are as wrong as all those who missed this housing bubble.
They judged the future based upon what has happened in the past.
So the congressmen act as the defending attornies for the bankers present?
Those would be Tom Davis (R-VA) and Darrell Issa (R-CA).
The DOW is up 4.5% Average Annual Return since the BOTTOM of the market in the crash of 1998.
So sebastian:
Given that was the "buying opportunity of a lifetime", can we judge the next 10 years of stock ownership on the last 10?
I'll never forget where I was when the Conjure Clock struck 12:00:00.
Some people like to talk about where they were when Kennedy was shot. Me, I don't have an alibi. - Emo Phillips
Chuck Prince: If I talk slow enough, and throw in enough jargon, maybe no one will realize that I'm avoiding the question.
Average Joe said: "And housing never goes down.....
And you should never fight the fed.....
You have just proven my point.
You offer no argument other than justifying your view of the future by your view of the past."
And you're complaining that I'm not defending claims that I never made, LOL!
The subject is "stock valuations." If you get the data (SP500 historical stock data and SP500 peak as-reported TTM EPS) and calculate the valuations you'll see that the market is very reasonably priced, even undervalued.
But you won't do that, and that makes me obtuse.
))
S.
Richard Parsons: We thought about exactly the question you asked, and we did decide that we should pay failing executives as much money as successful ones.
re congressional hearing now
rep issa...what a wonderful mouthpiece for the CEOs
i hardly knew he was asking questions
Henceforth Helicopter Ben shall be known as Weimar Ben. How many dollars to the Amero? 3 to 1 ?
Angelo Mozilo: Hey, as long as prices were going up, everything was fine. It turns out that prices don't always go up. Hucoodanode?
haha! if you fund advocacy for sensible lending you are the bad guy!
If you fund rediculous lending that takes valuations to outragious levels you are the heros of the day!
Surely this must have been as it was in Rome?
Issa and McHenry are making me ill.
Average Joe said: "Given that was the "buying opportunity of a lifetime", can we judge the next 10 years of stock ownership on the last 10?"
Are you interested, or are you just arguing? I can't tell, but I prefer to give you the benefit of the doubt.
In March, 1998 the SP500 PE valuation was in the mid-20's, forecasting poor long-run returns.
As of yesterday's close the PE valuation, calculated exactly the same way, was 15.35.
So you tell me. Based purely on the numbers, what can we deduce about the returns over the next decade for someone who buys an SP500 Index fund today?
S.
Not sure he got the wording correct.
It's not screaming buy. It's:
Screaming, bye!, to 12000.
Cheers,
Chuck Prince: We had risk models, but they didn't actually try to measure risk. That was someone else's problem.
Rep. Peter Welch (D-VT): Goldman pwned all of you clowns, so why are you paying yourselves like they pay themselves.
Richard Parsons: Asking about our risk models is a good question, and it is worthy of a hearing before a different committe, so that I don't have to answer questions today.
I pictured you in a Shelby.
Angry Saver | 03.07.08 - 11:21 am | #
That is my "I'm gonna loose my license car"
. I built a Unique Cobra replica 8 years ago. My daily driver is a 97 PURPLE Neon with the requisite dents and 232k. Still uses 1 qt every 1500 miles. Gotta keep my expenses to a minimum...But I happen to be cheap...
Chris
Rep. Chris Cannon (R-UT): Golly, it's so swell that such fantastic people would grace us with their presence.
Listen to how Rep. Chris Cannon (R-Utah) put the CEO's in a pedestal!
I really hate Republicans!!!
There are always dumbasses. The sign of a decadent system is that it encourages them, even counts on them...
Bob Dobbs | Homepage | 03.07.08 - 11:36 am | #
Bob,
Don't get me wrong...I have no sympathy for the lenders,dealers etc. The idiots that sold this shit are reaping the absolute lack of used car sales now...
Chris
This is so disgusting.... these are the people who are in congress? half of them are smart - the other half are idiots...
The Rep. who talked about Paulson and the center for responsible lending...man... what the hell, thats so small compared to... anyway... screw that... i have to go puke.... blehhh!!
