Of course, "credit losses" only means loans going bad (and I still think they're underestimating). The direct hit to homeowners won't be a question of trillion or not, it'll be "how many".
With apologies to the oft literally misquoted (but accurately quoted in 'spirit') mellifluous Senator Ev Dirksen, "a trillion here, a trillion there, pretty soon it adds up to real money".
I'm waiting for the mortgage debacle costs to add up to the total national debt, and we seem to be 10-20% of the way. Might as well add the mortgage costs to the national debt, because the country is insolvent anyway.
If Citi and BOA can do a writedown, the US Government surely can do the same thing, right?
friardaddy writes:
You mean the bottom isn't in?
friardaddy | 08.02.08 - 6:29 pm | #
Well not exactly - but then with a really big round bottom its awfully tough to know where and when the actual bottom is... but its out there somewhere. You can be confident in that.
Maybe we could claw back all the earnings above minimum wage of every Wall Streeter who participated in this mess...that would be a reasonable down payment on their contribution to society.
That's actual losses to lenders, right. What about the business contraction as a result of the tightening. Vehicle sales now 12.5mm. From 16mm. How many billions is that and what about other durables? Once the direct and indirect losses are tallied I think $2b will look like a gift.
CR will you be doing a post on vehicle sales that shows run rates and possible floor...
CR, how do you know that 2 trillion is "too high". It might just be "too low". You know? Anybody know? No. Everybody is just guessing. What we do know is that it will be AWFUL.
Let's guess the total will be 1.8 trillion. We've written down, or rather banks, etc., have, $300 billion. So we're about one-sixth of the way. Not even one fourth. Nor one half. Long, long way to go with these losses.
more than a year ago these guys tried to hook me. i played them like a fish all the way to signing and then gave three of their reps a lecture about how they were destroying the country...
(knowledge courtesy of what CR and company taught me here) cause before that i was an ever bigger idiot than i am today
so this is sweet
Seattle PI
"(washington)State goes after Paramount Equity Mortgage"
"The state wants to revoke the license of Paramount Equity Mortgage Inc. and fine the company $500,000 over deceptive lending practices.
The (washington) state Department of Financial Institutions charged the company with collecting unearned fees, hiding fees from borrowers, charging consumers to buy down interest rates without reducing the rate and not making certain fee disclosures."
Quit the inning analogy already. I think 18 months of contraction followed by a stagnant economy is best case. I think we will contract for at least 24 months...
I remember when many here thought Roubini was high with $500 Billion.
Once you add up residential mortgages, HELOCS, consumer revolver debt, auto debt, commerical real estate debt, commercial debt and municipal debt.....we are looking at well over $25 Trillion of debt......two trillion will likely be the floor.
Yeah, but that $100Billion was in 2007-dollars. You need to adjust
for inflation, which gets you somewhere
around $2T in 2008 dollars. Bernanke
was correct all along. Hucoudanode?
The first page of Calculatedrisk (Headlines) sum up how great things are; I wonder how much of this is ignored by the current Bush Coup Members?
We are in the second inning of a severe, protracted recession, which started in the first quarter
Goldman: "Second Half Slowdown Ahead"
Your Friday Bank Failure
Auto Sales Decline in July, 2nd Half Expected to be Worse
Unemployment Rate Rises to 5.7%
IndyMac Holding Company Files BK
GM: $15.5 Billion Loss
FT: Fears Growing Concerning CMBS Default
CA Governor Orders Layoffs, Pay Cuts
The Coming Hotel Bust
Recession May Have Started in Q4, 2007
Weekly Claims Hit 5 Year High
Re: Fitch believes that pending litigation surrounding loans made by Countrywide acquisition and CSFB, the latter it purchased so-called option ARM mortgages from, adds additional risks. Officials in three states have filed separate legal actions against Countrywide. The actions -- by the attorneys general of California and Illinois, and the Washington State Department of Financial Institutions -- came on the same day that Countrywide shareholders voted to approve the sale of the company to Bank of America.
All debts are supposed to be liquidated in the 50th year:
"And you shall count seven Sabbaths of years for yourself, seven times seven years;
and the time of the seven Sabbaths of years shall be to you forty-nine years.
'Then you shall cause the trumpet of the Jubilee to sound
on the tenth day of the seventh month; on the Day of Atonement
you shall make the trumpet to sound
throughout all your land.
And you shall consecrate the fiftieth year, and proclaim liberty throughout all the land to all its inhabitants.
It shall be a Jubilee for you;
and each of you shall return to his possession,
and each of you shall return to his family...."
--Leviticus 25:8-55
(The phrase, "proclaim liberty throughout all the land to all the inhabitants thereof" is inscribed on The Liberty Bell.)
Again, I think Roubini has found a shtick and that's cool. But 2T is a huge amount of money. So I'm waiting for the equivocation here to be ALL losses and not losses related to the housing bubble as the original intent was.
He should have just stuck with the 1T number because that's probably going to be close to the real impact of the housing bubble itself. With the possible exception of commercial RE, this is going to be the biggest loss area because of the extent across the entire country and population. Any consumer losses arising out of this are going to be peanuts compared to the numbers of mortgage related items on books out there. And as we've seen, they will carry large amounts of securities out to maturity if needed to lessen the headline loss number.
The debt is now $9.5 trillion, or $31,284.84 for every person in the United States, according to the National Debt Clock website. That's all the debt the government has accumulated since George Washington was president. The debt was $5.6 trillion in 2000. Simply paying interest will cost taxpayers about $260 billion this year
It's true that the $482 billion deficit chasm estimated for fiscal year 2009 doesn't look so deep when taken as a percentage of the overall economy 3.3 percent of gross domestic product compared to the 1983 nadir of about 6 percent.
But this is just one "mortgage" that the federal government (i.e., taxpayers) must meet. It owes on all the deficits it has accumulated over the years (the national debt), and it has jumbo liabilities to come in the form of Social Security, Medicare, and Medicaid.
Adding all those liabilities together, the government has dug itself into a $53 trillion fiscal hole the equivalent of $175,000 per person living in the United States. If the White House and Congress continue to follow the do-nothing plan, in another 30 years or so the federal government will spend more than twice as much as it raises in taxes.
They seem a bit whacked out there with $53 trillion:
Is the paper a religious periodical?
No, it's a real newspaper published by a church The First Church of Christ, Scientist in Boston, Mass., USA. Everything in the Monitor is international and US news and features, except for one religious article that has appeared each day in The Home Forum section since 1908, at the request of the paper's founder, Mary Baker Eddy.
The massive initial batch of sell orders processed on Monday, March 13 triggered a chain reaction of selling that fed on itself as investors, funds, and institutions liquidated positions. In just three days the NASDAQ had lost nearly nine percent, falling from roughly 5,050 on March 10 to 4,580 on March 15.
Another reason may have been accelerated business spending in preparation for the Y2K switchover. Once New Year had passed without incident, businesses found themselves with all the equipment they needed for some time, and business spending quickly declined. This correlates quite closely to the peak of U.S. stock markets. The Dow Jones peaked on January 14, 2000 (closed at 11,722.98, with an intra-day peak of 11,750.28 and theoretical[7] peak of 11,908.50)[8] and the broader S&P 500 on March 24, 2000 (closed at 1,527.46, with an intra-day peak of 1,553.11);[9] while, even more dramatically the UK's FTSE 100 Index peaked at 6,950.60 on the last day of trading in 1999 (December 30). Hiring freezes, layoffs, and consolidations followed in several industries, especially in the dot-com sector.
The bursting of the bubble may also have been related to the poor results of Internet retailers following the 1999 Christmas season. This was the first unequivocal and public evidence that the "Get Big Fast" Internet strategy was flawed for most companies. These retailers' results were made public in March when annual and quarterly reports of public firms were released.
By 2001 the bubble was deflating at full speed. A majority of the dot-coms ceased trading after burning through their venture capital, many having never made a net profit. Investors often jokingly referred to these failed dot-coms as either "dot-bombs" or "dot-compost".
Hi awgee. I've asked what effect the credit default swaps will have and haven't got a credible or logical answer. I think because nobody knows the answer, except it isn't good.
I agree with Roubini that total losses may well be near $2 trillion; however that does not augur that banks are in for continued massive writedowns. While banks may have only written off $300B to date, much more than that has quietly been written off by pension funds, hedge funds, SWFs, and other privately managed pools of money.
Not that I am suggesting it is time to buy bank stocks, but if Roubini is yelling the sky is falling he should be more thorough in his analysis of how much has already fallen.
Lawyerliz - Exactly, no one knows. There is no real market or clearing house. They are over the counter so no one really knows how many or their worth. The IBS tries to estimate, but ... And each party enters their worth on their balance sheet at whatever they choose to value them at. A CDS can be entered as a $10 mil liability on ones party's balance sheet and a $100 million asset on the counterparty's balance sheet. And many are hedged, so they are accounted for on the difference, but if one counterparty can not pay, the other party is still liable for the full amount of their paper. And I am truly an optimist.
I would love to see Roubini's spreadsheet with the components that add up to $2T.
I think it's conservative. Consider the over all size of the derivative market is close to 3/4's of a quadrillion dollars, it only takes a hiccup to make it at least this big. And it will be bigger.
lawyerliz, the CDS issue isn't the notational value of the instruments themselves, but the effect as a hedge. Why there isn't a straight answer is because in order to know, you have to know the ultimate losses on the first order securities and no one does by a longshot. What I imagine will happen is what happened this week with AMBAC. They settled what they owed instead of paying the whole amount, with the result actually being that they get to write UP the amount they took as a loss.
There are so many interdependencies here it's hard to put ultimate amounts to this, and they may never fully be known as this is unwound. But if you follow the patterns, everyone is just going to eat some loss and the instruments will get unwound. That's all this is about. The orderly unwind, but it is financial kabuki to watch.
So if 10% (which is a HUGE number) of people in the entire US defaulted on their mortgages you are looking at a 1.2T loss. That's with zero recovery on the property. Does that seem reasonable to you? Look at the percentages now, it's not close to this.
Total leveraged instruments based on that debt, $200 Trillion.
That isn't the actual value of these instruments, that's the entire morass of derivatives, swaps, and other exotic issue that may or may not ever see any value. Don't forget that most of this are just "insurance" and hedges. So what is the actual notational value of all of this? I've seen somewhere around 200 to 400B.
"Some estimates are in the order of between $50 billion and $100 billion of losses associated with subprime credit problems." -Ben Bernanke July 2007
It is striking and ironic that this is in the ballpark for what the Iraq war was supposed to cost and we're looking at that turning out to cost nearly as much as the housing mess. Didn't Paul O'Neill get run out of there for wanting to be transparent?
Regardless of the projected future loss and future cash burn, I think we are seeing common shareholder dilution across the board in America -- which is being masked by share repurchase programs -- which are conduits for backdated option grants.
No where have we seen dividend cuts or honest reflections of the money which has vaporized from all the multiple global bank write-offs, which at this point have to be getting close to a trillion -- yet, very little impact to dividends or option grants; dividends hurt option grants and as share values crash, insiders are still being stuffed with billions in the form of compensation.
