Depending on the scale they're using billion can either mean 10^9 (short scale) or 10^12 (long scale). With trillion being 10^12 or 10^18. I do hope they're using the 10^9 scale since the losses would quite frankly be staggering otherwise. Though you usually only see 1,000 billions when one uses the long scale.
Stock market losses are well over 1 trillion now. If not 2 trillion. Some of which will be real because of hedge fund investors losing everything and cashing out.
The impact on global GDP will result in a global recession. The synthetic derivatives used to back up commercial loans are just starting to pop up on the radar and IMHO, we will see closer to $3 Trillion.
If this article is referencing the same research that I have seen from Bridgewater, then yes it does include losses on assets beyond mortgages. The firm writes some lucid material describing how this "deleveraging" is not a traditional "recession". A "recession" being one of those Fed induced business cycle thingies.
The equity market does not reflect anywhere this near number. Either stock prices plummet or the estimates are wildly pessimistic. There is no middle ground.
History has always been written by the survivors. As such, we got the story of Little Big Horn not from General Custer but the Indians. I wonder who the survivors will be and what the history books will say.
Resturants are still jammed. As long as those credit-cards are still working the peasants don't need to worry their tiny minds about these big numbers.
if this deleveraging is what they allege it is going to be, 1996 equity prices are becoming more believable.
And with leverage being restricted going forward you need organic growth from the BRICs to drive GDP growth if the US doesn't invest and implement infrastructure and renewable energy.
"History has always been written by the survivors. As such, we got the story of Little Big Horn not from General Custer but the Indians. I wonder who the survivors will be and what the history books will say."
Survivorship bias.
All the money managers are in the same boat. They have all survived this far....
Which restaurants are you talking about?
Most folks whom live in the burbs have to drive to friggin' everything so going grocery shopping usually means stopping by a restaurant to fill up the kiddies as you just spent the whole day driving and everyone is grouchy.
Downtown PDX was scarily quiet this afternoon. Hardly a soul to be seen in Macy's, Nordstrom or Pioneer Place. Abercrombie and Fitch was like a morgue. I am suspecting we are seeing a full-scale downscaling by the middle to upper middle class. Sam's Club and Wallmart are the new places to be seen. Frugal is in! Mainstreet retailers are going to be hurting if this trend keeps up.
I agree with you on gold - think it heads lower off forced liquidations, but then eventually much higher. It's a much better deflation hedge then inflation.
MinniRenter-
If you've seen the Bridgewater paper, can you post a link?
Whenever I see $ trillion in the news, it reminds me of that Simpson's episode where the US printed the one Trillion dollar bill to pay for the ravages of WWII.
ot a chance at all, that us gov can take care of SS,
medical situations,Housing blowout,and carry 10000 billion of debt.Politicians in this country need to be honest with their constituits
On my way home from Lake Tahoe to SF, I passed thru Folsom (East Sacramento). I saw a brand new empty mall. Total Ghost Town. Man it is going to get ugly-er.
Gamma - Sorry, I don't have permission. It's not so much a paper, the "study" is communicated via daily client letters. They were very wrong on housing as recently as a year ago. They have had a change of heart it seems.
3-4 kilobillions in lost home values
~4 kilobillions in stock market losses
0.5 kilobillion spent on Iraq adventures
~1 kilobillion in decreased dollar value
The kilobillions keep adding up. Theres some big holes in this ship.
I did a back of the envelop thingy last fall, wherein I estimated that the losses in just mtges were from half a trill to a trill and a half as an upper boundary. The banks are now admitting to what, .6 trill? So I think that the upper boundary for just mtg & housing losses increasingly likely to be a trill and a half, as as a wild estimate, other stuff half a trill to a trillion.
And if house prices drop, ultimately,
30% nationwide that's 6 trillion dollars of imaginary value vanished.
We expect the stock mkt to gain and lose ferociously, but we never expected the same thing of houses.
trillion here trillion there, it does not matter. the promblem is a crisis in the confidence of the us gov,when will people in this country WAKE UP and act on political revolt.
NBC, Bain Capital and Blackstone Group buy the weather channel for 3.5b (1.5b less than asking)
In a sign of the weaker debt markets that have clamped down on large private equity deals, more than half of the price will be paid in equity, to be divided roughly equally among the three buyers, these people said.
not a chance at all, that us gov can take care of SS, medical situations,Housing blowout,and carry 10000 billion of debt.Politicians in this country need to be honest with their constituits ~ auction pro
Well, at least Iraq is covering the costs of Halliburton overthrowing Saddam & rebuilding their country. That could really have been expensive!
Bloomberg saying developing nations face a hard landing, should follow Volcker's lead and raise rates:
In the absence of effective strategies, a ``hard landing'' may be the only way to get inflation down, says Morgan Stanley's Jen.
There does not seem to be another way out,'' Jen says.Until recently, the emerging markets were seen as a safe haven from the financial crisis. The tables have turned.''
I get the feeling this is a controlled descent. Ya know, my brother flies for one of those trunk airline thingys, ol' stuff, big planes, SUV's in the sky type of mo bill. He's always talkin' bout a controlled descent into terrain. Not a crash. But we both agree the results are the same in the end.
With CONgress and Big Bone Ben continuing to meddle with the correction in the markets it is probably pretty safe to put a 3 handle on this for now and reevaluate in 6 months.
Ot,I was enjoying a cup of coffee and reading the help wanted ads in the sacramento Bee this morning,where lo and behold I found an ad for an experienced loan broker.the subhead was "FHA IS THE NEW SUBPRIME!" their emphasis.Oh,and business is GREAT!.Just a note of cheer for my fellow readers at CR.
Poor gretchen has her own sorta uberpost today on CDS (credit default swaps) and how they work. I think I'll wait for Tanta to tell us where Poor Gretchen got it wrong.
Plantagenet writes:
"When do losses reach a zillion?"
Well, I'm glad to see my fellow royalty posting here. The real truth is that money is merely an expression of power and, at some point, power is going to have to decide whether or not "saving the integrity of money" is worth losing its skin.
I think we will get 1.6 trillion in losses just here in the USA. Europe will probably be worse just a little delayed. It looks like we are in the front car on this ride.
RE: the ny times article on cds. Great timing. The new rule goes into effect in the fall. If we manage to sputter along until then, continue to lie about exposure and expected write downs, etc. this will break our back with a giant flying elbow.
And how will everyone be getting their money offshore before it hits?
Sandler O'Neill just announced a month or so ago that they are among a group of GS led banks that are underwriting a new IPO! Remember those? Sinister IPO it is as well... Liquidnet... which is dedicated to facilitating "dark pool" transactions on stock exchanges (like that nasty old corrupt nyse, for example). Transparency?
Is this part of the same contained credit mess that Ben Bernanke boldly claimed would top out at $100b in losses ? Good thing he's at the wheel (such as it is, with all the steering linkage disconnected)..
We expect the stock mkt to gain and lose ferociously, but we never expected the same thing of houses
having lived in LA 1985-1992 and Tokyo 1992-2000, I knew firsthand what can happen when a market gets disconnected from fundamentals.
That's what kept me out of the bay area market 2001-2002. I was entirely blindsided by the 2003-2006 runup, but that was before I learned about how the loan taps were turned wide open for the Casey Serins of the world.
My sources put Govt officials at IndyMac this weekend doing the deed. I am being told an announcement will come tomorrow first thing, that IndyMac is no more and at least their wholesale operation is gone effective immediately. Apparently wholesale operations will get pink slips, no new loans will be locked and all existing loans in the pipe must be closed by the end of July.
So... the whole world can't turn into Zimbabwe, right? This just means that US/EU turns into India for a bit, and then India corrects down to Greece or Czech Republic, and those countries all bump down until everyone down to Rwanda and Malawi are still in the same order... right?
