From www.ft.com...can't believe the credit crunch isn't over...oh wait, yes, I can:
The high-grade derivatives index has widened to 138 basis points after being as low as 90bp in mid-May. The Merrill Lynch US High-Yield Master II index, the benchmark for the high-yield cash market, is showing a spread of more than 700bp over US Treasuries, compared to 637bp on June 16. In March, the high-grade derivatives index reached 193bp, according to Markit, while spreads on cash junk bonds topped 850bp.
For a while last year we were half-believing Bernanke's 100 billion total mortgage-related worldwide writedowns.
Numbers around a trillion have been booted around recently. Presumably comes from assuming real estate drops another 20% maybe and that all under-water mortgages then default. Seems like reasonable assumptions.
How about Merrill Brothers & Lehman Lynch, citing synergies and efficiencies, write down post-merger the last write-down for $100Bill, and promise healthy profits (and ponies) from now on...we promise.
The millions of economic stimulus payments gave a massive jolt to household finanances in May, sending after-tax incomes up by the largest amount in 33 years.
In other news, economists are reporting that 10 plus 1 is 11. They also report that 11 is larger than 10.
I smell a nice big rise today, as our long economic nightmare is over, with ponies for everybody:
June 27 (Bloomberg) -- Spending by U.S. consumers rose more than forecast in May as the tax rebates propelled the biggest gain in incomes in almost three years, enabling households to overcome soaring fuel bills.
The 0.8 percent rise in purchases was the biggest since November, the Commerce Department said today in Washington. Incomes grew 1.9 percent, the most since September 2005, and measures of inflation were lower than anticipated.
enabling households to overcome soaring fuel bills.>>
I'm so glad that the duped everyone into thinking they would get the max of $1200...so they could , in reality, get $600 so they could give it back to the oil producing states.
Anyone without children and taxable income way above the cut off get only $600???
Most of my friends fall into that category and they only got $600...
This company is BK, just everyone that holds level III notations of value.
This continuous charade of dishonesty has undermined the respect and terminated the trust of every smart investor. The game being played is "You No Look!" It's BS, puerile, and has undermined authority as well as been foolish.
The consequences are, among others much more severe, the FT-launched opinionated observation, "The FedRes is not credible."
The future is the only relevant focus. ML is BK; so are dozens of other financial companies. What is next? What should happen? What will happen?
How will the transition occur?
If this charade continues, imo one fine day Richard Cory will come home and recognize he's put a bullet in his head, and the rest of the world will agree, fleeing the crime scene. Total loss of faith in the USD is a reasonable possibility. I certainly don't hope for it; but it would be equally foolish not to ignore this possibility.
BB, the video with Mark Faber is great. Thanks. He and Roubini have this thing pegged pretty good (ie, the Fed's monetary policy, if they have one, is becoming a joke).
Oh, and as I'm yet miffed, CR would be more moderate in his assessment of this situation, more along the lines of a 20% haircut. It's baseless to think this way, and if one bet on Shiller or CR, one would be at best, underwater about 20%.
When the opinions here and analyses get real, like Tanta's no punches pulled, we can see the future more clearly. The hoocudanode talk, on the way to the gallows, wouldn't be so prevalent.
OT: JP, isn't there a restitution step in confession? I can't see that flying.
I'm not a good catholic, in fact I'm not even a good ex-catholic. My memory from childhood is that the priest doles out "penance" which is how you make your peace with god. Restitution might be part of that at his discretion. And surprise! making a donation to the church was often a part of penance in past centuries. Yes, you could buy your way back into heaven.
Does anyone know what the final BofA decision was regarding assuming Countrwide debt? I would have thought this is an issue that needed to be closed on prior to finalizing the merger.
Is it possible that BofA will actually just acquite "bits" of CFC but actually leave a shell behind to go into bankruptcy?
Looking at how the comments on the past few threads peaked when things started to go south, I was thinking we could do some interesting regression analysis by building some metrics out of the number and length of posts and the number of visitors- a sort of Calculated Risk Volatility Index.
The CRVIX would be an excellent indicator of to what degree blogosphere traffic thinks things are going to hell in a handbasket.
Credit markets are surprisingly calm today, considering that stocks are in the teeth of a bear market and pretty much every major financial institution in the world will be taking a multi-billion dollar writedown this quarter. Then again, I suppose a good analogy is when you work with the criminally insane long enough, one's notion of calm might become a little distorted. We're a very, very long way departed from a "normal" operating environment.
How many more write-downs till we hit the $100 bill. mark that Uncle Ben was talking about?
P.S. Once we hit 100 bill. Ben will find "Shalom".LOL
Meanwhile, Shalom to all of you!
The millions of economic stimulus payments gave a massive jolt to household finanances in May, sending after-tax incomes up by the largest amount in 33 years.
This is how it starts.
These little jolts of consumer spending feel good and seem to work.