Perhaps this is not well put tonight, by myself, but as an example, how can Bank Of America botch a deal so badly as with Countryfried, see its share-value destroyed, but yet not lower the dividend? Furthermore, you see the same correlation in The S&P 500, with billions lost to accounting fraud and billion dollar write-downs, yet, virtually no impact with the yield/P/E.
If you spent a million dollars a minute starting at the time Christ was born, you would NOT have spent a Trillion dollars yet.
Conversely, if you had written bad checks at the rate of one million dollars a minute since the time Christ was born, you STILL would not have written a TRILLION dollars worth of bad checks.
I understand first order hedging, but it seems we've hedged the hedges and then hedged those? I get to that and my brain starts to explode.
I deduce the bad effects will be less than indicated with the huge numbers with all the zeros, but there is no answer it seems to the bad effects, even within an order of magnitude.
Also, I came up with a back of the envelope estimate of half a trill to a trill and a half back last fall, and I see nothing to indicate that the numbers will be less and a lot to indicate that they will be more. What I didn't take account of last fall was the neglect of the housing stock by the incompetent evil (go get 'em conjure) stoopid gasp choke lenders. Also, didn't realize that the effect of the empty towers would be devastation due to lack of maintenance money. Well, I knew, but not so concretely.
ipodious wrote: That isn't the actual value of these instruments, that's the entire morass of derivatives, swaps, and other exotic issue that may or may not ever see any value. Don't forget that most of this are just "insurance" and hedges. So what is the actual notational value of all of this? I've seen somewhere around 200 to 400B.
The matter you may be overlooking is that everything leans against each other. Nothing stands on its own.
If all you had to do with the bad checks is sign them, you'd still have a severe writer's cramp (and maybe paralysis). [not to mention needing to live for 2000 years].
The dollar is toast and when nations who carry our debt realize that we are going to default, mass exodus of investors in the USA. Does anyone know how to buy Treasuries in Swiss Francs?
OT but I'm trying to figure something out on puts and I'm still not clear from the reading.
Assume I buy a contract at - for example - $1.50/contract with each contract covering 100 shares. The current share price is $30/share and the strike price is $25/share in 90 days. The price drops to $24/share in 60 days and I sell. My understanding is that as the share price drops, the put/option contract price increases accordingly. So when I sell, the option is supposedly higher than the $1.50 which I paid. Assume $2.00. So I've then made $.50 profit on the contract.
And the actual $6/share drop is meaningless in terms of determining the final haul on the transaction. Is that correct? Or does the $.50 contract profit get multiplied by the number of shares in the contract?
Thanks. I've been to multiple sites and I still can't wrap my head around that particular concept...
Or maybe I'll just load it onto an iPod and ask my teenager to figure it out.
"Gosh, a really vivid description of Hell. That's want we'll do with the evil doers. Make them sign their names over and over and over and over again."
-Lawyerliz
Kind of like a Twilight Zone version of The Simpson's
ha lawyerliz! that's what happens to bureaucrats in hell. they get to sign their name and stamp things for eternity!
I think it does make your head sort of explode, which is why it was important for this all to be orderly. of course, that means drawn-out and this isn't over by a longshot. this is the 1 year anniversary and it's probably going to take another year to get close to done. but like JP is saying, I think Roubini is rolling up everything to be a bit sensationalist. Remember, he started calling recession about a year before it happened. Jeez, I should start screaming about an asteroid hitting the earth. I'll eventually be right
I think the way to think about this is sort of what you allude to though. Take off all those zeros and look at this as sets of interlocking items where all of them insure each other. Picture all the parties at one big casino table with piles of money in from of them. So after you pay everyone at the table who has one, with the same money over and over i might add, what was lost and gained? That's the rub here.
As for Obama's talks with Treasury Secretary Paulson and Fed Chairman Bernanke, they strike me as entirely appropriate given the state of the economy and the necessity for Obama, if elected, to hit the ground running to battle what polls show is Americans' most serious concern. Perhaps rather than the "extended phone conversation" with Paulson, reported elsewhere in the Post, in which Obama discussed the future of Fannie Mae and Freddie Mac and the new housing law, Milbank would have preferred a meeting like the early ones Bush held with his cabinet. Those meetings were compared by then-Treasury Secretary Paul O'Neill, with those of "a blind man in a room full of deaf people." Nor was Bush's Fed Chairman, Alan Greenspan, any more impressed with him. Despite being a staunch Republican, Greenspan said he much preferred Democrat Bill Clinton's economic policies to those of the cowboy from Crawford.
New law: All derivatives and leveraged investments must be represented by proportional quantities of poop. The poop is to be stacked on the roofs of buyers, sellers, and brokers. This way we have transparency -- we know exactly how much poop is out there -- and if the piles get to big, the roofs cave in as a sort of early warning device.
I barely noticed the dotcom thing. Except to wonder why idjiots were buying shares of stock in companies that obviously would never make any money.
I sat back and marveled. This bust is in my industry and thus it has smacked me right in the face.
Also, people need to live in or rent a dwelling, but nobody needed to buy a dotcom company; you could sit on the sidelines are just observe. the hub wanted to buy something called Red Hat at one point, and nobody would allocate him any. Wonder if that means anything today.
Like a closing. hehehehe. Yep. And virtually none of those papers mean anything. A combination of lender stupidity and the feds requiring useless paperwork. All you need is a deed, closing statement, note, and mtg at minimum.
And you need to add a Bill of Sale, and Mechanics lien affidavit to do it right. If you have the misfortune to be called John Smith or Jose Rodriguez, you need an it's not me affidavit. That's it. All the rest is crap. If you're buying cash, leave out the note and mtg(deed of trust).
Got my professional start in commercial reinsurance (as
Andrew Tobias once wrote many years ago, he doesn't know what the strangest thing in the world is, but he does know that insurance accounting is the second strangest). The magnitude of what's out there is mind-boggling, but you have to remember that the pieces that are "ceded" or laid off on subordinate entities are often much smaller than you might think.
Example: Old employer covered Ford Motor. The insurance was set so that we might retain the first $2M of any physical loss. The next level, up to $5M, would be split among, perhaps, 25 secondary carriers arranged through a syndicate, so each carrier got 4% of the loss.
If Ford incurred a $4M loss - like hail damage to a lot full of factory frest Escorts in Argentina - the spread would be $2M retained by my employer and the subsequent $2M spread so that each of the 25 reinsurers got hit for only $80K (4% of their portion).
It's going to be a long, ugly road but an orderly unwind isn't impossible. That said, the insurance carriers were required by NAIC standards (as I recall) to monitor total written exposure so that it could be correlated to premium levels/capital - which the Fed/FDIC has apparently never done.
So that means everybody in the giant mythical casino table just keeps handing each other stacks and stacks of the same chips, in a musical chairs sort of way, and at the end we see who has a big stack and who doesn't even have a chair to sit on anymore?
So what, if anything does that do to the real world?
So what, if anything does that do to the real world?
Well, the effect is that while these stacks are being passed around, they can't be taken off the table. So the effect in the real world is to take the money off the table until it is all sorted out. That's the effect you're seeing now. Do these zeros evaporating affect you at all? Probably about as much as the dot com evaporation did.
so the real effect is to vaporize some zeros at the end of a lot of investments. big deal, we've survived that before and we will now. the real issue is that money being off the table. it's economic lubricant and the gears are now getting rusty.
It depends upon the size of the risk being insured - Ford v Joe's Garage - as well as the availability of what's out there at the time the policy is placed. If things are healthy, then more can sign up but if anybody on the contract failed, then that amount was retained by the carrier that wrote the policy. In our case, if Gen Re was crapped out, then my employer would have to retain their $80K portion as well.
Note to doom and gloomers. If you live in the city and try to grow your own food in the backyarrd, the squirrels will eat your tomatoes. So, if you want tomatoes, you must eat the squirrels.
"big deal, we've survived that before and we will now."
You are my Sebastian. The interconnecting strings are all taught and reaching failure. Which "SNAP" will cause the unraveling? I don't know. Neither do the authorities. They keep reacting to each "SNAP" as if this the "one"...and wasting ever diminishing resources. Soon it will be "The One". Will there be anything left in the kiddy to hold it together? My guess is not.
Plot: A flying saucer circles the world, eventually landing in Washington D.C. where a man and seven foot tall robot emerge. The man, Klaatu, produces a gift for the President, but a trigger-happy soldier thinks it is a weapon and shoots Klaatu down. In retaliation, the robot melts all the tanks and weaponry with a ray from its visor. Klaatu is taken to hospital where he affects a remarkable recovery and announces that he wishes a meeting with all world leaders. But the leaders are too scared to agree to this. So Klaatu sneaks out, signing into a boarding house under an assumed name. He contacts scientists to organize a meeting and arranges a demonstration by stopping all power on Earth for half-an-hour so that he can announce to the world that if humanity does the nuclear arms race, his people will destroy the world.
If you spent a million dollars a minute starting at the time Christ was born, you would NOT have spent a Trillion dollars yet.
Conversely, if you had written bad checks at the rate of one million dollars a minute since the time Christ was born, you STILL would not have written a TRILLION dollars worth of bad checks.
Two Trillion is a lot of money.
Is your math just bad, Matt, or does someone pay you to lie for a living?
If you spent a million dollars a minute since 0 A.D., you would have spent more than $1,055,667,600,000,000 = 1.056 QUADRILLION dollars, or in other words 1,056 TIMES one trillion.
that's what happens to bureaucrats in hell. they get to sign their name and stamp things for eternity!
Actually, that would be heaven for a beaurocrat. It would be hell for a CR poster, especially if it involved money actually coming out of one's account.
Are you well Ub?
You need to call in sick and not be late, you missed an appointment with a client; WTF are you doing? This could wreck everything!
Re: Miltons epic poem and its key themes: Fall of humanity and justifying Gods actions
Satan and the other fallen angels: Convergence and culmination of earlier traditions
Also: Council in heaven (prologue)
Fausts pursuit of godlike knowledge (I rode too high)
misean, i'm one of those jaded sorts who hears about the end of the world all the time and yawns. the wonderful thing about humanity is its adaptability. and the wonderful thing about this country is its resourcefulness in adversity. unlike sebastian i don't deny the adversity, and that's the difference.
so the disaster movie will have a happy ending, as all american hollywood adventures do as at the last minute, things will turn. in the meantime, sit down and enjoy the popcorn and scream as you get scared at the bad parts. while everyone was on here preaching doom, others were trying to avert that disaster and, so far, it's working. it will be a hairy ride and the end is uncertain, but i'm sure we'll pull through.
We don't have rats where I'm at. They are mostly down by the river. Actually our pro hockey team is called the "river rats". I saw one once. I thought it was an armadillo.
If things get to the point where I know what rat tastes like, I'm willing to bet america won't have an obesity problem anymore. I'm a glass half full bear.
On a side note, I know someone in the Dept of Health in Maine. They busted a chinese restuarant for serving what the restuarant owner called "sea chicken". They didn't call it that on the menu. They just called it chicken. It was seagull. As they say in Thailand, "Same. Same. But different!"