I fail to see how gobal cascading deflation-defaults-debt spirals are going to benefit countries when a lot of them were dependent on American spending.
So which countries have risen to the top not on crazy deficits or benefited from crazy deficits?
I can confirm that they stopped funding loans wholesale before the 4th. My friend is an AE in their Irvine office and was told via email that loan fundings would halt that afternoon. No news of the permanency (is that a word?) of this move.
the only thing that matters is who owns the productive assets going forward. With $140 oil and 20 mbpd going out as export goods, that's around THREE BILLION dollars a day accruing to the oil producers.
The S&P 500, less the oil producers, has around a $8T (SWAG) market cap, which means big oil can buy up America Inc with 7 years of oil export income.
Interesting article from Bloomberg, suecris. It seems to me that instead of addressing and attempting to solve trade/currency issues politically, we have defaulted to "solving" them with dueling central bank interest rate policies. As a result of our super-low interest rates the emerging economies are importing inflation and as we've seen nearly everywhere, nobody wants to crank up rates to "solve" an inflation problem because they are afraid of harming growth in their respective nations. I think we are playing chicken with the rest of the world to force everybody else to stop pegging their currency to the dollar. If they fail to do so, they will crash harder and faster than we ever could (that's THE BET). This will provide one way or another the massive demand destruction for petroleum that will be needed. They can decouple the artificiality of their currency to ours which we intend, or suffer the consequences of a killer hyperinflation that will eat them alive far more so than it can eat us alive-the ball is in their court.
As to my margins. I sold my last investment real estate April 2006 and that was sweating bullets. The poor guy I sold to had no worries, real estate only goes up. It probably didn't help that he was also my listing agent. Anyway he re-sold last month for a 24% loss.
Timing is about not getting caught on the wrong side of a trade rather than seeing how close you can come to having the door slam on your ass(ets).
It won't go to my head. Whenever I get cocky I just look at my Fed Funds futures contract trades and get real quiet.
If anyone is interested in my next trick; WaMu. I know too big and not apparently in danger but they tried to aggressively expand in California and on vacation to Seattle last week it was noted that their HQ was voted one of the most beautiful skyscrapers in North America. Anybody remember what happened to Sears shortly after their bout with the edifice complex? Besides, they have my HELOC and I'm hoping for an opportunity to get them to offer closing it in exchange for a fixed. Currently at Prime minus 1/8th how can I lose?
Banking metaphor video:
disney fantasia The Sorcerer's Apprentice with Mickey YouTube -
Tsunami of easy liquidity, everything looks easy and then the casino gets out of control, and then Bernanke takes an axe to the single broom, splitting it into thousands of new derivatives that generate countless new additional problems... the tsunami becomes a whirlpool of excess, spinning wild
I think we are playing chicken with the rest of the world to force everybody else to stop pegging their currency to the dollar. If they fail to do so, they will crash harder and faster than we ever could (that's THE BET). This will provide one way or another the massive demand destruction for petroleum that will be needed. They can decouple the artificiality of their currency to ours which we intend, or suffer the consequences of a killer hyperinflation that will eat them alive far more so than it can eat us alive-the ball is in their court.
Doc at the Radar Station | 07.06.08 - 11:33 pm | #
Yup. I've been thinking that for a long time - it really is quite the paradox.
Did you read Tim Duyover the weekend? Pretty interesting - follow the money.
doc at the r.s.- could you please explain? How would forcing everybody to stop pegging their currency to the dollar. If they fail to do so, they will crash lead to massive demand destruction for petroleum?
The senator says there is a "shroud" that prevents easy examination of what's happening in fertilizer pricing.
"Is this simply big companies having the muscle to price in their own manner without competition? The fewer companies you have, the less competition you have. That's just a fact of life," he says.
There is virtually no pricing transparency, he adds, which could demonstrate the fertilizer industry's upstream and downstream costs and therefore their pricing profit levels.
The cost of fertilizer to North Dakota farmers has risen from about $450 million in 2006 to about $800 million in 2008.
"You impose about $350 million to $400 million added cost just in fertilizer on North Dakota farmers, that's a huge burden," Dorgan says. "That's why I've asked the Federal Trade Commission to investigate what's causing it."
When do financial gray-collar crooks
quit playing with fire on the bad ship Sucker,
and ruin our future and the kids' future ?
(Erin Callan, ex CFO at Lehman, admitted
2 or 3 years back that she designed packages with
components that qualified as debts for tax purposes
while also qualifying as assets for credit rating.)
Month old story, but highly stimulating IMHO:
Sharp Rise in Shopping Center Vacancies
Suzanne Mulvee, senior economist at Property & Portfolio Research, estimates that the overall retail vacancy rate will reach 12.5 percent later this year. That's roughly 1.2 billion square feet, or around 40 square miles of empty shopping space (plus perhaps another 100 square miles of unused parking lot). To put that into perspective, the total land area of the city of Miami is 36 square miles.
"I would avoid anything related to commercial construction," advised Michael Larson, associate editor of Safe Money Report and an early predictor of the mortgage crisis.
Last year, developers built 143 million square feet of new shopping centers and big-box stores. Another 137 million square feet is expected to be completed this year.
Landlords have been reluctant to lower rates," Alexander says. "They're trying to keep rates high by giving up other concessions, like higher tenant improvement allowances and free rent. We've even seen a situation where a landlord has gone in and bought a tenant out of its lease obligation [with another landlord] to secure them in their building."
Ryan Kasten, associate vice president in the tenant division of Oxford, says developers are having a tough time negotiating between the high costs of construction and the need to get deals done via lower rents and concessions.
"I think you're seeing some of the rents on existing buildings begin to drop, but it's much harder for those landlords with new space," Kasten says.
According to the Centro Web site, the Hornell Wal-Mart has 30,000 square feet behind a false wall to expand onto, if the need arises.
But with higher prices and slow growth in the national economy, the expansion may not go through, Hogan said.
Hogan said two other planned Wal-Mart stores in the area in Bath and Wellsville have seen downsizing.
The plan to build a 150,000-square-foot Supercenter in Bath, he said, was dropped in April, while the store proposed for Wellsville was downsized by several thousand square feet.
Centro officials declined to comment on negotiations with potential or current tenants, and said a press release would be issued when a contract is signed. A spokeswoman for Wal-Mart said she would check on questions from The Evening Tribune, but did not respond by press time.
This morning I noticed the UBS/Credit Suisse blurb on Reuters. I wrote this post at the time- METROPOLITAN | Property Management & Real Estate Investments. I hestitated and almost didn't publish it because I thought I was being too pesimistic. Now I log on and see this.
I want to see the entire article before I jump to any conclusions but this is getting just a bit frightening.
Cindy McCain writes:
The Rapture will save us.
Cindy McCain | Homepage | 07.06.08 - 10:57 pm | #
Actually, some folks maxed out their credit in such a belief. You know, that was their plan, that the rapture would come before they had to pay off the debt.
Australian real estate investment trusts may have to sell much of the A$70 billion ($67 billion) in overseas property assets they hold as the global economic slowdown forces them to pay down debt, the Australian reported.
The country's trusts bought $20 billion of U.S. shopping centers between 2005 and 2007, including Centro Properties Group's $3.7 billion acquisition of New Plan Excel Realty Trust, the newspaper said, citing New York-based research firm Real Capital Analytics Inc. During those three years Australian companies bought an eighth of all U.S. strip malls sold, the newspaper said, citing Real Capital Analytics.
The starting point is the fact that since last October interest rate differentials between dollars and yuan have reversed. The U.S. Federal Reserve aggressively lowered rates just as the Chinese central bank, the People's Bank of China, was pushing up domestic rates to fight inflation. Currently, rates on the Chinese central bank's one-year bills are about 170 basis points higher than comparable U.S. Treasuries.