But nearly all the problems we have today are due to focusing excessively on consumption as a driver of the US economy at the cost of neglecting investment in production and the wealth creation needed to sustain that consumption without relying on foreign charity.
So I wonder how much good it's going to do to keep handing out money to stimulate the behavior that is at the root of our economic problems as well as cultivating an expectation of receiving money without having done some productive activity in return.
I don't believe that a nation of consumers waiting around for the next helicopter drop to make a run for the shopping mall has much of a future.
We're giving people the means to consume without producing. We're reinforcing that old habit that lead us to where we are now.
Training people to think that shopping is the most important way to contribute to economic growth is going to create a nation of consumers with nothing to offer in return for the goods they want.
"Your kids shall suffer the decline of living standards."
And how much of life in the US today is really a 'higher' standard of living than 2, 3 or 4 decades ago? SUVs? Flat screen LCDs? Better music? Better politics? Life in the exurbs?
I like the CRVIX idea. Another CR index might be the daily number of Sebastian posts. Kind of a contrarian indicator - greater than 5, he's getting cocky and time to sell equities. Two or less, he's hiding under the bed, watching his portfolio disintigrate, time to cover shorts and consider going long. I'd say the CRVIX and SebCon indicators argue against being aggressively short here, but aren't quite flashing buy.
Margin Call of Cthulhu - go big, think multivariate. Build a bunch of the Indexes and run a lot of comparisons. We might be able to infer which hand-basket is currently moving fastest toward which exact hell. Because the blogosphere is always in a tizzy somewhere. Wait, then maybe we could tranche the various tizzies, re-bundle them, re-measure and prove that the innertubz and the handbaskets are actually stable.
I think I need to get back to work now. Reality is too much to take at the moment.
One of Sebastian's bright spots (selling smaller homes on same lots goosed sales for KB in SoCal, light at the end of the tunnel!!)
KB Home, the No. 5 U.S. home builder, posted a deeper quarterly loss on Friday on tumbling revenue as the United States faced its deepest housing slump in months.
KB reported a net loss of $255.9 million, or $3.30 per share, in its second quarter, compared with a loss of $148.7 million, or $1.93 per share, last year.
I deliberately didn't decide what to do with my $1,200 rebate until I had it in hand. I wanted to actually have the money first.
On the night before the rebate check arrived, a hot water heater started leaking and flooded the basement.
The next day, a plumber installed a brand new hot water heater for $1,600 (labor and taxes included). So, I lost $400 that day. But I helped out the economy.
You now have to replace hot water heaters every 6-10 years. Like the plumber said: "When they spring a leak, they're gone, because they make them so we can't get inside to see where the leak is."
UBS, Barclays, HSBC, RBS, SocGen, Credit Suisse, Deutsche, a number of German Landesbanks - Spanish, Italian, Irish and UK banks have their own home-grown property-lending debacles brewing. Every sovereign wealth fund that has bought mbs...need I keep going?
The nasty little secret about U.S. living standards is that they really haven't improved all that much for a while.
Most "new" products out there feature only minor tweaks on existing products. What are they going to come up with when your iPhone also comes with a nose hair clipper?
Imagination is at an all-time low; hype at an all-time high.
Reuters
AIG to lose up to $5 billion from investments: report
Friday June 27, 6:57 am ET
NEW YORK (Reuters) - American International Group Inc (NYSE:AIG - News) said it planned to absorb up to $5 billion on losses of sales of investments from a dozen insurance units hit by the subprime meltdown, Bloomberg News reported on Friday.
In an interview, Christopher Swift, vice president for life and retirement services, also told Bloomberg that AIG would inject an undisclosed amount of capital into some of the subsidiaries.
The world's largest insurer had previously said it would take $500 million of losses on investment sales after the units' securities-lending accounts took $13 billion of write-downs tied to the subprime-mortgage collapse during the past year, Bloomberg reported.
Such losses were factors cited by ratings agency Moody's when it downgraded AIG's credit ratings and kept its outlook negati
TAF being extended to 3 months. The fed could hike fed funds 50-75bps, and it would have no impact on real borrowing costs (since the interbank system is totally broken at the moment) if they keep the system liquid. They may be finding at least one vertebrate of a spine.
UBS, Barclays, HSBC, RBS, SocGen, Credit Suisse, Deutsche, a number of German Landesbanks - Spanish, Italian, Irish and UK banks have their own home-grown property-lending debacles brewing. Every sovereign wealth fund that has bought mbs...need I keep going?
Turbo
SocGen had writedowns due to a bad trade and haven't had one since, Deutche Bank had one and was smaller than any other bank, 1 piddling ostlandesbank was absorbed.
The rest of your list aren't eurozone banks(as I had written above), they're European banks. Have any banks in Spain or Ireland had writedowns or gone TU? Italy? Greece?
btw, there was a phaseout of those stimulus checks..
Phase Out: The stimulus payment both the basic component and the additional funds for qualifying children begins to phase out for individuals with adjusted gross incomes (AGI) over $75,000 and married couples who file a joint return with AGI over $150,000. The combined payment is reduced by 5 percent of the income above the AGI thresholds.