In the example you gave, the profit on a 100 share contract would be $50 ($2.00 x 100 - 1.50 x 100).
But it's a helluva lot more complicated than that. As your out of the money option approaches the strike price, the premium declines (compare, for example, deep in-the-money options vs. out-of-the money options).
What this is all about is greek -- specifically "The Greeks". I've put a link below that goes into it.
what's with all this leviticus stuff tonight? yeesh, if you're looking for something that can read any way you want to bend it, try a derivatives contract instead. at least it wasn't written with bronze age views of the world in mind!
The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending July 25, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 420.8, a decrease of 14.1% on a seasonally adjusted basis from 489.6 one week earlier.
Can we get this crash over? Because even as a renter I'm still paying over-inflated rent... and its tempting to lay out some cash for a smaller monthly payment. Way too tempting...
Are condos in SoCal really going to end up at like $175k-200k?
I suppose I should just think about the extra income I'd bring in by "investing" in PMs/CDs/shorts... but still, paying $500 less per month is too tempting...
Maybe we should ask dryfly. This recipe ran in his newspaper. It should be noted that in the culinary world, the overnight salt water soak is known as "brining". I like it that they don't use those elitist terms when printing squirrel recipes. Also, you can do without the parsley.
Good times cooking tip: If you don't brine your pork chops, you should.
Squirrels in Cream Sauce
2 squirrels, cleaned and cut into serving pieces
1 medium onion, finely chopped
1/2 tsp. leaf thyme
1 4-oz. can sliced mushrooms, drained
1 c. beef bouillon
1 c. sour cream
2 tbsp. lemon juice
3 tbsp. flour
Minced parsley
Soak squirrel in salted water overnight in refrigerator. Remove squirrel pieces and rinse. Discard salted water.
Place squirrel, onion, thyme and mushrooms in a crock pot. Pour in bouillon. Cover and cook on "low" for 8 to 10 hours. Remove squirrel to a warm platter.
Combine sour cream, lemon juice and flour. Stir sour cream mixture into crock pot. Turn on high and cook until thickened. Spoon sauce over squirrel and sprinkle with parsley.
This talk of Roubini being a shill or schtick is ridiculous. Sure, if he just came out with this, but Roubini has been tooting this horn for a long time now. Remember, he used to be an idiot demanding to be noticed. Now that he is shown correct, he is schtick? Please...
I guess Schiff, Roubini, Thornberg, et al were all just schtick, and the reality is that "nobody could've seen this coming?"
Get a frickin grip. These guys were correct. They were brave enough to call a spade a spade when the rest of the world called them Chicken Littles. That doesn't mean they are right about the future, but give them the respect they've earned, dudes.
Re: haven't actually worked it out, but is it possible he is using the British definition of trillion (i.e. million million million)?
If that were the case, he would be using pounds and thus his definition would need to be adjusted for the devalued dollar, e.g, one US (Bush) Dolar = 0.5063 U.K pounds,
Pavel: You're one of my favorites, dude. It's too bad you're not the old man in the rocking chair next door. I'd totally bring you some whiskey and a listening ear.
"and no doubt gets paid in the upper six figures for his creative accuracy."
And I would imagine that someone like yourself who becomes so incredibly aggressive and offensive over something so very minor is paid very little, if indeed he is paid at all.
CSC, in my humble opinion Roubini found his 15 minutes and is now taking it for what it's worth. bully for him. but in reality, the bulls are right for a time and then so are the bears. you can't give a guy all the credit for natural upswings in the market. am i a genius if i said for two years running that there'd be heavy rains in the midwest? You know when I'll know it's not a shtick? When he stops being a bear and starts to offer opinions about what is right that is happening now.
and btw, i've read Roubini for a long time. he was way too bearish back when you could have made a lot of money by NOT listening to him. and now he's still way too bearish in my opinion. the kernal of what he said was correct, but his timing was awful. and don't forget what i preach: you don't have to buy at the bottom or sell at the top to make money, just almost. he was way far of even almost. so in my book, being right in theory is no excuse for being wrong in practice.
"If that were the case, he would be using pounds and thus his definition would need to be adjusted for the devalued dollar, e.g, one US (Bush) Dolar = 0.5063 U.K pounds"
Not so. The British definition applies to everything, currencies included.
Anyone here besides me ever eat a squirrel? It isn't worth it - they are all bones. We used to do it as kids but we ate them in the woods grilled over fires after we shot them. That and rabbits & pheasants.
Rabbits are okay and corn fed pheasants are to die for (in the fall when you clean them they are literally PACKED with corn - they just erupt when you clean them).
Squirrels are enough to make you want to become vegetarian - hind quarters have some meat (each one less than one McNugget) but that is about it.
pavel, i'm not sure i understand your point there. but if you want to go around examining people's skin lesions and yelling "unclean unclean" while rending your garments (which are not made of linen and cotton together i hope!) don't let me stop you! also you can add a delicious recipe for locusts to this thread to go with the squirrel, which, i have no idea if fits levitical requirements. but stay away from the hare because those bronze age guys understood basic zoology not at all.
Seeing as we might be on the cusp of a renewed deceleration, I think we should ask, (as the nurse asked my wife): "How far apart are the contractions now?"
ipodius: Very fair. But let's not kid ourselves that this is any kind of natural upswing/downswing. Anyone with their head upright could see this thing coming for miles. Most just ignored it and belittled anyone who pointed out the obvious. The men I mentioned did not, and they paid for it during the boom.
I totally agree, though, that Roubini will have to come out Bullish at some point to retain credibility. Unless this really is the end of America, in which case he'll go down as a Pollyanna like the rest.
"Advice from personal experience in cooking squirrel: Omit the ribcages from any stew. There is very little meat there, and the tiny ribs distribute themselves throughout the dish."
"and no doubt gets paid in the upper six figures for his creative accuracy."
"And I would imagine that someone like yourself who becomes so incredibly aggressive and offensive over something so very minor is paid very little, if indeed he is paid at all."
I'm still working with Sea Chicken garnishes and have no idea what Pollyanna has to do with rats and yak jelly. I came here for porn and find a bunch of snots blogging about Squirrels in Cream Sauce. Are you people insane? WTF are you doing, there is a discussion here about fuc-ing Roubini going out of his mind with some economic disease that no one understands. Can we please get back to helping me find how to transfer FLV files to Quicktime!
and CSC i think my point about Roubini is that the crux of his argument was on the money, and to that i paid attention. but like most economists he was thrilled with his theory and rotten about its application. and even though you can see something coming for miles, you can still profit from it then take the money off the table until the smoke clears.
and now because his views were correct he's found some fame. i think that's great. but he's the prophet of doom and that's going to be a hard act to disengage from. so he is a one-act? or does he now have theories about how this all recovers. i'm listening for that but i'm not hearing anything from him yet.
"I totally agree, though, that Roubini will have to come out Bullish at some point to retain credibility. Unless this really is the end of America, in which case he'll go down as a Pollyanna like the rest."
oh god CSC that visual is pretty funny...misean with some colander with tin foil sticking out all over it and a glass of whiskey in his hand in a rocking chair sparking a bowl. i prefer bong hits but i'm sure misean is a roll your own sort of guy
Uncle Billy Vs. Mt. Pelerin writes:
Heehee, dryfly. From the previous link:
"Advice from personal experience in cooking squirrel: Omit the ribcages from any stew. There is very little meat there, and the tiny ribs distribute themselves throughout the dish."
Uncle Billy Vs. Mt. Pelerin | Homepage | 08.02.08 - 9:19 pm | #
That's accurate - but they would make okay broth or stock... cut the legs off and use the trunk for stock then pour through a fine sieve to catch the bones... then use the stock to stew the 'bigger' pieces along with potatoes, carrots, onion - etc.
I had a friend in Iowa who would do that with the squirrels he shot - pretty tasty but a lot of work for a very little bit to eat. He gave me the tails to tie flies & spinner baits (that and pheasant tails).
I tell my city friends stuff like this and they think we're nutz. Ya well, probably.
Roubini is predicting a recession that'll be 12-18 months long. He thinks it started Q1 of 2008 and will end somewhere in the middle of 2009. Despite all the doom and gloom attributed to him, he does see an end to this "deceleration in growth." So he's not a perma-bear--he is just talking some realism to Pollyanna's.
I can mount a bong on this thing. Put a water chamber on one of the handles, tubes around the Super Colander Tin Foil Hat to the other side, and mount a water chamber there. then a tube out the top of that one to the mouth. Kinda like those beer hats...but FAR more effective. I'm a two chamber bonger myself...but I don't go to that well as often as in the past...asthma ya know.
"but he's the prophet of doom and that's going to be a hard act to disengage from. so he is a one-act? or does he now have theories about how this all recovers. i'm listening for that but i'm not hearing anything from him yet."
ipodius: In fairness to Roubini, I don't see the light yet myself.
More directly to your point, there have been a bunch of doomers who have nailed this one. Pastors speaking about the end times, militia dudes fretting about runaway Fed power, etc. No doubt, when we finally get the "Big One" in Southern Cal, there will be dozens of people who "predicted" it.
But is that really Roubini? (I concede that it may turn out to be Schiff, who's predicted the end of America for a long time while selling "alternatives.") Roubini is not just some privateer, and he's been pretty specific and fairly accurate so far.
That said, I'm picking up what you're putting down.
There were many things being ignored in the mainstream during this run up. And I'm not sure how many of the "truth tellers" were really just timely contrarians. I certainly don't believe this of Thornberg, but I wouldn't go to the mat for Roubini. I just think he deserves some respect for standing up and pointing at the wolf while the financial pundits mostly laughed at him. He was, afterall, sending valid warnings.
Anyone here besides me ever eat a squirrel? It isn't worth it - they are all bones.
- dryfly
My mom used to always make squirrel and dumplings. She would pressure cook the squirrel meat because it was tough. You had to pick some buckshot out of it at times though if whoever killed it used a shotgun instead of a .22
Misean's protective device is much better. He is humble, so he doesn't pimp it too hard, but dude has invented a helmet that also protects from falling Chemtrails. This could not be a coincidence.
you have to remember his roots, emerging market debt crises.
the bulk of his professional life has been studying the effects of debt, debt crises, the effect of debt crises on banking systems, and how this all plays out in the international forum....
Never did the squirrel thing but ptarmigan are kind of the inverse - all the meat is in the breast and chuck the legs etc. - with a .22 you are working on the head shot to conserve the meat.
They make for some tasty fajitas (good way to stretch out the protein for larger group).
to do it...but the ingrate...she wanted money...like I've got that. Do you know how much foil costs? And copper wire? Hell, I'd have to raid about a failed subdivision to afford her fees. So I said to myself...self just do it your self. Your an ugly old man but no one is going to buy it. And Iwent like, Hey brain cell number 3 you're back online.
I assume you are talking blue crabs and 'NO' they aren't the same - crabs are worth picking - unbelievably delicious & tender once you get to the lump meat. Plus you can steam them in a batch and throw out on the table and pick at your leisure with buddies over lotsa drinks. I can pick crab almost as fast as a 'pro'.