This has created an arbitrage opportunity that local firms are exploiting on a massive scale, borrowing cheap dollars to substitute for more expensive borrowings in yuan and for local investments. A second factor driving this arbitrage is the wide-spread expectation that the government will either speed up the rise in the yuan's crawling peg or implement a one-off revaluation.
"The technology boom was characterized by high rates of investment spending, and although the final push that followed the Asian Financial Crisis saw plenty of excess, one could reasonably argue that the capital inflow was supporting investment spending. This, of course, is the traditional textbook interpretation of a current account deficit/capital account surplus as a mirror of an internal saving and investment imbalance."
Wow. The Asians are truly in far more of a pickle than we are, and we can now take advantage of expensive oil and the credit crunch to keep our consumer zombies from buying any more of their shit. This reminds me of that knuckle under game in High School.
yowza, If the Chinese and many other currencies were allowed to float with respect to the dollar, they would lose a massive subsidy to their manufacturing base they have been incubating for the last 3 decades. We are just making it more difficult for them to artificially maintain the pegs. They have to be slowing already, despite high inflation.
Deutsche's problem is that chunks of its total asset base of 2.3 trillion ($3.6 trillion) generate next to no returns. Still, the bank has 850 billion in derivatives on the balance sheet, equivalent to nearly a fifth of total assets. But it partly reflects the different way derivatives are handled under international and U.S. accounting standards.
With oil at more than $140 a barrel, the real fireworks in Washington resume this week on one of the hottest issues in the global economy: whether speculation is contributing to the past year's doubling of crude-oil prices and should be curbed.
The House Agriculture Committee will host hearings examining whether the Commodity Futures Trading Commission has a strong-enough grip on the fast-growing, $5 trillion futures market for oil and other commodities or needs other tools. It also will examine how that market is affected by the $9 trillion "over-the-counter" market that has mushroomed outside CFTC regulation.
yowza, If the Chinese and many other currencies were allowed to float with respect to the dollar, they would lose a massive subsidy to their manufacturing base they have been incubating for the last 3 decades. We are just making it more difficult for them to artificially maintain the pegs. They have to be slowing already, despite high inflation.
Doc at the Radar Station | 07.07.08 - 12:39 am | #
Yup.
The irony is if they made a big push to switch from an export focus to supporting their own young but growing internal demand - stronger currency would HELP them continue growing not HURT them.
But they don't do that.
Everybody wants a pony - their own one trick pony they know & understand. We consume, they produce - just try reversing the two (or even balancing them) - its like swimming up Niagara Falls.
cluster_fluck writes:
On my way home from Lake Tahoe to SF, I passed thru Folsom (East Sacramento). I saw a brand new empty mall. Total Ghost Town. Man it is going to get ugly-er.
Um, don't say Folsom is East Sacramento. They're two different places, many miles apart. Folsom is East of Sacramento, that's all. And it's been dead out that way for a lot longer than just yesterday. Try a few months. Grossly overbuilt retail out there. Gonna be death for many of them. I don't travel more than five miles from my house to buy anything anymore unless there's a very compelling reason to do so, and when I can walk a few blocks to a Trader Joe's, I have no compelling reason to drive much for food.
Developers opening new malls this year clearly timed the economic cycle poorly. And the cultural cycle isnt helping matters any. The extreme consumption of this current gilded age has inspired a backlash. In December, hedge-fund billionaire Ray Dalio ran full-page advertisements in newspapers urging Americans to eschew Christmas gifts and instead make donations to charity. (???)
Excerpt from mp's link with more details about the Bridgewater study (translated):
...
U.S. banks are expected to incur the biggest losses
So far, only financial institutions have only acknowledged losses of 400 billion U.S. dollars estimates Bridgewater. Non-US banks - especially UBS - have been the biggest "contributors" with 238 billion U.S. dollars. The biggest losses will be by U.S. banks with names such as Citigroup, Bank of America and JP Morgan Chase and many smaller institutions not well known around here.
Why? Because their core business is lending, and they hold the largest exposure to these loans. But also because a large part of it is traditional bank loans, that unlike securitized mortgages are not traded and their decline in value is not reflected on their balance sheet. "Assessing current market conditions, we still have a long way to go because these institutions have acknowledged only one sixth of the expected losses that they suffered as a result of the credit crisis", writes Bridgewater. Five-sixths are nearly 500 billion U.S. dollars.
The following major firms have now warned concerning the likelihood of one or more "catastrophic events" in the financial markets over the next few months:
The Treasury should be issuing some kinda war bond or subprime bail out bond and monetize this mess, kinda go back a few hundred years and start this thing over (America). The problem of course is that this mess is private debt being socialized into public debt, but same idea in principal.
Re: Inflation results when the money supply increases faster than goods and services, and replacing government securities with cash would not change the size of the money supply. Federal securities are already money. They have been money ever since Alexander Hamilton made them the basis of the national money supply in the late eighteenth century. Converting federal securities into government-issued U.S. Notes would not cause prices to shoot up because consumers would have no more money to spend than they had before.
n 1933, Franklin Roosevelt pronounced the country officially bankrupt, exercised his special emergency powers and, with a wave of the royal Presidential fiat, ordered the promise to pay in gold removed from the dollar bill. The dollar was instantly transformed from a promise to pay in legal tender into legal tender itself. Seventy years later, Congress could again acknowledge that the country was officially bankrupt, propose a plan of reorganization, and turn its debts into " legal tender." Alexander Hamilton showed two centuries ago that Congress could dispose of the federal debt by "monetizing" it, but Congress made the mistake of delegating that function to a private banking system. Congress needs to rectify its error and monetize the debt itself, by buying back its own bonds with newly-issued U.S.
It appears about 150 heads will roll. Couldn't happen to a nicer bunch of REIC shills. The people who can write and have more than a few synapses firing should start some good blogs.
I do wonder if it's going to be the end of the profitable era of these dead tree news outlets. Used to be classifieds made them tons of $$$. That's been killed by craigslist, Auto Trader, et. al. So they went to REIC ads. That brought in the money. Then they really brought in the money when their writers engaged in REIC shillery puff balls.
Now REIC revenue is declining after they whored out their credibility, so what are they going to do? I can't say I know.
Add to that list of firms is Barron's with its short article about the Hindenburg Omen. Boom and Bust - Barrons.com
A RATHER OMINOUS AND OBSCURE TECHNICAL SIGNAL that allegedly predicts a stock-market crash has been flashing of late. It's the Hindenburg Omen, so named for the ill-fated dirigible that burned and crashed in May 1937.
The Hindenburg Omen actually appeared twice in June, once on the 6th and again on the 17th, and from the looks of what followed, it should be paid no small amount of heed. June was a disastrous month for the Dow Jones Industrial Average, with the blue-chip indicator ...
Can anybody shed some light on this technical indicator?
By any rational measure our society is comprehensively bankrupt. From the federal treasury down to the suburban cul-de-sacs so much loaned money is either not being paid back, or is at risk of never being paid back, that the suckage of presumed wealth has passed through an event horizon out of the known universe into some other realm of space-time, never to be seen again in this realm...
...the upshot will be something at least twice as bad as the Great Depression of the 1930s: people with no money in a land with no resources (with manpower that has no discipline), hardly any family farms left, cities that are basket-cases of bottomless need, comatose small towns stripped of their assets and social capital, an aviation industry on the verge of death, and a railroad system that is the laughingstock of the world...
...The banks have been doing their death dance for an entire year now, pretending that their problems are those of mere "liquidity"...rather than insolvency. But the destruction of money (resulting from loans not paid back) is now so intense that the game of pretend has reached its terminal point. The question for the moment is exactly who and what will be crushed as these institutions roll over and die.