Alec writes: Margin Call of Cthulhu,
Just make sure when the day comes, eat me first.
LOL. A few folks get the name, but I think everyone else thinks, "who the F&*# is that guy and why can't he spell?"
scav writes: the blogosphere is always in a tizzy somewhere. Wait, then maybe we could tranche the various tizzies, re-bundle them, re-measure and prove that the innertubz and the handbaskets are actually stable.
Scav, I think what you've described is a Total Information Awareness SPDR. This is both chilling and brilliant. I imagine Dick Cheney will be calling you shortly. Congratulations!
Feel free to invest in the Eurozone bank of your choice Alec. I think you'll find those that largely escaped the US subprime debacle are sitting on a mountain of dodgy lbo and commercial property loans they will start writing down this quarter. But then again, what do I know, since I only trade the crap. Global banks are pack animals - they all ramped up at the wrong time - it's just a question of which bad market they chose to ramp up in, and what stage of unwind that market is in. Of course some will emerge better than others, but they will all be sharing the pain.
MS said:
I'm so glad that the duped everyone into thinking they would get the max of $1200...so they could , in reality, get $600 so they could give it back to the oil producing states.
I ended up with the max, $1200+300 for 1 kid. Heard from the rest of the family recently that none of them got the full amount. I put half of mine in gold and used half for other expenses (like my wifes $4k dental work). I knew I was getting the max since we only have a 1-income family.
What's more funny is that the tax rebate wasn't adjusted based on locality.
Financial put premiums have been and continue to be utterly criminal and in no way is reflecting the current environment-share price. THey have already priced in the "thump" to come.
ANd it gets no mention at all.
Yesterday's action on most was bordering on total thievery. That doesn't mean I do not have some though......
And from what I see in terms of daily financing requirements, and what banks are required to pay for it, the Eurozone banks may be in the worst shape of any of the developed world's banks. But like I said, other than the fact that I see it every day, what could I possibly know.
I've written repeatedly who I'm putting my money on when the time is right, Turbo, I just want the name of those eurozone banks that have the huge writedowns like America beyond what's been mentioned.
BBVA? Santander? Irish Permanent? Their bubbles have burst, where's the writedowns?
You may trade the crap, but I've yet to see it. Could it be that since eurozone markets have traditionally been banking rather than equities driven that possibly that they have better regulator oversight and internal controls(SocGen excluded)?
I'm starting to believe that there really is no "guidelines" as they are published. They may have them however (and since we can't really look at each others returns) they seem like Leonard the wonder monkey is throwing darts at his board again.
You continue to blame everyone but yourself regarding option pricing. The fact is that listed equity options are a highly liquid and efficient market. Any moderate kind of mispricing is immediately arb'd by any number of profressional banks, funds, trading groups.
When we discussed this a week ago I suggested that you pick up a book and learn about the investment vehicle you are trading. Pick up Natenberg's "Option Volatility and Pricing" and stop embarrassing yourself.
can someone remind me, who DOESN'T get a stimulus check
Me. I'm single, childless and evidently not american enough to be stimulated. Pity because I would have spent it on something I don't need to do my patriotic duty.
Interesting to compare stimulus check discussions with the CR survey income results. Skewed data somewhere. Variable of commenting vs noncommenting might explain the difference.
Me. I'm single, childless and evidently not american enough to be stimulated. Pity because I would have spent it on something I don't need to do my patriotic duty.
ipodius | 06.27.08 - 10:50 am | #
Uh, my wife and I are childless and we rec'd $1200 direct deposit. It is $600/ person PLUS $300/child . . . for people who paid taxes.
iposius, I suspect the reason you got no rebate is because you're a deadbeat. They are diverting checks for (1) child support (2) federal taxes owed and (3) state taxes owed - and rightly so.
The rest of you with no kids, your check may not have been processed yet. For electronic filers and those using direct deposit, I believe the process is faster.
I still think it was a shitty policy, and I used mine to pay off debt.
Pfft. I"ve got you pegged, d-bag. You hate paying taxes, cheat when you can, and consider yourself a "patriot". You are a free-riding scumbag. I've been paying my taxes since I was sixteen.
You are a selfish turd with no sense of civic responsibility . . . out only for yourself.
I really can't be that specific. I probably shouldn't even be making generic comments on this blog. Europe is relatively more dependent on bank balance sheets than capital markets compared to the US, so general financial problems can hit Eurozone banks harder, even if the problems in their zone are less severe, just because they are ultimately a relatively larger bagholder. That's certainly what the price action in wholesale debt markets is telling me. Bust to bank writeoffs comes with a lag, as we're seeing in the US. The Eurozone banks are also heavily involved in the insane credit growth that has been, and still is, going on in eastern Europe, which I believe will end in tears next year. "Western standards" housing in Prague is now more expensive than London - I don't think I want to be investing the banks making those loans. I also have the view that Europe is only lagging the US, and Eurozone data has definately deteriorated of late - plus you have the ECB about to tighten in an environment where most Eurozone banks are seriously struggling for reasonably priced funding. Nothing I see makes me near-term bullish on European banks.