There is no good way to do anything like that with squirrel... gamey and too much work to hunt & clean & cook.
Crabbing is one of the funnest ways to catch a meal I know (and yes I've done it - though obviously not here in fly over).
FWIW we ate crab tonight - a guy drives up from the gulf & sells shrimp & crabs. Dumb Midwest locals all go for the largest & most expensive 'mega jumbo shrimp' - I buy the smallest he has (25-30 count) - much sweeter. If he has lump crab meat I buy it too... tonight he did & it was fine & already picked. Outstanding!!
Squirrels are rats with fuzzy tails. Rabbits are rats with long ears. Plump rats. You can buy frozen rabbit at the grocery store, and about every 5 years I make it for the hub. Don't eat it myself. Just watch him eat. His granddad from the poor side of the family raised rabbits for eatin'.
Yesterday, I made some orange roughy, dredged in organic bread crumbs crushed with a rolling pin with walnuts, saute'ed with half olive oil and half home made organic butter. Tasty enough to die for. Y'all can think of that when you are LEFT BEHIND in the rapture.
Ok, I'm still at the giant craps game with the money being handed around. If it's on the table, does that mean it's not being spent somewhere, and thus reducing economic activity.
My mom used to always make squirrel and dumplings. She would pressure cook the squirrel meat because it was tough. You had to pick some buckshot out of it at times though if whoever killed it used a shotgun instead of a .22
Doc at the Radar Station | 08.02.08 - 9:36 pm | #
I used an old 22 bolt action - get them clean as a whistle.
Well obviously $2T is a huge amount to lose & bank capital loss is far worse than shareholder weath destruction, since the economy still moves... but we also get ~8T or so in homeowner wealth destruction this go round. No wonder people are putting off buying that car. They took a huge net worth haircut.
homedad43 writes:
I wanna see Bobby Flay throwdown on Dryfly. He'll have to do it while sitting in front of a laptop.
homedad43 | Homepage | 08.02.08 - 9:45 pm | #
I'm not that 'flyover' - just LIVE here and you'd have to be a moron not try a little of the 'when in Rome' thing.
I've tried to do that everywhere I've lived - just so happens I've been here WAY TOO LONG.
Lawyerliz: You're not drunk or stoned? You must be a T14 grad who prefers a bump of coke to go with the long hours of doc review. Otherwise, what kind of lawyer operates on an unadulterated mind?
"My mom used to always make squirrel and dumplings. She would pressure cook the squirrel meat because it was tough. You had to pick some buckshot out of it at times though if whoever killed it used a shotgun instead of a .22"
I don't think one trillion is a large amount. I think ten bucks is a large amount, but when you start tacking on the zeros, it ceases to have any meaning for me anyway. Look, we got to half a trillion in 9 billion chunks and nobody batted an eye (Just a flesh wound) We'll probably add the rest the same way, after all; one trillion is only one hundred chunks,...if your chunks are ten billion a pop.
It's like I said to my to my friends who came into some money. How long would it take you to save fifty thousand? Now go buy a Mercedes. How long did it take you to spend it? It takes a long time to make money, not so long to blow it.
And as far as the money on the table in a casino, well, maybe a couple players have managed to slip in their marker; all the pots are not going to be of equal value when it comes time to cash out.
"Misean, if you could only get the 4th, 5th and yes even the 6th brain cell working, just think of what you could come up with."
There was an expedition. #1 is in the medula oblongata, #2 was in the cerebelum. Both are stable. That's good...or bad depending on your opinion...as they make basic life happen. #3 is buried deep in the cerebelum. This protects it from the repeated head butts to walls that occur as a result of all the shite coming down the financial pike.
When we had our Dr. Livingston moment and asked if others were safe, he clammed up. I suspect #3 knows where some other cerebrum cells are, but is protecting them. Though, I'm not sure I'd go as high as 6.
This will be hard to top. Dry?
Anonymous | 08.02.08 - 9:55 pm | #
That's pretty much SOP when eating upland game or ducks/geese that have been taken w/ a shot gun - always picking bird shot out between bites.
The funniest story I have was when I lived in Iowa... I was a process engineer slash supervisor at a large ag processing plant. One of the guys I supervised had a 'hobby farm'... 1100 acres... and he'd pick and plant before & after work. When those seasons were 'on' it was pretty much 24X7... farm work farm work - he must have been on speed or something.
When he was picking - he kept a couple shot guns in a gun rack in the cab of his combine... one with bird shot & the other with a slug. As he'd go he'd flush out deer and pheasants... and if he had time to stop, get out and shoot - he would - even though technically 'out of season'. His belief was they were eating his corn so they were his...
He would occasionally bring me venison & birds (more birds than venison)... They weren't cleaned - got them as is, do with them what you want. There were always some shot left in after I cleaned them.
I just wanted to introduce myself and let you all know how much I appreciate your comments and knowledge. I work as a CDS (Credit Default Swaps) trader at a not-to-be named major Street firm. I've been lurking here for the past year and a half now - and the comments here have both colored my view of the markets and made me some pretty significant gains on the desk. A couple of the more "forward-looking" guys on the desk have started lurking here at my prodding as well - but for the most part, folks working on the Street are completely ignorant of the larger calamity we face in the fixed income markets/equity markets/world trade/the world in general. There is a degree of subtle intimidation that gets directed at those who question the sustainability of what we do on the Street, and so, for the most part, people trade their "product" and keep their heads down while praying for this year's bonus to be flat to last year's. The looks one gets when bringing up the existence of significant unaccounted for risks in my space (counterparty risk being the greatest) are not those that correspond with large EOY bonuses. And what are us traders if not profit-maximizing incentive-internalizing machines? But I digress...
That being said, myself and a few other traders in CDS have really started to lose confidence in the validity/usefulness of our product. After all, if things really turn out the way that they look like they will, how many of our counterparties will have the money to pay up for their obligations? The fact that you are exposed to (what the street likes to call "residual", but what I consider MAJOR) counterparty risk in these transactions significantly impacts their value both as hedging and speculative instruments. For those of you more academically inclined, I would only point to the existence of the "basis trade" for proof of the contradictions within the CDS space.
Anyways, I just wanted to say hello, and let you all know that I appreciate your continued proffering of information. Know that even at those institutions that many of you vilify daily (and for the most part, rightfully so), there are those of us who are on board with you, and would like to see the business change fundamentally to once again engage in its original purpose: the proper assessment of risk and the prudent allocation of capital.
T14 just refers to the top law schools. It's like the Top 10, except they use 14 (supposedly because the top 14 just trade places in the rankings, but always remain there.)
A lawyer who doesn't self-medicate? That's a new one on me. Even the DAs here are twisted.
In any case, Lawyerliz, you really should smoke ganja. I mean this; it does a mind good.
I've been mulling over my first post here for a while, and I'd finally had enough red wine for the evening & decided to throw in my two cents.
Lawyerliz -
Defaulting "zeroes"? Are you thinking along the lines of Greenspan's "cascading cross-defaults"? If so, please let me know how much you currently know about CDS, and we'll move from there - no use in boring you on a Saturday night with information already locked away.
How does one try squirrel here in the OC? Can I just pop one at a regional park or will Irvine PD give me trouble? I know for a fact that Albertson's does not carry squirrel.
I'm going to deal with the question of the validity of the statistics proffered by our gentle and magnificent government from the perspective of the Street right now:
We all know they're complete bullshit. But we trade on them anyway.
Currently Smoking Cannabis writes:
How does one try squirrel here in the OC? Can I just pop one at a regional park or will Irvine PD give me trouble? I know for a fact that Albertson's does not carry squirrel.
Currently Smoking Cannabis | 08.02.08 - 10:20 pm | #
LOL - don't have the answer for that but if they are like the ones on the U of Minnesota campus they come right up to you if you show them a peanut... just have a sack ready.
Similar thing can be done with geese - I had some buddies who would go golfing for geese (I've posted on this before)... pieces of bread and a nine iron... FORE!!!
And I can promise you 100% they had bongs aplenty prior to and after. That was circa 1978 in SE Minnesota not far from the Mayo Clinic.
Dryfly's buddies were quite the resource when it came to ways to poach game.
12th: So, if you want tomatoes, you must eat the squirrels. They taste like chicken
Funny, I live in the City and they eat my apples, plums, and grapes but not my tomatoes. Stringy as hell- I should have tried the crock pot or pressure cooker. Cream sauce seems a bit much. One year I trapped 13 but more just showed up - like pulling a bucket of water out of the ocean.
The reason for asking is that the Washington Post is reporting that Greenspan believes the housing market is nowhere near the bottom. While I strongly agree with this assessment, it is worth pointing out to readers that Greenspan spent his tenure as Fed Chairman avidly denying the existence of a bubble in the housing market.
Rocky Mountain oysters is a North American culinary name for edible offal, specifically buffalo, boar, or bull testicles. They are usually peeled, coated in flour, pepper and salt, sometimes pounded flat, then deep-fried. This delicacy is most often served as an appetizer.
Dryfly: A goose and a 9 iron? I am deeply disturbed by your post.
NoVa: Squirrel brains? There just cannot be much there. I did try a PI treat called a "balut" once. You tap around the top with a spoon until a lid pops off. Inside, a tiny, soft-boned chicken baby sits there waiting to be eaten from the head down. I salted mine, and it was actually pretty decent.
The enemy? Do explain. I don't believe I've sold anybody "down the shitter" - if you took some time to understand what CDS is, you'd realize that although it involves implicit leverage & significant counterparty risk, no new net debt is ever created.
I'm under the assumption that you consider those who employed/encouraged/enabled the easy money environment of the past several years to be the enemy. I'm not as strongly opinionated as you are in this regard - but I do understand the frustration of watching your savings eroded by inflation before your eyes.
Ken Wilson, the Goldman Sachs banker who is joining the US Treasury to help the country through the financial crisis, is expected to take a temporary post that will subject him to less stringent ethics rules than many other high-level officials.
I closed the loans that end up being squished together and then sliced and diced into the tranches that have all gone to hell.
I knew they were destined for a pool but for a long time that's all I knew.
I was at an S & L when they went from keeping most of their loans to selling them and the quality and concern for the product dropped, it seemed, in a matter of weeks.
So no, I don't know much about CDS except what I've read here.
Misean, don't chase default away, I want to read what he has to say.
I would look at the people who were signing these mtges, no fraud involved and wonder how the hell the people were gonna pay their mtges AND eat some cheerios (if not squirrel) once in a while. You are living in an abstract world (actually one hesitates to say world, existence would be better), galaxies away from the payers of that debt, that you do not know what is going on 2 steps below. It is better for your mental health that you do not find out.
But I want to know how much default there will be in dollars that real people can spend in the real world. If it's just ring around the rosy money, then there's not much harm, except for wall streeter's bonuses, which, with all due respect, none of us here care very much about. If this is real money, lotsa harm. Nobody has answered my quesion yet, tho the person with the casino example, now I forget who seems to have come the closest.
It's happenin' - comm credit is tight, small biz especially.