Misean writes:
Fall back! We need to regroup!
Prepare Gasparano! Hand him an Ambac AND MBIA rumor!
Cheers,
Misean | 03.07.08 - 11:54 am | #
"Retreat Hell! We're just attacking in another direction." (Attributed to Major General Oliver P. Smith, USMC, Korea, December 1950.)
Fixed it for ya
...
Chris
Eleanor Holmes Norton (D-DC): If I didn't have a stutter, I'd be making you look like a corrupt moron.
it's a shame...these crony capitalists are really the enemy of a free market system that so many entrepreneurs respect.
compensation consulting... disgusting cncept. what's so complicated about figuring out what to give someone? you negotiate with the person and you look at peers.. plus consultants are conflicted inherently. i like this girl who is speaking, she's grilling the whole conflict-of-interest of these consultants, they are WORSE than home appraiser.
Eleanor Holmes Norton (D-DC): If I didn't have a stutter, I'd be making you look like a corrupt moron.
Exactly... Ame
OOOOOOO nooooo I need some consultant to "assist me" in figuring out how much millions i need. hmmmmmm....let's see??? GRILL HIM HE'S NOT TAN ENOUGH!!
Harley Snyder: We chose to listen to the consultant Angelo hired rather than the one we hired, when it came to negotiating his compensation.
probert at 1:26
yeah...half the dems look impotent...and so far the republicans look like but wipe apologists of the raiders
ice she's grilling hm on the "sign on equity award" (sign on award for the founder)... hehe nice, and shes not stuttering anymore!
I don't think that it's fair to call Norton incompetent. She comes off as smart, and on topic. She just seems to have a speech impediment.
About half an hour ago when one of the directors said "but the shareholders could have sold too". That was disgusting smoke screen. The point is fiduciary duty means to maximize per share value regardless who who owns/trades the shares
Rep. Waxman: Hey, Finnegan, did you use the same buffoon of a consultant Countrywide did? Is that a yes?
"I'm looking for the villain here, and I don't see it." Mr. Issa, you're the villain here!!!
Issa: I'm going to keep talking and talking about how it is perfectly fair to pay executives who fail like Goldman does executives who succeed.
Issa needs to be Obama'ed out of congress...this is crazy
"Keep It Simple, I'm Stupid writes:
Eleanor Holmes Norton (D-DC): If I didn't have a stutter, I'd be making you look like a corrupt moron."
Haha! Even though i look like a little old lady i made you guys look like a bunch o crooks!
How many dividends did CFC give shareholders?
How much per share value creation in buybacks?
What was the terminal value of CFC stock??
Shareholders lost money while CEOs made zero. CEOs barely ever have to give back the money...
To think that Issa represents San Diego's residents... Ha!
Issa cracks me up. I guess you could reword his last thought as: "You are only now being paid for the successful and utter and total screwing of the folks you put into mortgages that they obviously couldn't afford. I applaud you and don't have a problem with these actions."
Cummings is giving them the Gretchen Morgenson treatment. Better than Issa...I guess...
Rep. Elijah Cummings (D-MD): Let's talk about Conutrywide's customers so that we can put a human face on this. I've spent the last hour and a half looking at your orange mug, and it very clearly is not a human face.
Seb,
Well heres some numbers.
6/98 DOLLAR RISES TO 11-YEAR HIGH IN JUNE
Dollar Index - July 1998
113.62.
Currently,
~73.06.
Delta -35.7%. S&P gains not looking so good now.
But number models only work until they dont. Other things that make today unlike 98.
Rising unemployment.
Largest credit bubble EVER bursting.
Last 5 years some 30-40% of growth due to housing related activities.
Nope, not screaming buy to me.
Cheers,
Cummings is speaking the truth, but I'd rather actually be asking Mozilo questions about this.
"Golden parachutes dripping off to the golf fields".
best. hearing. ever.
Rep Edolphus Towns (D-NY): Parsons, why would a brother sell out to the finance companies?
Parsons: Why, yes, we do scratch each others backs.