I have not seen mine yet, sort of like Ipod, not childless, but child support payments are not reflected in AGI. Every time they pass these tax plans that help families (i.e. increase child credits) they just screw divorced dads...so what else is new.
And I was actually thinking yesterday: "Gee, Merrill is trading at a market cap that's a lot further above assets for the industry right now, and they don't have any reason to be squeaky clean. Maybe the puts at $25 are a great value at .43 apiece."
We're a single earner family with three kids and received our check for $2100 which promptly disappeared when our eight year old minivan needed $2000 in repairs. It actually came at a good time for us.
Just doin' my part to help us all live the Murkin Dream!
Has anyone calculated how much more in "writedowns" these financial institutions can take without disappearing entirely? Assuming they don't get more input from abroad.
If these operations are too big to be allowed to fail, they are too big to remain so immune to regulation.
And, how does a bank or investment house have billions in write-downs and stay in business? I ask in all honesty, cause I really don't understand this.
Anyone know how we'll tell when the write downs are over? Is there anything to look for? (Other than them not having any assets to write down?)
TIA
Ususally when my sales drop, the writeoffs are over. Currently the line extends out the door. I only take cash.
Gosh, you mean when the mortgages that make up those AAA rated alt-A packages hit reset or neg am limits, they default?
Hoocoodanode!
Cheers,
I thought "John Thain" rhymed with "contained"?
The writeoffs will be over when the Fed raises rates, at that point the banks either sink or swim.
They've had the innertube for 9 months, water wings since january..
From www.ft.com...can't believe the credit crunch isn't over...oh wait, yes, I can:
The high-grade derivatives index has widened to 138 basis points after being as low as 90bp in mid-May. The Merrill Lynch US High-Yield Master II index, the benchmark for the high-yield cash market, is showing a spread of more than 700bp over US Treasuries, compared to 637bp on June 16. In March, the high-grade derivatives index reached 193bp, according to Markit, while spreads on cash junk bonds topped 850bp.
Remember the ad on TV?
"My broker is Merrill Lynch, and they are saying...."
Everyone in the room leans in to listen....
"Run for the hills!"
Oil plunges to $139!
When do we know writedowns are over?
For a while last year we were half-believing Bernanke's 100 billion total mortgage-related worldwide writedowns.
Numbers around a trillion have been booted around recently. Presumably comes from assuming real estate drops another 20% maybe and that all under-water mortgages then default. Seems like reasonable assumptions.
How about Merrill Brothers & Lehman Lynch, citing synergies and efficiencies, write down post-merger the last write-down for $100Bill, and promise healthy profits (and ponies) from now on...we promise.
Yahoo is now headlining that household incomes were up. The lead paragraph:
The millions of economic stimulus payments gave a massive jolt to household finanances in May, sending after-tax incomes up by the largest amount in 33 years.
In other news, economists are reporting that 10 plus 1 is 11. They also report that 11 is larger than 10.
NSA posted:
Remember the ad on TV?
"My broker is Merrill Lynch, and they are saying...."
Everyone in the room leans in to listen....
"Run for the hills!"
ROFL. At the risk of being a spoilsport, wasn't that an E F Hutton ad?
NSA writes:
Remember the ad on TV?
"My broker is Merrill Lynch, and they are saying...."
Everyone in the room leans in to listen....
"Run for the hills!"
Um... that was E.F. Hutton.
Confessional? "Forgive me father for I have sinned. I have made many many loans against worthless assets."
Now the question is: What is the penance?
I smell a nice big rise today, as our long economic nightmare is over, with ponies for everybody:
June 27 (Bloomberg) -- Spending by U.S. consumers rose more than forecast in May as the tax rebates propelled the biggest gain in incomes in almost three years, enabling households to overcome soaring fuel bills.
The 0.8 percent rise in purchases was the biggest since November, the Commerce Department said today in Washington. Incomes grew 1.9 percent, the most since September 2005, and measures of inflation were lower than anticipated.
JP writes:
Now the question is: What is the penance?
Your kids shall suffer the decline of living standards.
"measures of inflation were lower than anticipated"--
and actual inflation is much higher than is measured, as ought to be obvious to anyone who does their own grocery shopping.
Thanks for the quote.
I'm so glad that the duped everyone into thinking they would get the max of $1200...so they could , in reality, get $600 so they could give it back to the oil producing states.
Anyone without children and taxable income way above the cut off get only $600???
Most of my friends fall into that category and they only got $600...
Ciao
MS
If they say "Invest in what you know," I'm not sure how anyone can know what is going on inside these black boxes. Least of all the guys running them
JP, isn't there a restitution step in confession? <Insert non-Catholic warning> I can't see that flying.