[FWIW - I doubt the stats that almost all new jobs come from companies w/ less than 100 people - if so there wouldn't be many businesses w/ more than 100 employees - do the math, how do you get there if no one is hiring when >100 employees? Small biz is significant but not that significant. We all hear it but I've been told of studies indicating this story is at least partially urban myth - anyone have links?]
The Federal Reserve Board's "beige book" for June and July offers a clear explanation for why the economy has slowed to a crawl. It shows American consumers cutting way back on their purchases of everything from food to cars to appliances to name-brand products. As they do so, employers inevitably are cutting back on the hours they need people to work for them, thereby contributing to a downward spiral.
Ok, I'll admit, I'm from West Appalachia. My Uncle used to go to the Okeene, OK to the rattlesnake hunts every year. Now, we are talking the '60's and '70s' here. But, OMG I just found a website on it, I'm astonished: Okeene Diamondback Rattlesnake Hunt
Now, he told me way back then that rattlesnake tasted like chicken.
As a rule, expensive neighborhoods seem to be the ones which have gone up in price, while cheaper ones have gone down. But Cleveland is an exception: houses in Solon, which fell by 22% over the past year, are still 44% more expensive than houses in Amherst, which rose by 6%. The same's true in Seattle, whose worst-performing neighborhood, Magnolia, has a median listing price of more than $700,000.
The U.S. 4x400m relay team that won gold at the Sydney Games in 2000 have been stripped of their medals after Antonio Pettigrew admitted to doping, the International Olympic Committee (IOC) said on Saturday.
It was the sixth American medal from the Sydney Games lost to doping in the past eight months after U.S. sprinter Marion Jones was stripped of her five medals due to her doping confession last year.
"It was decided that the entire U.S. relay team will be disqualified from the Sydney Games," Davies said.
Credit default swaps costs jumped to a record of 45.5 percent the sum insured as an upfront payment, from 42 percent on Thursday, in addition to 500 basis point annual payments, according to Phoenix Partners Group. This means it would cost $4.55 million to insure $10 million in debt for five years, plus an additional $500,000 each year.
"if you took some time to understand what CDS is, you'd realize that although it involves implicit leverage & significant counterparty risk, no new net debt is ever created."
And there are no cross connects? I know I said I'd be cool, but ...There are NO cross connects? You sold this shite? Did you not know what you were selling?
And I suppose you look at your self like you were just some cog in a wheel?
Erm...OK. Tell you what you spill your guts...and I'll believe your repentance.
I too am a refuge from a major bank, only equity ledger. I suspect the sentiments you post are far more pervasive than you think. Those thinking the doom and gloomers are just nutjobs in the montana wilderness are squarely off the mark. I agree the comp structure and siloed org make for winner take all mentality damn the torpedoes. Eat what you kill is great uintil such time as canabalism. Welcome to the new world of I-banks
Currently Smoking Cannabis writes:
Treasury adviser likely to receive special status
Ken Wilson, the Goldman Sachs banker who is joining the US Treasury to help the country through the financial crisis, is expected to take a temporary post that will subject him to less stringent ethics rules than many other high-level officials.
Leaving a place (WS) with no ethics to temporarily join another place with no ethics (WH) shouldn't be a problem at all.
Default's somber, polite introduction (welcome to you, I think you'll add a very valuable perspective to these threads), followed by a comment on frozen rabbit... awesome!
I would have spilled something on the ole keyboard if I only were drinking... Lefty's where are you?
Here comes the promised long-winded explanation on the mechanics of credit default swaps:
Credit Default Swaps are an over-the-counter financial instrument used by participants in the fixed-income space to both hedge against & speculate on the risk of a company defaulting on its debt (hereafter referred to as the Reference Entity, or RE). Each CDS transaction involves two players - a "buyer" of protection on the RE, and the guy on the other side of the trade, the "seller" of protection on the RE. Essentially, the buyer of protection is "short" the creditworthiness of the RE - he is betting that the RE will default on its debt, and the seller of protection is "long" the creditworthiness of the RE - he is betting that for the duration of the CDS contract (typically 5 years), the RE will not default on its debt.
Credit Default Swaps are typically purchased in blocks of 10 million dollars - that is, a buyer of protection is buying insurance against 10 million dollars' worth of an RE's debt defaulting. Per the terms of the contract between the buyer and seller of protection, the buyer will periodically (typically yearly) remit a payment for the protection to the seller of protection. This amount is typically notated in basis points, or "bps". Think of each basis point as representing 1/100th of a percent of 10 million dollars - so a CDS contract that costs the buyer of protection "100 bps" results in the buyer of protection remitting 100,000 dollars yearly to the seller of protection. The seller of protection receives these payments in exchange for his guarantee to remit, in the case of a default by the RE, the notional value of the CDS (10 million dollars) minus the eventual recovery rate on the defaulted debt (on the Street, it is generally assumed to be about a 40% recovery rate, meaning that contracts, when an RE actually defaults, pay out about 6 million dollars per 10 million notional to the buyer of protection).
Now here is where things get tricky - what if I have bought protection from you, and when the RE defaults, you are unable to pay me? And what if shortly after I bought protection from you, the price of protection rose (lets say due to a negative earnings warning), and I sold protection to someone else, expecting my selling of protection to be fully hedged by my original purchase of protection? This is what Greenspan refers to as cascading-cross defaults - the fact that if one party in this chain of parties (and you can multiply the example I just gave by thousands of interconnected counterparties)defaults, the results can be catastrophic across the space. After all, I was relying on you paying me in order to pay the other guy, who was in turn depending on me to pay him to pay the OTHER guy...you get the picture. Something like this happening would be terribly destabilizing for the financial system, but its first-order effects are not what would hurt the average citizen - instead, it would be the complete seize-up in the financial markets (think the mortgage business in Florida today, but several orders of magnitude worse) resulting from such a situation that would hurt the average joe.
So, in summary, CDS is more like the "pass the chips around" scenario you referred to before - but with profound implications for the many banks/insurance companies/other financial institutions that depend on them to hedge out credit risks.
If you REALLY want an exciting Saturday night, ask me about monoline wrappers & synthetic CDOs...I'm ready to pop bottle number two.
Man, came here looking for wild game recipes and end up listening to a CDS inssider.
Default, welcome they play hard here but they also play fair. Counterparty risk doesn't seem to be a working model. Seems everyone insured each other meaning no one can collect on a claim. Of course everyone has already collected their fees. Funny that. Anyway, I expect the next shoe to be insurance companies. Not only the payouts but the reduced business when new rates scare away a segment of clients. Then there's the fallout, insurance pools are backed by municipal and other large retirement investors who have been ramping benefits based on the broken returns model of recent years. Wadda ya think?
what do you make of the argument that BS was rescued to basically save JPM given their massive CDS book 1T! Also don;t you think is it is interestong that Chrysler got a bridge loan conduit after all but admitting that it was going bankrupt from none other than JPM? Then they say it is a relief that they can now go on offering incentives and 0 financing so they can lose more money. Astounding but this has fed footprints all over it. The link here several days ago about the fed leaning on JPM derivatives book to swing markets (interest rates and gold futures) was pretty fascinating. Don;t have the link but well worth the read. Also, comment on why you think the fed is so desperately trying to keep lehman alive? Makes little sense. Clearly seems another case of massive interest rate and cds books that are too great a risk to the system?
also comment on the transferability of the cds..astounding after Gtretchen Morganseon NYT wrote that article in the NYT re CDS and the risks Jamie "the one" Diampond (you have to hand it to the Ministry of Truth) said on the conference call quite assuredly that she simply didnt understand the CDs market ie the dif between notional and risk exposure. He then went on to say he was having his very own FI research tem craft a CDS basics report and white paper on the subjkect which would be released for all to see the real mechanics. Pray tell, never showed up.
I'm assuming when you mentioned "cross-connects" in your previous post, you were referring to potential cascading cross-defaults & counterparty risk, no? If not, please explain.
Rob Dawg -
You have more or less identified the weak link in the CDS space. For now, at least, folks on the Street believe that the Fed will ensure that counterparty risk never actually rears its ugly head - that major counterparties (a la Bear) will be continuously bailed out either by 1) a "strategic purchase" by another IB/CB, or 2) the Fed turning the notch on the firehose of "liquidity" it has directed at broker-dealers from "high" to "tear-apart-the-WTO-protesters" level.
Misean (again)
What exactly do I have to confess for? I'm doing my best to try and explain an esoteric product to people who have been nice enough over the year and a half I've been lurking here to provide reams of information within their body of knowledge/experience...sheesh.
Furthermore, one way to assess the quality of any investment is to compute its price-to-earnings (P/E) ratio, which for houses can be defined as the price of the house divided by the potential annual rental income, minus expenses including property taxes, maintenance, insurance, and condominium fees. For many locations, this computation yields a P/E ratio of about 3040, which is considered by economists to be high for both the housing and the stock markets;[22] historical price-to-rent ratios are 1112.[2] For comparison, just before the dot-com crash the P/E ratio of the S&P 500 was 45, while in 20052007 around 17.[24] In a 2007 article comparing the cost and risks of renting to buying using a buy vs. rent calculator, the New York Times concluded, "Homeownership, [realtors] argue, is a way to achieve the American dream, save on taxes and earn a solid investment return all at the same time. ... [I]t's now clear that people who chose renting over buying in the last two years made the right move. In much of the country ...
Shiller, Robert (2005-06-20). "The Bubble's New Home", Barron's. "The home-price bubble feels like the stock-market mania in the fall of 1999, just before the stock bubble burst in early 2000, with all the hype, herd investing and absolute confidence in the inevitability of continuing price appreciation. My blood ran slightly cold at a cocktail party the other night when a recent Yale Medical School graduate told me that she was buying a condo to live in Boston during her year-long internship, so that she could flip it for a profit next year. Tulipmania reigns." Plot of inflation-adjusted home price appreciation in several U.S. cities, 19902005:
Where Mary Meeker Went Wrong She may be the greatest dealmaker around. The problem is, she's supposed to be an analyst.
It's true that the $482 billion deficit chasm estimated for fiscal year 2009 doesn't look so deep when taken as a percentage of the overall economy 3.3 percent of gross domestic product compared to the 1983 nadir of about 6 percent.
This $482B number is a joke. It does not include "off budget" items, or the war in Iraq, or even the amount they are "borrowing" from Social Security Trust Fund. If they did the true deficit for the year would be closer to $800 Billion. For one year!!
Between GM, Citi and LEH, who is in the worst position for Monday in your opinion? The cost they are all paying is getting above the danger zone, but WTF do you think tonight?
well majority still refuse to believe that housing prices have long road ahead before any stabilization.
somehow when people hear about RE losses, they think it can't happen to them and continue flipping, flipping their wallets that is.
One moment you have plenty of savings, than you flip and most of your savings are....
Welcome and thanks for your calm in the face of some less than civil greetings.
Question: can you estimate the extent to which people have GM coverage? I presume it exceeds GM's own bonds. What would happen if GM went down (before a bailout, presumably)?