Can't wait to read his new post at Clusterfuck Nation, due out in a few hours.
If I may come with a suggestion...? There are established prefixes for large sums in the scientific or engineering community. I suggest you use Giga (10^9) instead of billion and Tera (10^12) instead of trillion.
Gold will be dropping back down to $800 or lower this half.
Am going to have to disagree with you.
On account of all that commercial closing of hedges.
Volatile yes but 800 is a little bit extreme, besides at those prices physical buying will come out in force.
Would probably go down short term on account of perceived dollar strength and falling crude price which is due anytime now but once reality sets in, it will move again.
Gold will be dropping back down to $800 or lower this half.
Am going to have to disagree with you.
On account of all that commercial closing of hedges.
Volatile yes but 800 is a little bit extreme, besides at those prices physical buying will come out in force.
Would probably go down short term on account of perceived dollar strength and falling crude price which is due anytime now but once reality sets in, it will move again.
This thread is probably dead, but the local fishwrapper has nothing on
Indymac.
It also had some real estate advice written in Illinois, which clearly did not take certain Florida law issues into account, I suppose because they are too poor or cheap to hire a Fla real estate atty to vet the advise.
If I may come with a suggestion...? There are established prefixes for large sums in the scientific or engineering community. I suggest you use Giga (10^9) instead of billion and Tera (10^12) instead of trillion.
no way, this lends legitimacy and scientific backing to the economics and lending realm, which are neither.
we should use the least scientific language possible. perhaps child language or even cat language.
like this: "banks haz lost lotsa dollas, and dey will lose mo. where dollas haz go?"
I don't, I hold Gold and Silver but I also know that they typical fall until about the end of August, We are in a deflationary environment in which cash is king as all asset are sold. Gold sale in India the biggest buyers of gold are down 50%. Their is also a great deal of political pressure to turn a big ass spotlight on the exchanges forcing complete transparency of who is holding what. Now isn't that going to be interesting. You pays your money you takes your chances.
Anonymous writes:
We are in a deflationary environment in which cash is king as all asset are sold.
Gold sale in India the biggest buyers of gold are down 50%.
As long as the cash is not in the USD.
As for india, all the more reason that they'll buy at cheaper rates, which normally supports the price.
To mndean: Folsom is indeed part of Sacramento. It's called urban sprawl. When you can't tell where one town ends and the other begins, it's all one giant shiite hole. Just like the Bay Area.
Yes, that's shocking. The Unwinding continues.
No, that's just Citibank
I guess the Eurozone folks are going to have to adopt the word "Trillion."
Mere "Billion" doesn't hack it any more.
Many of us had back of the napkin estimates over $1T last year.
Depending on the scale they're using billion can either mean 10^9 (short scale) or 10^12 (long scale). With trillion being 10^12 or 10^18. I do hope they're using the 10^9 scale since the losses would quite frankly be staggering otherwise. Though you usually only see 1,000 billions when one uses the long scale.
That must be 3rd quarter projections.
This is not chump change anymore.
Stock market losses are well over 1 trillion now. If not 2 trillion. Some of which will be real because of hedge fund investors losing everything and cashing out.
Doesn't sound confidential to me.
The impact on global GDP will result in a global recession. The synthetic derivatives used to back up commercial loans are just starting to pop up on the radar and IMHO, we will see closer to $3 Trillion.
Nikkei can't seem to break its losing streak; down 60 at the start...
judging from foreclosure activity writeoffs will be at least 1600 billion maybe even 2300 billion.
If this article is referencing the same research that I have seen from Bridgewater, then yes it does include losses on assets beyond mortgages. The firm writes some lucid material describing how this "deleveraging" is not a traditional "recession". A "recession" being one of those Fed induced business cycle thingies.
The equity market does not reflect anywhere this near number. Either stock prices plummet or the estimates are wildly pessimistic. There is no middle ground.
History has always been written by the survivors. As such, we got the story of Little Big Horn not from General Custer but the Indians. I wonder who the survivors will be and what the history books will say.
A trillion here a trillion there...
Resturants are still jammed. As long as those credit-cards are still working the peasants don't need to worry their tiny minds about these big numbers.
if this deleveraging is what they allege it is going to be, 1996 equity prices are becoming more believable.
And with leverage being restricted going forward you need organic growth from the BRICs to drive GDP growth if the US doesn't invest and implement infrastructure and renewable energy.
"History has always been written by the survivors. As such, we got the story of Little Big Horn not from General Custer but the Indians. I wonder who the survivors will be and what the history books will say."
Survivorship bias.
All the money managers are in the same boat. They have all survived this far....
government credit debacle is coming faster than most people think.
Which restaurants are you talking about?
Most folks whom live in the burbs have to drive to friggin' everything so going grocery shopping usually means stopping by a restaurant to fill up the kiddies as you just spent the whole day driving and everyone is grouchy.
Downtown PDX was scarily quiet this afternoon. Hardly a soul to be seen in Macy's, Nordstrom or Pioneer Place. Abercrombie and Fitch was like a morgue. I am suspecting we are seeing a full-scale downscaling by the middle to upper middle class. Sam's Club and Wallmart are the new places to be seen. Frugal is in! Mainstreet retailers are going to be hurting if this trend keeps up.
Here is where I, a perceived gold nut, will have to be bearish on gold.
These losses are leading many funds to liquidate assets.
Gold is one of the most hedged assets out there.
Gold will be dropping back down to $800 or lower this half.
These people are beginning to make Roubini look like an optimist.
25 trillion... thru2010.
from the 500+ trillion in bis estimate.
total Notional must fall.
Interesting Times-
I agree with you on gold - think it heads lower off forced liquidations, but then eventually much higher. It's a much better deflation hedge then inflation.
MinniRenter-
If you've seen the Bridgewater paper, can you post a link?
Cheers,
Don't worry folks, this is now public news, which means it's all priced in. See, we have nothing to worry about!
everything is going to turn out alright in the end
When do losses reach a zillion?
Whenever I see $ trillion in the news, it reminds me of that Simpson's episode where the US printed the one Trillion dollar bill to pay for the ravages of WWII.
Those Simpson's writer are quite prescient.
ot a chance at all, that us gov can take care of SS,
medical situations,Housing blowout,and carry 10000 billion of debt.Politicians in this country need to be honest with their constituits
"When do losses reach a zillion?"
When you lose a one followed by 1000 Zillo's.
Banks Will Need More Money
Swiss banks may need to raise $68 billion more: reports - MarketWatch
On my way home from Lake Tahoe to SF, I passed thru Folsom (East Sacramento). I saw a brand new empty mall. Total Ghost Town. Man it is going to get ugly-er.
Gamma - Sorry, I don't have permission. It's not so much a paper, the "study" is communicated via daily client letters. They were very wrong on housing as recently as a year ago. They have had a change of heart it seems.
Wait until the young realize the condition of the
vandalized world we are giving them.
(I have been telling some.)
Ignorance is as ignorance does.
But nerve can start the changes.
.
1.6 kilobillions is for wankers.
We've already seen
3-4 kilobillions in lost home values
~4 kilobillions in stock market losses
0.5 kilobillion spent on Iraq adventures
~1 kilobillion in decreased dollar value
The kilobillions keep adding up. Theres some big holes in this ship.
So we're basically somewhere in the top of the 3rd inning.
This is good news. Some pessimists have been wrongly saying we're still in the 2nd inning. You see, the game is progressing.
I did a back of the envelop thingy last fall, wherein I estimated that the losses in just mtges were from half a trill to a trill and a half as an upper boundary. The banks are now admitting to what, .6 trill? So I think that the upper boundary for just mtg & housing losses increasingly likely to be a trill and a half, as as a wild estimate, other stuff half a trill to a trillion.