The therapy:
Oil $150 by July 4th, as prescribed by Dr. Goldman Sachs
This company is BK, just everyone that holds level III notations of value.
This continuous charade of dishonesty has undermined the respect and terminated the trust of every smart investor. The game being played is "You No Look!" It's BS, puerile, and has undermined authority as well as been foolish.
The consequences are, among others much more severe, the FT-launched opinionated observation, "The FedRes is not credible."
The future is the only relevant focus. ML is BK; so are dozens of other financial companies. What is next? What should happen? What will happen?
How will the transition occur?
If this charade continues, imo one fine day Richard Cory will come home and recognize he's put a bullet in his head, and the rest of the world will agree, fleeing the crime scene. Total loss of faith in the USD is a reasonable possibility. I certainly don't hope for it; but it would be equally foolish not to ignore this possibility.
You're right, E.F. Hutton.
BB, the video with Mark Faber is great. Thanks. He and Roubini have this thing pegged pretty good (ie, the Fed's monetary policy, if they have one, is becoming a joke).
His laugh sounds a little like Dr. Evil, though.
Oh, and as I'm yet miffed, CR would be more moderate in his assessment of this situation, more along the lines of a 20% haircut. It's baseless to think this way, and if one bet on Shiller or CR, one would be at best, underwater about 20%.
When the opinions here and analyses get real, like Tanta's no punches pulled, we can see the future more clearly. The hoocudanode talk, on the way to the gallows, wouldn't be so prevalent.
OT: JP, isn't there a restitution step in confession? I can't see that flying.
I'm not a good catholic, in fact I'm not even a good ex-catholic. My memory from childhood is that the priest doles out "penance" which is how you make your peace with god. Restitution might be part of that at his discretion. And surprise! making a donation to the church was often a part of penance in past centuries. Yes, you could buy your way back into heaven.
If only it were that simple for the banks.
I knew all this pessimism couldn't last. Consumer spending skyrockets .8% largely due to the rebates.
All we need now now is another couple dozen trillion in fresh rebates and we'll be out of the woods.
(Btw, I've always wondered: if an economist falls in the woods, does anyone care?)
NSA writes:
His laugh sounds a little like Dr. Evil, though.
Love the way he takes a good whack at Ben, every time he appears on tv and every chance he gets.
For someone who saw the start of the commodity boom in the early years, I have a lot of respect for him. Besides he's not an armchair economist.
Leftys Liquors writes:
"Ususally when my sales drop, the writeoffs are over. Currently the line extends out the door."
From Idaho: http://www.ktvb.com/news/localnews/stories/ktvbn-jun2408-liquor_sales.367d82cd.html
Anonymous Bosch,
"if an economist falls in the woods, does anyone care?"
No.
Cheers,
Indulgences will not save the market, sinners!!!
Where's my hammer & nails, I've almost got my draft done.
Okay, lemme reiterate my predictions that i made yesterday, equity markets to selloff again.
Gold is a dissapointment, didn;t quite reach 930 even in asian trade. But let's see how the eurodollar does again.
Anyone else have any ideas?
Does anyone know what the final BofA decision was regarding assuming Countrwide debt? I would have thought this is an issue that needed to be closed on prior to finalizing the merger.
Is it possible that BofA will actually just acquite "bits" of CFC but actually leave a shell behind to go into bankruptcy?
Looking at how the comments on the past few threads peaked when things started to go south, I was thinking we could do some interesting regression analysis by building some metrics out of the number and length of posts and the number of visitors- a sort of Calculated Risk Volatility Index.
The CRVIX would be an excellent indicator of to what degree blogosphere traffic thinks things are going to hell in a handbasket.
Credit markets are surprisingly calm today, considering that stocks are in the teeth of a bear market and pretty much every major financial institution in the world will be taking a multi-billion dollar writedown this quarter. Then again, I suppose a good analogy is when you work with the criminally insane long enough, one's notion of calm might become a little distorted. We're a very, very long way departed from a "normal" operating environment.
How many more write-downs till we hit the $100 bill. mark that Uncle Ben was talking about?
P.S. Once we hit 100 bill. Ben will find "Shalom".LOL
Meanwhile, Shalom to all of you!
JP, there is no such thing as an ex Catholic,
The millions of economic stimulus payments gave a massive jolt to household finanances in May, sending after-tax incomes up by the largest amount in 33 years.
This is how it starts.
These little jolts of consumer spending feel good and seem to work.
But nearly all the problems we have today are due to focusing excessively on consumption as a driver of the US economy at the cost of neglecting investment in production and the wealth creation needed to sustain that consumption without relying on foreign charity.
So I wonder how much good it's going to do to keep handing out money to stimulate the behavior that is at the root of our economic problems as well as cultivating an expectation of receiving money without having done some productive activity in return.
I don't believe that a nation of consumers waiting around for the next helicopter drop to make a run for the shopping mall has much of a future.
We're giving people the means to consume without producing. We're reinforcing that old habit that lead us to where we are now.