A war for talent
hhhhhhhaahahahaha
mooohahahahaa
ROTLFLMAO
stop it!!! stop it Mr. Parsons!!!
HUH???
those TALENTED people who didn't see how mass-availability of option ARMs is a bad thing?????????????????????????????????????????????????????????????????????
"shareholders approved it"
CORRECTION:
"F***ed up institutional shareholders gave a silent careless nod to it"
Ramen:
Good one!
Seriously folks, does anyone believe the Republicans any more? I'm not saying that the Dems don't have their own baggage, but next to these turncoat dissemblers, they look like...
...well, actually, they look like my namesake, Marcus Aurelius.
Man America has come a long way since the early 1960's
YouTube - MALCOLM X: THE HOUSE NEGRO AND THE FIELD NEGRO
There is hope yet surely.
Can someone please come here and force me to close my cspan.org window? I can't anymore...I can't...
Rep. Paul Kanjorski (D-PA): I dont want you guys to think that Im beating up on you while I drop this sledgehammer on your hands.
But these hedge fund managers didn't lose money!!
I knew I shouldn't have tried to hack the Direct TV box in the conference room.
Cheers,
Dang! I was curious why probert's cspan.org window wouldn't close, so I tried closing mine...
Going to that link again...
Mozilo: We want people to take risks, unless those risks threaten me.
My favorite so far (paraphrasing)from one of the CEO's to a sceptical observaton: "I have a number of responses to that, but I won't repeat them here."
Chuck Prince: "the lending deteriorated in 2006"
??????????
hello...??
Prince: The damage was all done on my watch. Don't examine my previous statements.
rep paul kanjorski, somebody comming to the heart of the matter
Mortgage CEO: "I am too rich to answer the question here"
paul kanjorski is preventing me from closing the window kindof like how the PPT prevents the dow from falling.
Mozilo: Future? What's the future?
Mozilo: white skin? what's white skin?
fair economist = clueless
inflation hedge - stocks were at 7x in the seventies before inflation blew off the top. If you have been in corproate bonds you have had it handed to you with spreads blowing out. Stocks are at best fair value (as buffet says) and that is if you belive the yoeld curve is reasonable which it isn't. we have peak margins and artificailly low yields (being offset BTW by rapidly expanding credit spreads/risk premium for your DCFs). One way or the other companies - no wait employees - are screwed. They either take it on the margin or they take it on the top line because no one can afford to buy thier products as everything is inflating except wages. That doesn't sound like a buy and hold strategy for stocks to me - not to mention lower secular growth rates for the US economy broadly. why is a 15 multiple the right multiple? why not 11. If you think 30 is reasonable you need to get your head checked.
She's the smartest, really. She's focusing on the compensation consultants and the failures in our BOD system.
Mozillo: "These loans were put into very complex securities, tranches and such..."
No shit!
Does Mozilo qualify as a diversity hiring?
I'm waiting--in vain--for the questioning to head in this direction:
Mr. Mozilo, in your prepared remarks you indicate that (1) mortgage underwriting standards need to be relaxed and (2) investors need to be guaranteed that the loans will be repaid.
It goes without saying that your own company would profit handsomely from originating and servicing such loans.
Two questions, sir:
Parsons: Chuck told you not to examine his previous statements.
I'm surprised that the market isn't back over 14000, what with this stunning demonstration of selflessness and integrity before Congress.
Ya the display of republican power...
paraphrasing at the hearings
rep paul kanjorski
question
... are you sufficiently compensated... are you due more...well would you say that a trillion dollars would be enuf or too much?
mozillo
answer
...well i don't know..i cant say, i don't want to put limits on the system... tax rates as compensation goes up is not my concern....the concern of congress..
(my comment...greed knows no limit, thank God for Buffet and Gates, entrepreneurs with a conscience)
Sebastian,
So you are predicting earnings growth for 2008 - 2010 will equal earnings growth for 1998 - 2000. Good luck!
Why are these people running the biggest companies in the world...???? Can someone tell me?
Unfortunately, Norton let herself get dragged into a morass of a discussion on what the definition of "compensation" is.
Mozilo: Being offered a few million dollars in compensation is showing me a lack of respect.