Astroturfing in American English is a neologism for formal public relations campaigns in politics and advertising which seek to create the impression of being spontaneous "grassroots" behavior, hence the reference to the artificial grass, AstroTurf.
The goal of such a campaign is to disguise the efforts of a political or commercial entity as an independent public reaction to some political entitya politician, political group, product, service or event. Astroturfers attempt to orchestrate the actions of apparently diverse and geographically distributed individuals, by both overt ("outreach", "awareness", etc.) and covert (disinformation) means. Astroturfing may be undertaken by an individual pushing a personal agenda or highly organized professional groups with financial backing from large corporations, non-profits, or activist organizations. Very often the efforts are conducted by political consultants who also specialize in opposition research.
FRED writes:
if you have to ask what an astroturfer is does that mean you are one
FRED | 08.02.08 - 11:36 pm | #
LOL - probably IS the case in many situations.
:::
For those who don't know - an 'astroturf organization' is a group sponsored by deep pocketed special interests - like say MBA or NAR - trying to appear like they are 'grass roots organizations' with broad support. Think artifical 'grassroots'.
'Spokesman' for these folks are increasingly common on large & popular blogs - which CR's now is - though they try to hide that they are sponsored. Get used to it - they aren't going away.
Your belief that the Fed bailout of Bear Stearns was really a bailout of JPM is the general belief across the Street. Like I wrote in my previous post, the Fed has a big firehose, and an even bigger lake to draw water from if the tank on the truck runs dry. They will do anything to keep this space from blowing up. The ramifications as far as future confidence in the U.S. financial markets, insurance companies who purchased expensive hedges for the riskier assets in their portfolios, hedge funds heavily involved in this space (who have state & local pension funds as major investors)...you get the picture.
I don't really know a whole lot about the JPM derivatives book/gold manipulation rumor you mentioned - send me a link and I'll try and give color if I have any.
Don't know anything about Chrysler either...
Oh, and Lehman is alive because the Fed wants them alive. That's really all I can gather from the situation - after the Bear Stearns blowup,CDS traders across the Street were given a stern talking-to, with the message being that all firms will take all other firms as counterparties - full stop. What killed Bear was the Street essentially saying that it would no longer take Bear on as a counterparty - no CDS, no repos, no rate swaps, no complex hedges.
Do I like Lehman as a counterparty? No. If I ran a hedge fund would I trade with them? No. But the Fed giveth and the Fed taketh away, and the Fed has spoken.
As far as the transferability of CDS, what you are referring to is whats called "novation" of an existing contract. Essentially, if I have bought protection from you, and then decide that I really don't like you as a counterparty (or find that I need to rebalance my counterparty exposure away from you because you have been on the other side of too many trades of mine), I can ask a third party to step in and take your place on the other side of the trade (all parties must agree to this, and it can be pretty tough to get done). If the price of the CDS has increased, as a buyer of protection, I would have to make up the difference to the third party stepping into the space that you once occupied as my counterparty. Similarly, if the price of protection has decreased, I would have to make it up to you, the original seller of the protection (which is derived through a simple PV calculation of the future periodic payments I was to make to you, minus the lower payments I am to make to the new counterparty).
Its only 11:43 out here, 2nd bottle popped and first glass poured.
Wb bank benefitted from a rumor that an unnamed bank was interested. JPM was named. Steel going there is a tell that the fix is in.
BAC benefited from the ABK news that they will write up a conduit CDO they settled with said bank. They takre a $150M gain. LEH benefited from the 345 leak to gasshole that they were to offload 30B in CMBS to blackrock in a deal similiar to MER.
Anonymous writes: "WTF did you come from, with such a nice welcome?"
I'm here frequently. I learn more listening than talking. Default may know things that we don't. Let's keep him talking, even at the expense of acting politely.
Currently Smoking Cannabis writes:
Astroturfing in American English is a neologism for formal public relations campaigns in politics and advertising which seek to create the impression of being spontaneous "grassroots" behavior, hence the reference to the artificial grass, AstroTurf.
Man when a guy who smokes dope beats you to the answer you know you're getting slow...
Chrysler deal win FT this weekend...private compny actually came out and released financials and said they have $11B in liquidity. Yeah that is what LEH said before they went beggin again. Interesting that Tress. Paulson included large Hedge funds in his TBTF mantra. Guess that means Cerebus - have to wonder about these guys - Chryselr GMAC seriously what were they thinking
Markit RED (Reference Entity Database) CDS is the market standard that confirms the legal relationship between reference entities that trade in the credit default swap market and their associated reference obligations, known as pairs.
Trading LCDS requires efficient access to detailed information including entity characteristics, credit agreements and loan tranche data. While of critical importance, this information is also a challenge to gather, manage and access efficiently.
I've suspected Brady Bonds for about a year; what's the scoop there?
In the event of a default on collateralized Brady Bonds for which obligations are accelerated, the collateral for the payment of principal will not be distributed to investors, nor will such obligations be sold and the proceeds distributed. The collateral will be held by the collateral agent to the scheduled maturity of the defaulted Brady Bonds, which will continue to be outstanding, at which time the face amount of the collateral will equal the principal payments which would have then been due on the Brady Bonds in the normal course.
Based upon current market conditions, a Fund would not intend to purchase Brady Bonds which, at the time of investment, are in default as to payment. However, in light of the residual risk of Brady Bonds and, among other factors, the history of default with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds, investments in Brady Bonds are to be viewed as speculative. A substantial portion of the Brady Bonds and other sovereign debt securities in which the Emerging Markets Debt Fund invests are likely to be acquired at a discount, which involves certain additional considerations.
First things first: I am not an "astroturfer", whatever the hell that is. Merely a longtime lurker here & a participant in a corner of the market that I've begun losing confidence in.
GM, Citi, LEH
GM 5-years trade 2600 bps or so...of course, that means big points-up-front (due to the huge risk of default in the near-term), and probably 600-800 bps running yearly for the duration of the contract. I don't have my handy bloomberg & its CDSW function with me at home, so I'm stuck with the garbage that markit partners puts up.
Citi, LEH
Honestly, at this point, CDS on big financials like these are pretty much pointless. They have been getting bailed out. They will continue to be bailed out. If they fail, you probably wouldn't even get paid out on the CDS that you bought on them because they're probably a counterparty to your counterparty...and we're back to the problem I mentioned earlier, which the Fed will do everything in its power to keep from occurring.
Plantagenet -
In the scenario you present, with the notional value of protection sold/bought on GM bonds far outweighing the value of the cash bonds outstanding, CDS buyers and sellers would do what's called a "cash settle." Essentially, (and this is probably a complete misrepresentation of the way it works, I can try and find the 200 page PDF on the process that I got from our research team), a very complicated auction is held in which the true recovery value of the GM bonds is discovered, and then applied across the board to all outstanding CDS contracts (remember, the buyer of protection only gets the notional value MINUS the recovery value in the case of a default). This has happened only once so far to my knowledge - the bankruptcy of Delphi (whoa, coincidence?)
Anonymous -
LCDX is simply an index of leveraged loans that was put together by Markit. It works much the same way CMBX & CDX work, except its 100% 1st lien syndicated secured debt. Essentially, debt from LBOs. Hopefully that helps.
OT to Doc at the Meth Lab -
my brother caught a FAT four foot timber rattler today and sent me the pics.
He let it go - no snake eating in our family.
Gary
Catch and Release is best, I suppose. Saw a snake crossing the road the other night, but wasn't sure what it was. There were a bunch of toads hopping across the roadway, so I figured he was after them. I've got to say though, that late at night this place is starting to get a little like a David Mamet screenplay, especially tonight. Something is brewing for sure I think.
You have discovered Markit. Before Markit, the CDS market was, to use a very technical term, a complete shitshow.
However, the pricing on single-name CDS (especially the more thinly traded REs) can be dodgy...(insert plug for your friendly local broker-dealer).
Back to this synthetic CDO post...I'm debating between the "magic box" explanation or just telling you all that its much worse than you ever believed possible, but not as bad as CDO-squareds...talk about the epitome of ratings-agency arbitrage.
If you spent a million dollars a minute starting at the time Christ was born, you would NOT have spent a Trillion dollars yet.
Actually you would have; slightly over one million minutes have passed 6024365*2000=1,051,200,000. Still, I agree with you: a trillion dollars is a big, big number.
In total somewhere between $7T and $9T in phantom equity is exposed in any retracement to the mean. An orderly retreat will allow inflation to eat away much of this. A decline in the dollar may result in a disproportionate amount of pain to be taken by foreign investors. No matter how the pain is spread, there will be consumer pain. Likewise because of govt spending policies that resemble the proverbial cricket in summer we can expect massive deficits and even larger tax increases. I hope everyone likes their neighbors because nobody is moving for a very long time. The new immobility class has moved in to stay.
A senior managing director at Bear Stearns derivatives trading desk has reportedly anonymously authored a book about the bank's demise. The book, called "Bear Trap: The Fall of Bear Stearns and the Panic of 2008,″ was obtained by Fox Business anchor Liz Claman. It tells the story of Bear's demise from the inside, and insists that Treasury Secretary Hank Paulson may have born a grudge against Bear Stearns stemming back from Bear's refusal to playball when Wall Street organized to bail-out Long Term Capital Management. And, of course, it all turns out to have been a plot hatched by Goldman Sachs, which Paulson ran before going to the Treasury department.
Had people coming into the guild needing a piece that their guild was ahead of us on...just to get that piece. (WOW stuff...I Know it's senseless for most).
Default - Thank you taking up your time to explain and educate us.
Is it possible/probable that many sellers of CDS sold multiple CDSes on the same RE, and for which they will not be able to make good in the event of default by the RE?
First things first: I am not an "astroturfer", whatever the hell that is. Merely a longtime lurker here & a participant in a corner of the market that I've begun losing confidence in.
Welcome aboard.
BTW - I'd be okay even if you were associated with an 'organization with an agenda'... we've had those here before. Different opinions even with a strong inside POV make for interesting discourse - we just like people to disclose their interests & agenda while respecting their anonymity.
Many here do - it makes for a pretty fun read & informative at times.
So do you work the trade or are you an analyst, MP in a hedge - what? Don't want specifics, just somewhat camouflaged generalities.
My understanding is that the CDS market is nothing like a casino with chips that will just have to be moved from one party to another. My understanding is that it is more like a bunch of hedge funds writing insurance policies for which they have no capability of making good on. And the buyers of the insurance policies are counting on those policies in case of default by the RE. If my house burns down and my insurance company can not pay, I have no place to live, so I have to rent, and I have to keep making my mortgage payment. When I default on my mortgage payment, the bank loses and when the bank loses ...
This is not just some chips being shoved around. If the defaults cascade, Joe6pack will be affected mightily. His pension may literally disappear overnight.
Of course, "credit losses" only means loans going bad (and I still think they're underestimating). The direct hit to homeowners won't be a question of trillion or not, it'll be "how many".
You mean the bottom isn't in?
With apologies to the oft literally misquoted (but accurately quoted in 'spirit') mellifluous Senator Ev Dirksen, "a trillion here, a trillion there, pretty soon it adds up to real money".