Training people to think that shopping is the most important way to contribute to economic growth is going to create a nation of consumers with nothing to offer in return for the goods they want.
I think that is called poverty.
"Your kids shall suffer the decline of living standards."
And how much of life in the US today is really a 'higher' standard of living than 2, 3 or 4 decades ago? SUVs? Flat screen LCDs? Better music? Better politics? Life in the exurbs?
I like the CRVIX idea. Another CR index might be the daily number of Sebastian posts. Kind of a contrarian indicator - greater than 5, he's getting cocky and time to sell equities. Two or less, he's hiding under the bed, watching his portfolio disintigrate, time to cover shorts and consider going long. I'd say the CRVIX and SebCon indicators argue against being aggressively short here, but aren't quite flashing buy.
pretty much every major financial institution in the world will be taking a multi-billion dollar writedown this quarter.
Where are all those eurozone bank writedowns? Still waiting on those.
Wells Fargo yes(but not announced), Citi yes(and big).
All I know is my buddy in Charlotte is going on holiday right in the face of the end of Q and earnings announcements with not a worry in the world.
Margin Call of Cthulhu - go big, think multivariate. Build a bunch of the Indexes and run a lot of comparisons. We might be able to infer which hand-basket is currently moving fastest toward which exact hell. Because the blogosphere is always in a tizzy somewhere. Wait, then maybe we could tranche the various tizzies, re-bundle them, re-measure and prove that the innertubz and the handbaskets are actually stable.
I think I need to get back to work now. Reality is too much to take at the moment.
One of Sebastian's bright spots (selling smaller homes on same lots goosed sales for KB in SoCal, light at the end of the tunnel!!)
KB Home, the No. 5 U.S. home builder, posted a deeper quarterly loss on Friday on tumbling revenue as the United States faced its deepest housing slump in months.
KB reported a net loss of $255.9 million, or $3.30 per share, in its second quarter, compared with a loss of $148.7 million, or $1.93 per share, last year.
Sure does know how to pick em.
U.S. June consumer sentiment index 3rd lowest since 1952.
Margin Call of Cthulhu,
Just make sure when the day comes, eat me first.
This is a true rebate story.
I deliberately didn't decide what to do with my $1,200 rebate until I had it in hand. I wanted to actually have the money first.
On the night before the rebate check arrived, a hot water heater started leaking and flooded the basement.
The next day, a plumber installed a brand new hot water heater for $1,600 (labor and taxes included). So, I lost $400 that day. But I helped out the economy.
You now have to replace hot water heaters every 6-10 years. Like the plumber said: "When they spring a leak, they're gone, because they make them so we can't get inside to see where the leak is."
Isn't it a little like the U.S. economy?
UBS, Barclays, HSBC, RBS, SocGen, Credit Suisse, Deutsche, a number of German Landesbanks - Spanish, Italian, Irish and UK banks have their own home-grown property-lending debacles brewing. Every sovereign wealth fund that has bought mbs...need I keep going?
The nasty little secret about U.S. living standards is that they really haven't improved all that much for a while.
Most "new" products out there feature only minor tweaks on existing products. What are they going to come up with when your iPhone also comes with a nose hair clipper?
Imagination is at an all-time low; hype at an all-time high.
Saw this bumper sticker:
Bush legacy, No Child Left a Dime
another one...
Reuters
AIG to lose up to $5 billion from investments: report
Friday June 27, 6:57 am ET
NEW YORK (Reuters) - American International Group Inc (NYSE:AIG - News) said it planned to absorb up to $5 billion on losses of sales of investments from a dozen insurance units hit by the subprime meltdown, Bloomberg News reported on Friday.
In an interview, Christopher Swift, vice president for life and retirement services, also told Bloomberg that AIG would inject an undisclosed amount of capital into some of the subsidiaries.
The world's largest insurer had previously said it would take $500 million of losses on investment sales after the units' securities-lending accounts took $13 billion of write-downs tied to the subprime-mortgage collapse during the past year, Bloomberg reported.
Such losses were factors cited by ratings agency Moody's when it downgraded AIG's credit ratings and kept its outlook negati
rich-
Do you have kids??
That is about as apropos as you can get. Fingers crossed I do not have a similar type of situation....you know I wouldn't want to be a bad 'merican.
Ciao
MS
What`s going on with Fannie and Freddie this morning? Overnight helicopter cash delivery from uncle Ben?
Rich,
You could've had a tankless water heater for less and had more time between replacements.
"Leftys Liquors writes:
JP, there is no such thing as an ex Catholic,
Leftys Liquors | 06.27.08 - 9:54 am |"
I was a catholic, until I reached the age of reason.
"Misleading' Fed Should Let Banks Fail"
Na this would be over already and we would be headed for recovery. Let the beating continue.
Anonymous writes:
Na this would be over already and we would be headed for recovery. Let the beating continue.
And continue it shall. Waiting for it to continue later today.