100% chance, nearly, of a Fed Funds Rate cut to 2.25% on 3/38 based upon the current futures market. My, how close we are to 0%. How much pain are we in for when we get down to 1% or less and this doesn't stop. That will be what we call capitulation.......
paraphrasing from the current congressional hearings
rep paul kanjorski
question
when you saw that 18 percent of the new home owners were failing to make the first mortgage payment didn't you realize that the loan qualifications procedure was deficient?
mozillo
answer
well these mortgages were mixed together in tranches of larger securities and there was no way for us to know about this.
(my comments, really...go to jail, go directly to jail,,,do not pass go)
Mozilo: "I tend to be an emotional individual"
Emotion is bad for business. He is not competent to run CFC? War for talent?????????????????
How much is enough for these guys?
Cummings I love you.
Mozilo: I'd rather that my employees run the investigation than your employees do, Mr. Cummings.
probert, i can answer
i grew up in an affluent family.
i am not, but had a chance to mix with the wealthy.
yes many, not all are smart...
BUT
to a man... to a woman they are VERY aggressive...they elbow their way to the front of the line and DEMAND "ME FIRST..I'm more deserving"
additionally, they understand loyalty and fealty no matter what...
they are subservient to their superiors and ruthless with their competitors and subordinates.
not 21st century people.
The wife is an important part because no other woman is attracted to my ta
Mozilo: Geez, that memo looks bad. In retrospect, I really wish I hadn't written it.
what about this issue??
Yves,
Are you aware of this: Poole is an influential Fed official who voted against the central bank's emergency rate cut of three quarters of a percentage point on January 22. He does not currently sit on the rate-setting Federal Open Market Committee, however, and he is retiring from the Fed shortly after next month's meeting.
I feel dirty, time to give up watching this travesty.
Financially Illiterate,
I'm still here and I expect the same from you... come on...
Cannon: Mortgage servicers will save the country. I also don't understand correlations.
Sebastian wrote "The U.S. is the only country for which there is reasonably-adequate current and historical economic and stock-market data available for serious analysis, so that's where my focus is. I'm telling you that U.S. stocks are at the best long-run valuation levels since 2002, and a screaming buy"
Sebastian, you should take a look at a LONG term P/E vs time chart!
P/E's reached market lows of 5 to 7 in 1921, 1932 and 1981. Take a look at what happens in BEAR markets!
The fallacy with looking at 2002 is:
1) effect of 1990's buble in .net stocks
2) precluding natural drop to historical lows P/E by Greenspan bubble in real estate market
Therefore: market P/E's are over long term average of 14, and NOWHERE near historical lows for bear markets.
stop listening to CNBC!
Republican congressman: "You operate a capitalistic enterprise right?"
CEO: "Right"
Republican congressman: "Ok, let the record reflect that this CEO is a good man"
Oompaloompa is pretending to be jimmy stewart in it's a wonderful life. awesome.
Yes Mozillo, Gretchen HAS written many articles! First smart thing he says.
Mozilo: It would be stupid of us to make loans that couldn't be repaid. Please ignore all of the earlier comments about securitization.
Chris Cannon: The big superhero with a CC written on his chest. Oh boy...
Mozilo: "Blue is red"
Republican congressman desperate for donations: "Exactly! And black is white!"
Mozilo: "Exactly!"
phone number exchange...They're hooking up.... here we go...next scandal in the making!
Yes Mr. Issa? What other stupidity do you want to talk about??
Issa: All of us make sure that we're reimbursed for our spouses' travel.
Sad day for America... we need Obama NOW, that's all i have to say. I never go this far on business blogs. Now I'm saying it. We need Obama.
Obama or not, we don't need McCain.
Hey, Issa: How much money does a Congressional wife earn in that capacity?
i cant watch any more
when congress let's moxillo get away with saying,
paraphrasing)
hey we never expected these loans to fail...
we had no reason to believe...
their wer no models a year or two years ago...
"this all happened with a week..."
when home owners loose we loose...
(i say bull s#i^)
(the barbarians are at the gate)
I hope it's a Citizen Barbarian.