And if house prices drop, ultimately,
30% nationwide that's 6 trillion dollars of imaginary value vanished.
We expect the stock mkt to gain and lose ferociously, but we never expected the same thing of houses.
If Bridgewater was oblivious to housing, they're probably as oblivious on this as well.
Do banks report this week or next?
For some reason I'm feeling very contrarian of late and I don't know why
I love it.
YouTube - lendingtree commercial
trillion here trillion there, it does not matter. the promblem is a crisis in the confidence of the us gov,when will people in this country WAKE UP and act on political revolt.
Do banks report this week or next?
2Q08 bank numbers will appear on the FDIC site anytime between the 14th and the end of July.
NBC, Bain Capital and Blackstone Group buy the weather channel for 3.5b (1.5b less than asking)
In a sign of the weaker debt markets that have clamped down on large private equity deals, more than half of the price will be paid in equity, to be divided roughly equally among the three buyers, these people said.
Weather Channel Is Sold To NBC and Equity Firms - NY Times
As I said earlier, Ken Norton was dissing the dollar on the BBC last night.
Cheers,
A poster (Eff) on the Irvine Housing
Blog sez Indymac is toast and there will be a big announcement Monday.
According to IM Implode.
rk,
"I love it."
I remember that commercial. I thought it insane back then. Now, it's positively foreboding...
Cheers,
Seems to me that until people are jumping out of buildings we can just double the most recent and worst loss estimate and use it as a working number.
not a chance at all, that us gov can take care of SS, medical situations,Housing blowout,and carry 10000 billion of debt.Politicians in this country need to be honest with their constituits ~ auction pro
Well, at least Iraq is covering the costs of Halliburton overthrowing Saddam & rebuilding their country. That could really have been expensive!
United States Department of Defense (defense.gov)
Bloomberg saying developing nations face a hard landing, should follow Volcker's lead and raise rates:
In the absence of effective strategies, a ``hard landing'' may be the only way to get inflation down, says Morgan Stanley's Jen.
There does not seem to be another way out,'' Jen says.Until recently, the emerging markets were seen as a safe haven from the financial crisis. The tables have turned.''
Bernanke's Emerging-Market Disciples May Heed Volcker (Update1) - Bloomberg.com
I get the feeling this is a controlled descent. Ya know, my brother flies for one of those trunk airline thingys, ol' stuff, big planes, SUV's in the sky type of mo bill. He's always talkin' bout a controlled descent into terrain. Not a crash. But we both agree the results are the same in the end.
With CONgress and Big Bone Ben continuing to meddle with the correction in the markets it is probably pretty safe to put a 3 handle on this for now and reevaluate in 6 months.
Ot,I was enjoying a cup of coffee and reading the help wanted ads in the sacramento Bee this morning,where lo and behold I found an ad for an experienced loan broker.the subhead was "FHA IS THE NEW SUBPRIME!" their emphasis.Oh,and business is GREAT!.Just a note of cheer for my fellow readers at CR.
Poor gretchen has her own sorta uberpost today on CDS (credit default swaps) and how they work. I think I'll wait for Tanta to tell us where Poor Gretchen got it wrong.
NYTimes if it workss:
FAIR GAME; A Window In a Smoky Market - NY Times
The Rapture will save us.
Plantagenet writes:
"When do losses reach a zillion?"
Well, I'm glad to see my fellow royalty posting here. The real truth is that money is merely an expression of power and, at some point, power is going to have to decide whether or not "saving the integrity of money" is worth losing its skin.
I think we will get 1.6 trillion in losses just here in the USA. Europe will probably be worse just a little delayed. It looks like we are in the front car on this ride.
Many of us had back of the napkin estimates over $1T last year
yup.
According to the Fed, total consumer debt doubled from $11T in 2001 to around $20T today.
Taking 10% of that net new debt as dead-loss, you get ONE TRILLION DOLLARS.
Ben Stein's "$30-60B, tops" call a year ago is looking PFS these days.
RE: the ny times article on cds. Great timing. The new rule goes into effect in the fall. If we manage to sputter along until then, continue to lie about exposure and expected write downs, etc. this will break our back with a giant flying elbow.
And how will everyone be getting their money offshore before it hits?
Sandler O'Neill just announced a month or so ago that they are among a group of GS led banks that are underwriting a new IPO! Remember those? Sinister IPO it is as well... Liquidnet... which is dedicated to facilitating "dark pool" transactions on stock exchanges (like that nasty old corrupt nyse, for example). Transparency?
Is this part of the same contained credit mess that Ben Bernanke boldly claimed would top out at $100b in losses ? Good thing he's at the wheel (such as it is, with all the steering linkage disconnected)..
We expect the stock mkt to gain and lose ferociously, but we never expected the same thing of houses
having lived in LA 1985-1992 and Tokyo 1992-2000, I knew firsthand what can happen when a market gets disconnected from fundamentals.
That's what kept me out of the bay area market 2001-2002. I was entirely blindsided by the 2003-2006 runup, but that was before I learned about how the loan taps were turned wide open for the Casey Serins of the world.
Sorry to interrupt, but...
INDYMAC BANK JUST WENT UNDER.
Mr. Mortgage’s Guide to the TRUTH! » IndyMac: Significant Seizure Chatter – Is This the End? Finally!
My sources put Govt officials at IndyMac this weekend doing the deed. I am being told an announcement will come tomorrow first thing, that IndyMac is no more and at least their wholesale operation is gone effective immediately. Apparently wholesale operations will get pink slips, no new loans will be locked and all existing loans in the pipe must be closed by the end of July.
...
DONE!
implode-explode.com - Implosion News Pick-ups: Not Found
you beat me by a split second!
So... the whole world can't turn into Zimbabwe, right? This just means that US/EU turns into India for a bit, and then India corrects down to Greece or Czech Republic, and those countries all bump down until everyone down to Rwanda and Malawi are still in the same order... right?
I fail to see how gobal cascading deflation-defaults-debt spirals are going to benefit countries when a lot of them were dependent on American spending.
So which countries have risen to the top not on crazy deficits or benefited from crazy deficits?
Rob Dawg is a prophet! Hat tip to his, "Last one out is a FDIC Creditor" title last week... your margin wasn't nearly as good as you thought it was...
Nikkei's leading the way over the past 2 years.
....And the Dollar strengthens on all this news!
I can confirm that they stopped funding loans wholesale before the 4th. My friend is an AE in their Irvine office and was told via email that loan fundings would halt that afternoon. No news of the permanency (is that a word?) of this move.
LOL!
Rob has beat me numerous times over the years, he is a true prophet...hopefully he does not read this...it will go to his head.
So which countries have risen to the top
the only thing that matters is who owns the productive assets going forward. With $140 oil and 20 mbpd going out as export goods, that's around THREE BILLION dollars a day accruing to the oil producers.
The S&P 500, less the oil producers, has around a $8T (SWAG) market cap, which means big oil can buy up America Inc with 7 years of oil export income.
Troy writes:
The S&P 500, less the oil producers, has around a $8T (SWAG) market cap, which means big oil can buy up America Inc with 7 years of oil export income.
Probably less time, given the S&P's downward trend and oil's upward strength still intact.
Is this Indy news already priced in???
How can this report (BridgeOverTroubledWater) impact our finacial markets? There's an ocean and mountains separating us from them? Gee wiz.
Of course, but soon the good old days will be back. When bad news is bad, and then the DJIA goes down 1200 some day.
Rob Dawg's prophecy... If the news is true that was a good call, although no doubt way too close for comfort Mr. Dawg.
Ahh... instead of turning Japanese we are turning Middle East...