JP, there is no such thing as an ex Catholic,
LOL. You can check out anytime you like, but you can never leave.
TAF being extended to 3 months. The fed could hike fed funds 50-75bps, and it would have no impact on real borrowing costs (since the interbank system is totally broken at the moment) if they keep the system liquid. They may be finding at least one vertebrate of a spine.
UBS, Barclays, HSBC, RBS, SocGen, Credit Suisse, Deutsche, a number of German Landesbanks - Spanish, Italian, Irish and UK banks have their own home-grown property-lending debacles brewing. Every sovereign wealth fund that has bought mbs...need I keep going?
Turbo
SocGen had writedowns due to a bad trade and haven't had one since, Deutche Bank had one and was smaller than any other bank, 1 piddling ostlandesbank was absorbed.
The rest of your list aren't eurozone banks(as I had written above), they're European banks. Have any banks in Spain or Ireland had writedowns or gone TU? Italy? Greece?
Shall I go on?
btw, there was a phaseout of those stimulus checks..
Phase Out: The stimulus payment both the basic component and the additional funds for qualifying children begins to phase out for individuals with adjusted gross incomes (AGI) over $75,000 and married couples who file a joint return with AGI over $150,000. The combined payment is reduced by 5 percent of the income above the AGI thresholds.
Economic Stimulus Payment Q&As: Eligibility
This means that a childless couple gets nothing if their AGI exceeds 174K.
-K
can someone remind me, who DOESN'T get a stimulus check?
sk-
thanks for the info. I am squarely in the "zone" and should have rec'd the full $1200.
My post was speaking to the above $3000 Taxable income portion. I guess I should have been more specific...
Ciao
MS
Alec writes:
Margin Call of Cthulhu,
Just make sure when the day comes, eat me first.
LOL. A few folks get the name, but I think everyone else thinks, "who the F&*# is that guy and why can't he spell?"
scav writes:
the blogosphere is always in a tizzy somewhere. Wait, then maybe we could tranche the various tizzies, re-bundle them, re-measure and prove that the innertubz and the handbaskets are actually stable.
Scav, I think what you've described is a Total Information Awareness SPDR. This is both chilling and brilliant. I imagine Dick Cheney will be calling you shortly. Congratulations!
o! no! Please, nibble on me before Alec, I beg of you!
Feel free to invest in the Eurozone bank of your choice Alec. I think you'll find those that largely escaped the US subprime debacle are sitting on a mountain of dodgy lbo and commercial property loans they will start writing down this quarter. But then again, what do I know, since I only trade the crap. Global banks are pack animals - they all ramped up at the wrong time - it's just a question of which bad market they chose to ramp up in, and what stage of unwind that market is in. Of course some will emerge better than others, but they will all be sharing the pain.
Asking price for IMB October 2.5 Puts is $2.5
These guys officially toast yet?
MS said:
I'm so glad that the duped everyone into thinking they would get the max of $1200...so they could , in reality, get $600 so they could give it back to the oil producing states.
I ended up with the max, $1200+300 for 1 kid. Heard from the rest of the family recently that none of them got the full amount. I put half of mine in gold and used half for other expenses (like my wifes $4k dental work). I knew I was getting the max since we only have a 1-income family.
What's more funny is that the tax rebate wasn't adjusted based on locality.
Financial put premiums have been and continue to be utterly criminal and in no way is reflecting the current environment-share price. THey have already priced in the "thump" to come.
ANd it gets no mention at all.
Yesterday's action on most was bordering on total thievery. That doesn't mean I do not have some though......
Ciao
MS
And from what I see in terms of daily financing requirements, and what banks are required to pay for it, the Eurozone banks may be in the worst shape of any of the developed world's banks. But like I said, other than the fact that I see it every day, what could I possibly know.
My wife and I are childless (happily). We did not get any stim check from Uncle.
I've written repeatedly who I'm putting my money on when the time is right, Turbo, I just want the name of those eurozone banks that have the huge writedowns like America beyond what's been mentioned.
BBVA? Santander? Irish Permanent? Their bubbles have burst, where's the writedowns?
You may trade the crap, but I've yet to see it. Could it be that since eurozone markets have traditionally been banking rather than equities driven that possibly that they have better regulator oversight and internal controls(SocGen excluded)?
My wife and I are childless, no stim check for us either. And one of us hasn't worked in 12 months!
I'm starting to believe that there really is no "guidelines" as they are published. They may have them however (and since we can't really look at each others returns) they seem like Leonard the wonder monkey is throwing darts at his board again.
Ciao
MS
they seem like Leonard the wonder monkey is throwing darts at his board again
I actually have a lot more faith in Leonard the Wonder Monkey!
MS-
You continue to blame everyone but yourself regarding option pricing. The fact is that listed equity options are a highly liquid and efficient market. Any moderate kind of mispricing is immediately arb'd by any number of profressional banks, funds, trading groups.