Waxman: When you fired O'Neill, why didn't you save the company $125 million by actually firing him?
Finnegan: It isn't just O'Neill that can't be fired for incompetence, it's all 10,000 of our executives that we can't fire for incompetence.
OT: Goldman says $200 dollar a barrel oil coming to a tv near you.
When Bush took office....
Wasn't oil like 24 bucks a barrel? When do "we the people" say enough is enough?
Chimpy Mcflysuite talks on tv with s*** all over his face...like we don't know where his heads been... where are the crowds with torches and pitch forks? Do we have to wait until gas is $5 or $10 dollars a gallon and unemployment hits 20%? ...some have talked about Guns and Ammo...and I brushed that off as silly talk...well i am starting to become a believer.
OT: Goldman says $200 dollar a barrel oil coming to a tv near you.
When Bush took office....
Wasn't oil like 24 bucks a barrel? When do "we the people" say enough is enough?
Chimpy Mcflysuite talks on tv with s*** all over his face...like we don't know where his heads been... where are the crowds with torches and pitch forks? Do we have to wait until gas is $5 or $10 dollars a gallon and unemployment hits 20%? ...some have talked about Guns and Ammo...and I brushed that off as silly talk...well i am starting to become a believer.
Anonymous | 03.07.08 - 2:33 pm |
Bush is on now. Our MBA President.
waxman did a nice wrapup. time for the market to do it's 2:30 rebound.
i think the ceo's should have more skin in the game. actual flesh, theirs of course.
Shouldn't he be out resurrecting the brain dead?
Bush: "We believe in voodoo"
If you get enough skin from Mozillo, you could make an alligator purse.
Now Cuba... man the guy's busy. it's tough to be president. (I'm serious this time)
Cuba? WTF? Cuba hasn't been an issue since the '60s. I'm serious, too.
Bush comment on people unjustly arrested - by Cuba. Too. Freekin'. Much.
I think he's trying to convey that giving Cuba the benefit of the doubt is a bit too crazy, and I guess I'd agree with the president...but what do i know..
Hey... it's 2:37...anyone wanna join me in taunting the PPT to come back
Isn't Gitmo in Cuba?
anonymous (hey get a handle...be friendly ok?)
re your post
guns and ammo is not an insurance policy against our problems
for 1/10th the money spent trying to secure oil fields in iraq we could be energy independent!!!!
problem is haliburton, exxon mobil et al might have to share under the "new" energy rubric and they don't like that.
for less than 1 trillion dollars we can create a hydrogen energy infrastructure. the source for the electricity (to split H2O into H and O is hydro electric dams, clean coal, geothermal, nuclear, wind, solar...anything we can get our hands on.
and all cars burn hydrogen (internal combustion engine i.e. like BMW etc) or go electric (hydrogen electric fuel cell...nasa)
the masters at the top are standing in the way....vote like your life depended on it...and that of your childre
Isn't Gitmo in Cuba?
It's at the freedom worshipping end of Cuba.
We tried that voting thing you speak of in 2000...look where it has gotten us...I with you on the Guns and ammo.
I just pulled my property tax assessment for 2008 out of my mailbox. According to the city of Minneapolis, the assessed value of my duplex dropped from $272,000 to $251,500.
I have always despised Darrel Issa since I found out he made his fortune selling loud car alarms, one of the worst inventions ever.
Fair Economist writes:
I have to agree with Sebastian that stocks are a reasonable investment.
True. If by "reasonable" you mean "insane".
Marcus Aurelius | 03.07.08 - 11:49 am | #
Depends on the stock. Chevron at 9.8x trailing, 2.4x Bv and a 2.6% yield doesn't look to hateful. XOM, COP simalarly priced. RIG at under 10x trailing and owning the biggest fleet of deep drilling rigs (i.e the only place we will likely find significant amounts of oil is in deep water, and if you want to get to it you have to come to RIG, good luck trying to scuba dive down to 6000' of water and then drill a hole 10,000' into the seabed) looks pretty attractive to me.
Mozillo needs a drano enema, so does O'Neil, Prince, and Issa