Interesting article from Bloomberg, suecris. It seems to me that instead of addressing and attempting to solve trade/currency issues politically, we have defaulted to "solving" them with dueling central bank interest rate policies. As a result of our super-low interest rates the emerging economies are importing inflation and as we've seen nearly everywhere, nobody wants to crank up rates to "solve" an inflation problem because they are afraid of harming growth in their respective nations. I think we are playing chicken with the rest of the world to force everybody else to stop pegging their currency to the dollar. If they fail to do so, they will crash harder and faster than we ever could (that's THE BET). This will provide one way or another the massive demand destruction for petroleum that will be needed. They can decouple the artificiality of their currency to ours which we intend, or suffer the consequences of a killer hyperinflation that will eat them alive far more so than it can eat us alive-the ball is in their court.
Awww shucks.... [blushes]
As to my margins. I sold my last investment real estate April 2006 and that was sweating bullets. The poor guy I sold to had no worries, real estate only goes up. It probably didn't help that he was also my listing agent.
Anyway he re-sold last month for a 24% loss.
Timing is about not getting caught on the wrong side of a trade rather than seeing how close you can come to having the door slam on your ass(ets).
It won't go to my head. Whenever I get cocky I just look at my Fed Funds futures contract trades and get real quiet.
If anyone is interested in my next trick; WaMu. I know too big and not apparently in danger but they tried to aggressively expand in California and on vacation to Seattle last week it was noted that their HQ was voted one of the most beautiful skyscrapers in North America. Anybody remember what happened to Sears shortly after their bout with the edifice complex? Besides, they have my HELOC and I'm hoping for an opportunity to get them to offer closing it in exchange for a fixed. Currently at Prime minus 1/8th how can I lose?
Banking metaphor video:
disney fantasia The Sorcerer's Apprentice with Mickey
YouTube -
Tsunami of easy liquidity, everything looks easy and then the casino gets out of control, and then Bernanke takes an axe to the single broom, splitting it into thousands of new derivatives that generate countless new additional problems... the tsunami becomes a whirlpool of excess, spinning wild
"Banking losses to Hit $1.6 trillion"
Soon to be followed by: Federal Reserve creates $1.6 trillion Term Auction Facility to aid insolvent banks.
I think we are playing chicken with the rest of the world to force everybody else to stop pegging their currency to the dollar. If they fail to do so, they will crash harder and faster than we ever could (that's THE BET). This will provide one way or another the massive demand destruction for petroleum that will be needed. They can decouple the artificiality of their currency to ours which we intend, or suffer the consequences of a killer hyperinflation that will eat them alive far more so than it can eat us alive-the ball is in their court.
Doc at the Radar Station | 07.06.08 - 11:33 pm | #
Yup. I've been thinking that for a long time - it really is quite the paradox.
Did you read Tim Duyover the weekend? Pretty interesting - follow the money.
doc at the r.s.- could you please explain? How would forcing everybody to stop pegging their currency to the dollar. If they fail to do so, they will crash lead to massive demand destruction for petroleum?
OT (maybe):
Lawmakers question high cost of fertilizer
http://www.billingsgazette.net/articles/2008/07/06/news/business/61-fertilizer.txt
The senator says there is a "shroud" that prevents easy examination of what's happening in fertilizer pricing.
"Is this simply big companies having the muscle to price in their own manner without competition? The fewer companies you have, the less competition you have. That's just a fact of life," he says.
There is virtually no pricing transparency, he adds, which could demonstrate the fertilizer industry's upstream and downstream costs and therefore their pricing profit levels.
The cost of fertilizer to North Dakota farmers has risen from about $450 million in 2006 to about $800 million in 2008.
"You impose about $350 million to $400 million added cost just in fertilizer on North Dakota farmers, that's a huge burden," Dorgan says. "That's why I've asked the Federal Trade Commission to investigate what's causing it."
When do financial gray-collar crooks
quit playing with fire on the bad ship Sucker,
and ruin our future and the kids' future ?
(Erin Callan, ex CFO at Lehman, admitted
2 or 3 years back that she designed packages with
components that qualified as debts for tax purposes
while also qualifying as assets for credit rating.)
Is this the contrarian indicator of a trading low? Barron's cover of a bear!
I can't believe IMB made it this long. Wish I had bought more puts -- they were just too expensive there at the end.
Month old story, but highly stimulating IMHO:
Sharp Rise in Shopping Center Vacancies
Suzanne Mulvee, senior economist at Property & Portfolio Research, estimates that the overall retail vacancy rate will reach 12.5 percent later this year. That's roughly 1.2 billion square feet, or around 40 square miles of empty shopping space (plus perhaps another 100 square miles of unused parking lot). To put that into perspective, the total land area of the city of Miami is 36 square miles.
"I would avoid anything related to commercial construction," advised Michael Larson, associate editor of Safe Money Report and an early predictor of the mortgage crisis.
Last year, developers built 143 million square feet of new shopping centers and big-box stores. Another 137 million square feet is expected to be completed this year.
OT: Austin office vacancy hits 16.5%, lower rents may be inevitable
Austin office vacancy hits 16.5%, lower rents may be inevitable - Austin Business Journal:
Landlords have been reluctant to lower rates," Alexander says. "They're trying to keep rates high by giving up other concessions, like higher tenant improvement allowances and free rent. We've even seen a situation where a landlord has gone in and bought a tenant out of its lease obligation [with another landlord] to secure them in their building."
Ryan Kasten, associate vice president in the tenant division of Oxford, says developers are having a tough time negotiating between the high costs of construction and the need to get deals done via lower rents and concessions.
"I think you're seeing some of the rents on existing buildings begin to drop, but it's much harder for those landlords with new space," Kasten says.
The piece cited by CR is a summary.
The complete article, Die Grosse Finanzkrise hat eben erst begonnen, by Marco Zanchi is here:
SonntagsZeitung | Wirtschaft
It's only just begun.
Has anyone here read "The Great Wave" by Fischer? I just finished it and thought it quite good. The current great "price wave" seems to be cresting.
Now is a great time to buy
a home; a Hummer; UBS; BS; Larry Kudlow;
Keith Olbermann; pixie dust.
(You missed out on the B Bridge.)
According to the Centro Web site, the Hornell Wal-Mart has 30,000 square feet behind a false wall to expand onto, if the need arises.
But with higher prices and slow growth in the national economy, the expansion may not go through, Hogan said.
Hogan said two other planned Wal-Mart stores in the area in Bath and Wellsville have seen downsizing.
The plan to build a 150,000-square-foot Supercenter in Bath, he said, was dropped in April, while the store proposed for Wellsville was downsized by several thousand square feet.
Centro officials declined to comment on negotiations with potential or current tenants, and said a press release would be issued when a contract is signed. A spokeswoman for Wal-Mart said she would check on questions from The Evening Tribune, but did not respond by press time.
Wal-Mart, Applebee’s projects in the works - Hornell, NY - Hornell Evening Tribune
This morning I noticed the UBS/Credit Suisse blurb on Reuters. I wrote this post at the time- METROPOLITAN | Property Management & Real Estate Investments. I hestitated and almost didn't publish it because I thought I was being too pesimistic. Now I log on and see this.
I want to see the entire article before I jump to any conclusions but this is getting just a bit frightening.
so does the IMB problem make Schumer, after his public pronouncements last week, a Paul Revere or a Schmuck?
Cindy McCain writes:
The Rapture will save us.
Cindy McCain | Homepage | 07.06.08 - 10:57 pm | #
Actually, some folks maxed out their credit in such a belief. You know, that was their plan, that the rapture would come before they had to pay off the debt.
Australian REITs' A$70 Billion Spree Stumbles, Australian Says
Australian REITs' A$70 Billion Spree Stumbles, Australian Says - Bloomberg.com
Australian real estate investment trusts may have to sell much of the A$70 billion ($67 billion) in overseas property assets they hold as the global economic slowdown forces them to pay down debt, the Australian reported.