When we discussed this a week ago I suggested that you pick up a book and learn about the investment vehicle you are trading. Pick up Natenberg's "Option Volatility and Pricing" and stop embarrassing yourself.
can someone remind me, who DOESN'T get a stimulus check
Me. I'm single, childless and evidently not american enough to be stimulated. Pity because I would have spent it on something I don't need to do my patriotic duty.
Interesting to compare stimulus check discussions with the CR survey income results. Skewed data somewhere. Variable of commenting vs noncommenting might explain the difference.
IIRC, Sebastian was expecting a stimulus check -- prima facie evidence his investment acumen has yet to make him very wealthy.
Me. I'm single, childless and evidently not american enough to be stimulated. Pity because I would have spent it on something I don't need to do my patriotic duty.
ipodius | 06.27.08 - 10:50 am | #
Uh, my wife and I are childless and we rec'd $1200 direct deposit. It is $600/ person PLUS $300/child . . . for people who paid taxes.
iposius, I suspect the reason you got no rebate is because you're a deadbeat. They are diverting checks for (1) child support (2) federal taxes owed and (3) state taxes owed - and rightly so.
The rest of you with no kids, your check may not have been processed yet. For electronic filers and those using direct deposit, I believe the process is faster.
I still think it was a shitty policy, and I used mine to pay off debt.
Wawawa, i-.
I am married, with two children in private schools, a renter, living here in pricey SoCal, and got no stimulus check.
jg, as expected . .. another deadbeat!
Margin Call of Cthulhu,
Get me the data and I'll be happy to run the regressions. Sounds fun! CRVIX sounds vaguely...naughty, though.
G-, I plan to become a deadbeat after I vault my gold in Switzerland.
Until then, I subsidize you and your wife.
Treat me respectfully, peon.
Gary,
Married, 2 kids, no defaulted debt. Alas, I got a big check from an employer last year that sent me deep into AMT land. No check for you! :^)
Pfft. I"ve got you pegged, d-bag. You hate paying taxes, cheat when you can, and consider yourself a "patriot". You are a free-riding scumbag. I've been paying my taxes since I was sixteen.
You are a selfish turd with no sense of civic responsibility . . . out only for yourself.
That was for jg, not BG.
mal writes:
can someone remind me, who DOESN'T get a stimulus check?
mal | 06.27.08 - 10:24 am | #
No check here. Apparantly I made too much money the old fashioned way - working.
That means the government needs to take my money and money it has borrowed from other nations to give for free to everyone else.
I really can't be that specific. I probably shouldn't even be making generic comments on this blog. Europe is relatively more dependent on bank balance sheets than capital markets compared to the US, so general financial problems can hit Eurozone banks harder, even if the problems in their zone are less severe, just because they are ultimately a relatively larger bagholder. That's certainly what the price action in wholesale debt markets is telling me. Bust to bank writeoffs comes with a lag, as we're seeing in the US. The Eurozone banks are also heavily involved in the insane credit growth that has been, and still is, going on in eastern Europe, which I believe will end in tears next year. "Western standards" housing in Prague is now more expensive than London - I don't think I want to be investing the banks making those loans. I also have the view that Europe is only lagging the US, and Eurozone data has definately deteriorated of late - plus you have the ECB about to tighten in an environment where most Eurozone banks are seriously struggling for reasonably priced funding. Nothing I see makes me near-term bullish on European banks.
Don't worry, G-, Os--- will lift all boats, my yacht and your dinghy.
I have not seen mine yet, sort of like Ipod, not childless, but child support payments are not reflected in AGI. Every time they pass these tax plans that help families (i.e. increase child credits) they just screw divorced dads...so what else is new.
And I was actually thinking yesterday: "Gee, Merrill is trading at a market cap that's a lot further above assets for the industry right now, and they don't have any reason to be squeaky clean. Maybe the puts at $25 are a great value at .43 apiece."
Too bad I didn't put my money where my mouth was.
We're a single earner family with three kids and received our check for $2100 which promptly disappeared when our eight year old minivan needed $2000 in repairs. It actually came at a good time for us.
Just doin' my part to help us all live the Murkin Dream!
Has anyone calculated how much more in "writedowns" these financial institutions can take without disappearing entirely? Assuming they don't get more input from abroad.
No rebate check for me, as I'm a second class citizen (single, renter). And I make too much money. Get the wah-mbulance.
Could someone please explain the insider purchases and no sales of IMB vs. the insider sales and no purchases of CFC during the same period?
can someone remind me, who DOESN'T get a stimulus check
I think there were income limitations. We (DINKs) didn't get a stim check either. but there was an income cutoff.
i'm not a deadbeat dad to anybody I know about, unless there's some sort of freaky reverse immaculate conception or something!
Turbo,
All fair points.
"'Misleading' Fed Should Let Banks Fail". Yes!
If these operations are too big to be allowed to fail, they are too big to remain so immune to regulation.
And, how does a bank or investment house have billions in write-downs and stay in business? I ask in all honesty, cause I really don't understand this.