I'm waiting for the mortgage debacle costs to add up to the total national debt, and we seem to be 10-20% of the way. Might as well add the mortgage costs to the national debt, because the country is insolvent anyway.
If Citi and BOA can do a writedown, the US Government surely can do the same thing, right?
friardaddy writes:
You mean the bottom isn't in?
friardaddy | 08.02.08 - 6:29 pm | #
Well not exactly - but then with a really big round bottom its awfully tough to know where and when the actual bottom is... but its out there somewhere. You can be confident in that.
These numbers are mind bogeling. How can anyone calculate a accurate number.
wow
even expecting something like is, it's still, "wow"
London Banker has a link to a paper by Irving Fisher on Debt Deflation from 1933. It's really quite good.
London Banker: Fisher's Debt-Deflation Theory of Great Depressions and a possible revision
Maybe we could claw back all the earnings above minimum wage of every Wall Streeter who participated in this mess...that would be a reasonable down payment on their contribution to society.
That's actual losses to lenders, right. What about the business contraction as a result of the tightening. Vehicle sales now 12.5mm. From 16mm. How many billions is that and what about other durables? Once the direct and indirect losses are tallied I think $2b will look like a gift.
CR will you be doing a post on vehicle sales that shows run rates and possible floor...
Interesting how Barrons uses biblical references to introduce Roubini.
Are they suggesting that the seven fat years are over?
CR, how do you know that 2 trillion is "too high". It might just be "too low". You know? Anybody know? No. Everybody is just guessing. What we do know is that it will be AWFUL.
some here have questioned whether or not roubini has investment interests (ulterior motives) in prognosticating a particularly bad outcome,
these are reasonable questions to ask
my guess is that roubini is both right AND has positioned himself favorably relative to the crisis he has foreseen.
haven't you?
reading roubini and those who comment there is how, nearly two years ago, i "found" CR.
roubinis word is gold with this turtle.
buckle up, and batten down the hatches.
Roubini: "We are in the second inning of a severe, protracted recession"
That's the good news. The bad news is, it's a doubleheader.
Let's guess the total will be 1.8 trillion. We've written down, or rather banks, etc., have, $300 billion. So we're about one-sixth of the way. Not even one fourth. Nor one half. Long, long way to go with these losses.
I remember when $1 trillion was considered the absolute high end number. Now Roubini's spouting $2 trillion? How big is this thing?
more than a year ago these guys tried to hook me. i played them like a fish all the way to signing and then gave three of their reps a lecture about how they were destroying the country...
(knowledge courtesy of what CR and company taught me here) cause before that i was an ever bigger idiot than i am today
so this is sweet
Seattle PI
"(washington)State goes after Paramount Equity Mortgage"
"The state wants to revoke the license of Paramount Equity Mortgage Inc. and fine the company $500,000 over deceptive lending practices.
The (washington) state Department of Financial Institutions charged the company with collecting unearned fees, hiding fees from borrowers, charging consumers to buy down interest rates without reducing the rate and not making certain fee disclosures."
State goes after Paramount Equity Mortgage
Quit the inning analogy already. I think 18 months of contraction followed by a stagnant economy is best case. I think we will contract for at least 24 months...
I remember when many here thought Roubini was high with $500 Billion.
Once you add up residential mortgages, HELOCS, consumer revolver debt, auto debt, commerical real estate debt, commercial debt and municipal debt.....we are looking at well over $25 Trillion of debt......two trillion will likely be the floor.
If this was a wrasslin' match, the bad guy's manager is just now coming down the aisle to boos after the wrasslers have been introduced.
I'm sure Bennie Boy and Paulson are cooking up some new accounting rules right now to fix these losses.
They're only losses if they are realized.
Interesting how Barrons uses biblical references to introduce Roubini.
Are they suggesting that the seven fat years are over?
Or perhaps they are preparing folks to build an arc.
Yeah, but that $100Billion was in 2007-dollars. You need to adjust
for inflation, which gets you somewhere
around $2T in 2008 dollars. Bernanke
was correct all along. Hucoudanode?
JP: doesn't a rising tide (of bad debt) raise all boats? LOL
I've always liked Roubini because he's so perky and optimistic.
The first page of Calculatedrisk (Headlines) sum up how great things are; I wonder how much of this is ignored by the current Bush Coup Members?
We are in the second inning of a severe, protracted recession, which started in the first quarter
Goldman: "Second Half Slowdown Ahead"
Your Friday Bank Failure
Auto Sales Decline in July, 2nd Half Expected to be Worse
Unemployment Rate Rises to 5.7%
IndyMac Holding Company Files BK
GM: $15.5 Billion Loss
FT: Fears Growing Concerning CMBS Default
CA Governor Orders Layoffs, Pay Cuts
The Coming Hotel Bust
Recession May Have Started in Q4, 2007
Weekly Claims Hit 5 Year High
W for 'Worsening'
They're going to need to get a bigger billboard:
http://commons.wikimedia.org/wiki/Image:US_National_Debt.jpg
Every state has one of these:
Department of Financial Institutions
Re: Fitch believes that pending litigation surrounding loans made by Countrywide acquisition and CSFB, the latter it purchased so-called option ARM mortgages from, adds additional risks. Officials in three states have filed separate legal actions against Countrywide. The actions -- by the attorneys general of California and Illinois, and the Washington State Department of Financial Institutions -- came on the same day that Countrywide shareholders voted to approve the sale of the company to Bank of America.
Fitch Slashes B of A Rating
Fitch Slashes B of A Rating - WSJ.com
All debts are supposed to be liquidated in the 50th year:
"And you shall count seven Sabbaths of years for yourself, seven times seven years;
and the time of the seven Sabbaths of years shall be to you forty-nine years.
'Then you shall cause the trumpet of the Jubilee to sound
on the tenth day of the seventh month; on the Day of Atonement
you shall make the trumpet to sound
throughout all your land.
And you shall consecrate the fiftieth year, and proclaim liberty throughout all the land to all its inhabitants.
It shall be a Jubilee for you;
and each of you shall return to his possession,
and each of you shall return to his family...."
--Leviticus 25:8-55
(The phrase, "proclaim liberty throughout all the land to all the inhabitants thereof" is inscribed on The Liberty Bell.)
Put the National Debt Clock on your website, or simply watch it live. (Notice the debt climb while you watch as seconds elapse.)
mock turtle
my guess is that roubini is both right AND has positioned himself favorably relative to the crisis he has foreseen.
If he doesn't he should be a fool.
Again, I think Roubini has found a shtick and that's cool. But 2T is a huge amount of money. So I'm waiting for the equivocation here to be ALL losses and not losses related to the housing bubble as the original intent was.
He should have just stuck with the 1T number because that's probably going to be close to the real impact of the housing bubble itself. With the possible exception of commercial RE, this is going to be the biggest loss area because of the extent across the entire country and population. Any consumer losses arising out of this are going to be peanuts compared to the numbers of mortgage related items on books out there. And as we've seen, they will carry large amounts of securities out to maturity if needed to lessen the headline loss number.
The debt is now $9.5 trillion, or $31,284.84 for every person in the United States, according to the National Debt Clock website. That's all the debt the government has accumulated since George Washington was president. The debt was $5.6 trillion in 2000. Simply paying interest will cost taxpayers about $260 billion this year
AMERICA'S $53 TRILLION JUMBO LOAN
America's $53 trillion jumbo loan | csmonitor.com
It's true that the $482 billion deficit chasm estimated for fiscal year 2009 doesn't look so deep when taken as a percentage of the overall economy 3.3 percent of gross domestic product compared to the 1983 nadir of about 6 percent.
But this is just one "mortgage" that the federal government (i.e., taxpayers) must meet. It owes on all the deficits it has accumulated over the years (the national debt), and it has jumbo liabilities to come in the form of Social Security, Medicare, and Medicaid.
Adding all those liabilities together, the government has dug itself into a $53 trillion fiscal hole the equivalent of $175,000 per person living in the United States. If the White House and Congress continue to follow the do-nothing plan, in another 30 years or so the federal government will spend more than twice as much as it raises in taxes.
Anyone recall the total losses from the dot-com bubble bursting?
They seem a bit whacked out there with $53 trillion:
Is the paper a religious periodical?
No, it's a real newspaper published by a church The First Church of Christ, Scientist in Boston, Mass., USA. Everything in the Monitor is international and US news and features, except for one religious article that has appeared each day in The Home Forum section since 1908, at the request of the paper's founder, Mary Baker Eddy.
I thought that the amount accounted for was 400billion. Oh, well, what's 100b between friends?
Leave it to a woman to ask but "Does this contraction make my bottom look big?"
The massive initial batch of sell orders processed on Monday, March 13 triggered a chain reaction of selling that fed on itself as investors, funds, and institutions liquidated positions. In just three days the NASDAQ had lost nearly nine percent, falling from roughly 5,050 on March 10 to 4,580 on March 15.
Another reason may have been accelerated business spending in preparation for the Y2K switchover. Once New Year had passed without incident, businesses found themselves with all the equipment they needed for some time, and business spending quickly declined. This correlates quite closely to the peak of U.S. stock markets. The Dow Jones peaked on January 14, 2000 (closed at 11,722.98, with an intra-day peak of 11,750.28 and theoretical[7] peak of 11,908.50)[8] and the broader S&P 500 on March 24, 2000 (closed at 1,527.46, with an intra-day peak of 1,553.11);[9] while, even more dramatically the UK's FTSE 100 Index peaked at 6,950.60 on the last day of trading in 1999 (December 30). Hiring freezes, layoffs, and consolidations followed in several industries, especially in the dot-com sector.
The bursting of the bubble may also have been related to the poor results of Internet retailers following the 1999 Christmas season. This was the first unequivocal and public evidence that the "Get Big Fast" Internet strategy was flawed for most companies. These retailers' results were made public in March when annual and quarterly reports of public firms were released.
By 2001 the bubble was deflating at full speed. A majority of the dot-coms ceased trading after burning through their venture capital, many having never made a net profit. Investors often jokingly referred to these failed dot-coms as either "dot-bombs" or "dot-compost".
Years ago I used to read the Christian Science Monitor. It was very good.
I think I'd listen to Roubini
and he's shooting low
girlbear writes:
Leave it to a woman to ask "Does this contraction make my bottom look big?"
Yes.
(My wife is obviously a saint.)
Re: It was very good.
Maybe so, but IMHO, $53 Trillion is WRONG!
I doubt if that $2 trillion includes the losses that will be incurred from the exercise of credit default swaps.
NASDAQ is still less than half of what it was back then, and will probably go much lower as the contraction continues.
So the consumers are pulling back, as they need to do, and now all the states and fed gov't are whining 'cause tax receipts are down.
This is in the you just can't win dept.
girlbear writes:
Leave it to a woman to ask "Does this contraction make my bottom look big?"
no, it's not the contractio
I think the loss of paper wealth is what makes this look ugly - especially with all the boomers coming up on retirement.
I bet the dot-com bubble took out at least a trillion.
I suspect the housing bubble will dwarf that before it's all over.