The country's trusts bought $20 billion of U.S. shopping centers between 2005 and 2007, including Centro Properties Group's $3.7 billion acquisition of New Plan Excel Realty Trust, the newspaper said, citing New York-based research firm Real Capital Analytics Inc. During those three years Australian companies bought an eighth of all U.S. strip malls sold, the newspaper said, citing Real Capital Analytics.
Cindy McCain is a vampire allegedly preserved by crude oil. Let the buyer beware!
Hot Money Headache
Hot Money Headache - WSJ.com
The starting point is the fact that since last October interest rate differentials between dollars and yuan have reversed. The U.S. Federal Reserve aggressively lowered rates just as the Chinese central bank, the People's Bank of China, was pushing up domestic rates to fight inflation. Currently, rates on the Chinese central bank's one-year bills are about 170 basis points higher than comparable U.S. Treasuries.
This has created an arbitrage opportunity that local firms are exploiting on a massive scale, borrowing cheap dollars to substitute for more expensive borrowings in yuan and for local investments. A second factor driving this arbitrage is the wide-spread expectation that the government will either speed up the rise in the yuan's crawling peg or implement a one-off revaluation.
dryfly,
HA! Just now reading the article you linked to:
"The technology boom was characterized by high rates of investment spending, and although the final push that followed the Asian Financial Crisis saw plenty of excess, one could reasonably argue that the capital inflow was supporting investment spending. This, of course, is the traditional textbook interpretation of a current account deficit/capital account surplus as a mirror of an internal saving and investment imbalance."
Wow. The Asians are truly in far more of a pickle than we are, and we can now take advantage of expensive oil and the credit crunch to keep our consumer zombies from buying any more of their shit. This reminds me of that knuckle under game in High School.
yowza, If the Chinese and many other currencies were allowed to float with respect to the dollar, they would lose a massive subsidy to their manufacturing base they have been incubating for the last 3 decades. We are just making it more difficult for them to artificially maintain the pegs. They have to be slowing already, despite high inflation.
Is Deutsche Bank Weighing Asset Sale?
Look Closely Before Biting - WSJ.com
Deutsche's problem is that chunks of its total asset base of 2.3 trillion ($3.6 trillion) generate next to no returns. Still, the bank has 850 billion in derivatives on the balance sheet, equivalent to nearly a fifth of total assets. But it partly reflects the different way derivatives are handled under international and U.S. accounting standards.
Commodities Regulator Under Fire
Commodities Regulator Under Fire - WSJ.com
With oil at more than $140 a barrel, the real fireworks in Washington resume this week on one of the hottest issues in the global economy: whether speculation is contributing to the past year's doubling of crude-oil prices and should be curbed.
The House Agriculture Committee will host hearings examining whether the Commodity Futures Trading Commission has a strong-enough grip on the fast-growing, $5 trillion futures market for oil and other commodities or needs other tools. It also will examine how that market is affected by the $9 trillion "over-the-counter" market that has mushroomed outside CFTC regulation.
The study was written by Ray Dalio.
yowza, If the Chinese and many other currencies were allowed to float with respect to the dollar, they would lose a massive subsidy to their manufacturing base they have been incubating for the last 3 decades. We are just making it more difficult for them to artificially maintain the pegs. They have to be slowing already, despite high inflation.
Doc at the Radar Station | 07.07.08 - 12:39 am | #
Yup.
The irony is if they made a big push to switch from an export focus to supporting their own young but growing internal demand - stronger currency would HELP them continue growing not HURT them.
But they don't do that.
Everybody wants a pony - their own one trick pony they know & understand. We consume, they produce - just try reversing the two (or even balancing them) - its like swimming up Niagara Falls.
Um, don't say Folsom is East Sacramento. They're two different places, many miles apart. Folsom is East of Sacramento, that's all. And it's been dead out that way for a lot longer than just yesterday. Try a few months. Grossly overbuilt retail out there. Gonna be death for many of them. I don't travel more than five miles from my house to buy anything anymore unless there's a very compelling reason to do so, and when I can walk a few blocks to a Trader Joe's, I have no compelling reason to drive much for food.
Developers opening new malls this year clearly timed the economic cycle poorly. And the cultural cycle isnt helping matters any. The extreme consumption of this current gilded age has inspired a backlash. In December, hedge-fund billionaire Ray Dalio ran full-page advertisements in newspapers urging Americans to eschew Christmas gifts and instead make donations to charity. (???)
Excerpt from mp's link with more details about the Bridgewater study (translated):
...
U.S. banks are expected to incur the biggest losses
So far, only financial institutions have only acknowledged losses of 400 billion U.S. dollars estimates Bridgewater. Non-US banks - especially UBS - have been the biggest "contributors" with 238 billion U.S. dollars. The biggest losses will be by U.S. banks with names such as Citigroup, Bank of America and JP Morgan Chase and many smaller institutions not well known around here.
Why? Because their core business is lending, and they hold the largest exposure to these loans. But also because a large part of it is traditional bank loans, that unlike securitized mortgages are not traded and their decline in value is not reflected on their balance sheet. "Assessing current market conditions, we still have a long way to go because these institutions have acknowledged only one sixth of the expected losses that they suffered as a result of the credit crisis", writes Bridgewater. Five-sixths are nearly 500 billion U.S. dollars.
The following major firms have now warned concerning the likelihood of one or more "catastrophic events" in the financial markets over the next few months:
Morgan Stanley
June 17
Royal Bank of Scotland
June 19
Barclays Capital
June 27
Fortis
June 28
Bridgewater Associates
July 6
Conjure Bag says, "Get out your prayer rugs."
Yeah, yeah. We know what Conjure does on rugs.
The Treasury should be issuing some kinda war bond or subprime bail out bond and monetize this mess, kinda go back a few hundred years and start this thing over (America). The problem of course is that this mess is private debt being socialized into public debt, but same idea in principal.
Re: Inflation results when the money supply increases faster than goods and services, and replacing government securities with cash would not change the size of the money supply. Federal securities are already money. They have been money ever since Alexander Hamilton made them the basis of the national money supply in the late eighteenth century. Converting federal securities into government-issued U.S. Notes would not cause prices to shoot up because consumers would have no more money to spend than they had before.
n 1933, Franklin Roosevelt pronounced the country officially bankrupt, exercised his special emergency powers and, with a wave of the royal Presidential fiat, ordered the promise to pay in gold removed from the dollar bill. The dollar was instantly transformed from a promise to pay in legal tender into legal tender itself. Seventy years later, Congress could again acknowledge that the country was officially bankrupt, propose a plan of reorganization, and turn its debts into " legal tender." Alexander Hamilton showed two centuries ago that Congress could dispose of the federal debt by "monetizing" it, but Congress made the mistake of delegating that function to a private banking system. Congress needs to rectify its error and monetize the debt itself, by buying back its own bonds with newly-issued U.S.
Spiraling US Federal Debt Triggers Decline of Dollar
One gazillion-catrilion-megapipedillion Dollars in the hole. The number has become so big I just can't imagine it!!! It has lost meaning
RGMiron- "!!! It has lost meaning"
Did I just hear a brain reset?
Good liquor is always helpful during brain re-boot. Fortunately, Lefty's Liquors is available on-site and can help you with anything you want or need.
only another trillion, wake me when we get to a googol...
mp,
2 of those 4 banks were 2 of the 3 that divyied up ABN-AMRO so maybe they're projecting their own pain.
Just a thought
Alec- "Just a thought"
Makes sense to me.
Yen/euro action on Bridgewater report.
yep. put a fork in it.
From the ml-implode article: "My sources put regulators at IndyMac this weekend doing the deed."
Man, the bank regulators in this country sure are randy! You'd think they could scare up just a little class and modesty.
The news has been abuzz lately regarding the LA Times layoffs.
Times to cut jobs, reduce pages - Los Angeles Times
It appears about 150 heads will roll. Couldn't happen to a nicer bunch of REIC shills. The people who can write and have more than a few synapses firing should start some good blogs.
I do wonder if it's going to be the end of the profitable era of these dead tree news outlets. Used to be classifieds made them tons of $$$. That's been killed by craigslist, Auto Trader, et. al. So they went to REIC ads. That brought in the money. Then they really brought in the money when their writers engaged in REIC shillery puff balls.
Now REIC revenue is declining after they whored out their credibility, so what are they going to do? I can't say I know.
If you choose to stick a fork in it, we have some nice yellow or red plastic ones, that can be reused, if you wash them. Stop Bye.
One Trillion? No problem. Got change for a Quadrillion?
Add to that list of firms is Barron's with its short article about the Hindenburg Omen. Boom and Bust - Barrons.com
A RATHER OMINOUS AND OBSCURE TECHNICAL SIGNAL that allegedly predicts a stock-market crash has been flashing of late. It's the Hindenburg Omen, so named for the ill-fated dirigible that burned and crashed in May 1937.
The Hindenburg Omen actually appeared twice in June, once on the 6th and again on the 17th, and from the looks of what followed, it should be paid no small amount of heed. June was a disastrous month for the Dow Jones Industrial Average, with the blue-chip indicator ...
Can anybody shed some light on this technical indicator?
TIA,
Good times.
"Can anybody shed some light on this technical indicator?"
Hindenburg Ome - Wikipedia, the free encyclopedia
James Kunstler opines:
By any rational measure our society is comprehensively bankrupt. From the federal treasury down to the suburban cul-de-sacs so much loaned money is either not being paid back, or is at risk of never being paid back, that the suckage of presumed wealth has passed through an event horizon out of the known universe into some other realm of space-time, never to be seen again in this realm...
...the upshot will be something at least twice as bad as the Great Depression of the 1930s: people with no money in a land with no resources (with manpower that has no discipline), hardly any family farms left, cities that are basket-cases of bottomless need, comatose small towns stripped of their assets and social capital, an aviation industry on the verge of death, and a railroad system that is the laughingstock of the world...
...The banks have been doing their death dance for an entire year now, pretending that their problems are those of mere "liquidity"...rather than insolvency. But the destruction of money (resulting from loans not paid back) is now so intense that the game of pretend has reached its terminal point. The question for the moment is exactly who and what will be crushed as these institutions roll over and die.
Can't wait to read his new post at Clusterfuck Nation, due out in a few hours.
Hindenburg Omen:
Hindenburg Ome - Wikipedia, the free encyclopedia
The piece cited by CR is a summary.
The complete article, Die Grosse Finanzkrise hat eben erst begonnen, by Marco Zanchi is here
From the full article 1.6T loss estimate is actually crazy optimistic as it is only a 6% haircut on 26.6T outstanding.
If I may come with a suggestion...? There are established prefixes for large sums in the scientific or engineering community. I suggest you use Giga (10^9) instead of billion and Tera (10^12) instead of trillion.
Terabucks. It does have a certain ring, doesn't it?
"The complete article, Die Grosse Finanzkrise hat eben erst begonnen, by Marco Zanchi is here"
Link, please?
Pavel Chichikov writes:
"The complete article, Die Grosse Finanzkrise hat eben erst begonnen, by Marco Zanchi is here"
Here ya go:-
SonntagsZeitung | Wirtschaft
Thanks.
Interesting Times writes:
Gold will be dropping back down to $800 or lower this half.
Am going to have to disagree with you.
On account of all that commercial closing of hedges.
Volatile yes but 800 is a little bit extreme, besides at those prices physical buying will come out in force.
Would probably go down short term on account of perceived dollar strength and falling crude price which is due anytime now but once reality sets in, it will move again.
Should be an interesting week.
Interesting Times writes:
Gold will be dropping back down to $800 or lower this half.
Am going to have to disagree with you.
On account of all that commercial closing of hedges.
Volatile yes but 800 is a little bit extreme, besides at those prices physical buying will come out in force.
Would probably go down short term on account of perceived dollar strength and falling crude price which is due anytime now but once reality sets in, it will move again.
Should be an interesting week.
Peak Banking? Got popcorn?
Gold will be dropping back down to $800 or lower this half.
Am going to have to disagree with you.
A. is correct b. is going to get their ass handed to them on a lower priced silver plater.
This thread is probably dead, but the local fishwrapper has nothing on
Indymac.
It also had some real estate advice written in Illinois, which clearly did not take certain Florida law issues into account, I suppose because they are too poor or cheap to hire a Fla real estate atty to vet the advise.
No word on IndyMac; maybe they are waiting until after the close.
If I may come with a suggestion...? There are established prefixes for large sums in the scientific or engineering community. I suggest you use Giga (10^9) instead of billion and Tera (10^12) instead of trillion.
no way, this lends legitimacy and scientific backing to the economics and lending realm, which are neither.
we should use the least scientific language possible. perhaps child language or even cat language.
like this: "banks haz lost lotsa dollas, and dey will lose mo. where dollas haz go?"
oops:
sorry.
a billion dollars is "lotsa dollas"
a trillion dollars is "wowza dollas"
a quadrillion dollars is "one euro"
Anonymous writes:
A. is correct b. is going to get their ass handed to them on a lower priced silver plater.
Interesting analysis. When do you start work at the FED?
When do you start work at the FED?
I don't, I hold Gold and Silver but I also know that they typical fall until about the end of August, We are in a deflationary environment in which cash is king as all asset are sold. Gold sale in India the biggest buyers of gold are down 50%. Their is also a great deal of political pressure to turn a big ass spotlight on the exchanges forcing complete transparency of who is holding what. Now isn't that going to be interesting. You pays your money you takes your chances.
@like this: "banks haz lost lotsa dollas, and dey will lose mo. where dollas haz go?"
Jive-ass turkey ain't got no brains nohow.
That would be "dudes" instead of turkey. It's been a long time since I saw Airplane.
Anonymous writes:
We are in a deflationary environment in which cash is king as all asset are sold.
Gold sale in India the biggest buyers of gold are down 50%.
As long as the cash is not in the USD.
As for india, all the more reason that they'll buy at cheaper rates, which normally supports the price.
Market looking UP on bubblevision. Deals delas deals... let's make another deal. Oh, and the dollah is still wriggling around, not pronounced dead.
I think I'll buy some spot gasoline.
barely writes:
Market looking UP on bubblevision.
Crude is down about four and a half. Let's see if it can keep going lower.
If losses are that low, Stock markets are going to go lower. That doesn't figure in inflatio
India spot gold prices closed lower on Monday, tracking the international bullion market and amid weak domestic demand, trade participants said.
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
What are the implications for US interest rates?
Anonymous writes:
India spot gold prices closed lower on Monday, tracking the international bullion market and amid weak domestic demand, trade participants said.
Which is exactly why they will have to purchase later. They won't chase the price, which is smart but it will lend support to prices when they do buy.
Hamburger writes:
What are the implications for US interest rates?
- for the rest of 2008, early 2009? Anyone?
I predict that the FED will stay put for the rest of the year BUT if they do move it will be to lower rates.
Early 2009 same thing, maintain or lower.
I posted the translation of the full story here:
$1.6 trillion: new estimate on writedowns
To mndean: Folsom is indeed part of Sacramento. It's called urban sprawl. When you can't tell where one town ends and the other begins, it's all one giant shiite hole. Just like the Bay Area.
My Countrywide 1-year CD from last September keeps chugging along at 5.65%......
My screen is showing me that trading in IndyMac has been halted
Yellen saying house prices to continue to fall into 2009 to restore balance
Ed, thanks for an excellent translation.