Hi awgee. I've asked what effect the credit default swaps will have and haven't got a credible or logical answer. I think because nobody knows the answer, except it isn't good.
I agree with Roubini that total losses may well be near $2 trillion; however that does not augur that banks are in for continued massive writedowns. While banks may have only written off $300B to date, much more than that has quietly been written off by pension funds, hedge funds, SWFs, and other privately managed pools of money.
Not that I am suggesting it is time to buy bank stocks, but if Roubini is yelling the sky is falling he should be more thorough in his analysis of how much has already fallen.
Lawyerliz - Exactly, no one knows. There is no real market or clearing house. They are over the counter so no one really knows how many or their worth. The IBS tries to estimate, but ... And each party enters their worth on their balance sheet at whatever they choose to value them at. A CDS can be entered as a $10 mil liability on ones party's balance sheet and a $100 million asset on the counterparty's balance sheet. And many are hedged, so they are accounted for on the difference, but if one counterparty can not pay, the other party is still liable for the full amount of their paper. And I am truly an optimist.
I would love to see Roubini's spreadsheet with the components that add up to $2T.
I would love to see Roubini's spreadsheet with the components that add up to $2T.
I think it's conservative. Consider the over all size of the derivative market is close to 3/4's of a quadrillion dollars, it only takes a hiccup to make it at least this big. And it will be bigger.
Total mortgage debt in the US:
$12 Trillion
Total leveraged instruments based on that debt, $200 Trillion.
So yeah, $2 Trillion? Just getting started.
lawyerliz, the CDS issue isn't the notational value of the instruments themselves, but the effect as a hedge. Why there isn't a straight answer is because in order to know, you have to know the ultimate losses on the first order securities and no one does by a longshot. What I imagine will happen is what happened this week with AMBAC. They settled what they owed instead of paying the whole amount, with the result actually being that they get to write UP the amount they took as a loss.
There are so many interdependencies here it's hard to put ultimate amounts to this, and they may never fully be known as this is unwound. But if you follow the patterns, everyone is just going to eat some loss and the instruments will get unwound. That's all this is about. The orderly unwind, but it is financial kabuki to watch.
"The debt is now $9.5 trillion, or $31,284.84 for every person in the United States, according to the National Debt Clock website."
You're talking the national (government) debt. What about household debt?
London Banker: Fisher's Debt-Deflation Theory of Great Depressions and a possible revision
FT Woods | 08.02.08 - 6:44 pm | #
FT Woods - thanks for posting that, it was well worth the read.
Anonymous writes:
"The debt is now $9.5 trillion, or $31,284.84 for every person in the United States, according to the National Debt Clock website."
And raised last week to almost 11 trillion. We are so screwed.
Total mortgage debt in the US:
$12 Trillion
So if 10% (which is a HUGE number) of people in the entire US defaulted on their mortgages you are looking at a 1.2T loss. That's with zero recovery on the property. Does that seem reasonable to you? Look at the percentages now, it's not close to this.
Total leveraged instruments based on that debt, $200 Trillion.
That isn't the actual value of these instruments, that's the entire morass of derivatives, swaps, and other exotic issue that may or may not ever see any value. Don't forget that most of this are just "insurance" and hedges. So what is the actual notational value of all of this? I've seen somewhere around 200 to 400B.
"Some estimates are in the order of between $50 billion and $100 billion of losses associated with subprime credit problems." -Ben Bernanke July 2007
It is striking and ironic that this is in the ballpark for what the Iraq war was supposed to cost and we're looking at that turning out to cost nearly as much as the housing mess. Didn't Paul O'Neill get run out of there for wanting to be transparent?
Regardless of the projected future loss and future cash burn, I think we are seeing common shareholder dilution across the board in America -- which is being masked by share repurchase programs -- which are conduits for backdated option grants.
No where have we seen dividend cuts or honest reflections of the money which has vaporized from all the multiple global bank write-offs, which at this point have to be getting close to a trillion -- yet, very little impact to dividends or option grants; dividends hurt option grants and as share values crash, insiders are still being stuffed with billions in the form of compensation.
Perhaps this is not well put tonight, by myself, but as an example, how can Bank Of America botch a deal so badly as with Countryfried, see its share-value destroyed, but yet not lower the dividend? Furthermore, you see the same correlation in The S&P 500, with billions lost to accounting fraud and billion dollar write-downs, yet, virtually no impact with the yield/P/E.
Why?
If you spent a million dollars a minute starting at the time Christ was born, you would NOT have spent a Trillion dollars yet.
Conversely, if you had written bad checks at the rate of one million dollars a minute since the time Christ was born, you STILL would not have written a TRILLION dollars worth of bad checks.
Two Trillion is a lot of money.
Tony
What means "notational" value?
I understand first order hedging, but it seems we've hedged the hedges and then hedged those? I get to that and my brain starts to explode.
I deduce the bad effects will be less than indicated with the huge numbers with all the zeros, but there is no answer it seems to the bad effects, even within an order of magnitude.
Also, I came up with a back of the envelope estimate of half a trill to a trill and a half back last fall, and I see nothing to indicate that the numbers will be less and a lot to indicate that they will be more. What I didn't take account of last fall was the neglect of the housing stock by the incompetent evil (go get 'em conjure) stoopid gasp choke lenders. Also, didn't realize that the effect of the empty towers would be devastation due to lack of maintenance money. Well, I knew, but not so concretely.
ipodious wrote: That isn't the actual value of these instruments, that's the entire morass of derivatives, swaps, and other exotic issue that may or may not ever see any value. Don't forget that most of this are just "insurance" and hedges. So what is the actual notational value of all of this? I've seen somewhere around 200 to 400B.
The matter you may be overlooking is that everything leans against each other. Nothing stands on its own.
Tony
Matt
If all you had to do with the bad checks is sign them, you'd still have a severe writer's cramp (and maybe paralysis). [not to mention needing to live for 2000 years].
ipodius: I think he's also including meltdowns in CC & auto debt. + their derivs too.
Like I said, a thorough rollup would be interesting, my spreadsheet is clearly incomplete.
The dollar is toast and when nations who carry our debt realize that we are going to default, mass exodus of investors in the USA. Does anyone know how to buy Treasuries in Swiss Francs?
OT but I'm trying to figure something out on puts and I'm still not clear from the reading.
Assume I buy a contract at - for example - $1.50/contract with each contract covering 100 shares. The current share price is $30/share and the strike price is $25/share in 90 days. The price drops to $24/share in 60 days and I sell. My understanding is that as the share price drops, the put/option contract price increases accordingly. So when I sell, the option is supposedly higher than the $1.50 which I paid. Assume $2.00. So I've then made $.50 profit on the contract.
And the actual $6/share drop is meaningless in terms of determining the final haul on the transaction. Is that correct? Or does the $.50 contract profit get multiplied by the number of shares in the contract?
Thanks. I've been to multiple sites and I still can't wrap my head around that particular concept...
Or maybe I'll just load it onto an iPod and ask my teenager to figure it out.
Signing your name for 2000 years straight.
Gosh, a really vivid description of Hell. That's want we'll do with the evil doers. Make them sign their names over and over and over and over again.
We lost $7 trillion from the dot.com bust.
Per Peter Hartcher and his book "Bubble Man"
Lawyerliz: sorta like a mortgage closing.
"Gosh, a really vivid description of Hell. That's want we'll do with the evil doers. Make them sign their names over and over and over and over again."
-Lawyerliz
Kind of like a Twilight Zone version of The Simpson's
ipodius,
"There are so many interdependencies here it's hard to put ultimate amounts to this, and they may never fully be known as this is unwound."
Exactly. It's called cascading cross defaults. Notional values be damned. That's systemic failure.
Greenslime:
FRB: Testimony, Greenspan -- Private-sector refinancing of the large hedge fund, Long-Term Capital Management -- October 1, 1998
Dr. Gary North:
The Limits of Central Banking by Gary North
Cheers,
Volker the Viking writes:
"I think I'd listen to Roubini...and he's shooting low."
But does the market pay him any attention?
homedad43 writes:
OT but I'm trying to figure something out on puts and I'm still not clear from the reading.
want something clear? don't
stay in cash or PM's and take delivery
ha lawyerliz! that's what happens to bureaucrats in hell. they get to sign their name and stamp things for eternity!
I think it does make your head sort of explode, which is why it was important for this all to be orderly. of course, that means drawn-out and this isn't over by a longshot. this is the 1 year anniversary and it's probably going to take another year to get close to done. but like JP is saying, I think Roubini is rolling up everything to be a bit sensationalist. Remember, he started calling recession about a year before it happened. Jeez, I should start screaming about an asteroid hitting the earth. I'll eventually be right
I think the way to think about this is sort of what you allude to though. Take off all those zeros and look at this as sets of interlocking items where all of them insure each other. Picture all the parties at one big casino table with piles of money in from of them. So after you pay everyone at the table who has one, with the same money over and over i might add, what was lost and gained? That's the rub here.
Obama's Good Day And A Columnist's Bad One
Sandy Goodman: Obama's Good Day And A Columnist's Bad One
As for Obama's talks with Treasury Secretary Paulson and Fed Chairman Bernanke, they strike me as entirely appropriate given the state of the economy and the necessity for Obama, if elected, to hit the ground running to battle what polls show is Americans' most serious concern. Perhaps rather than the "extended phone conversation" with Paulson, reported elsewhere in the Post, in which Obama discussed the future of Fannie Mae and Freddie Mac and the new housing law, Milbank would have preferred a meeting like the early ones Bush held with his cabinet. Those meetings were compared by then-Treasury Secretary Paul O'Neill, with those of "a blind man in a room full of deaf people." Nor was Bush's Fed Chairman, Alan Greenspan, any more impressed with him. Despite being a staunch Republican, Greenspan said he much preferred Democrat Bill Clinton's economic policies to those of the cowboy from Crawford.
New law: All derivatives and leveraged investments must be represented by proportional quantities of poop. The poop is to be stacked on the roofs of buyers, sellers, and brokers. This way we have transparency -- we know exactly how much poop is out there -- and if the piles get to big, the roofs cave in as a sort of early warning device.
(hoof, hooves; roof, roofs, pronounced "rooves"?)
Ok, 7 trillion in the dotcom bust.
Lawyerliz wipes her brow in relief.
I barely noticed the dotcom thing. Except to wonder why idjiots were buying shares of stock in companies that obviously would never make any money.
I sat back and marveled. This bust is in my industry and thus it has smacked me right in the face.
Also, people need to live in or rent a dwelling, but nobody needed to buy a dotcom company; you could sit on the sidelines are just observe. the hub wanted to buy something called Red Hat at one point, and nobody would allocate him any. Wonder if that means anything today.
Like a closing. hehehehe. Yep. And virtually none of those papers mean anything. A combination of lender stupidity and the feds requiring useless paperwork. All you need is a deed, closing statement, note, and mtg at minimum.
And you need to add a Bill of Sale, and Mechanics lien affidavit to do it right. If you have the misfortune to be called John Smith or Jose Rodriguez, you need an it's not me affidavit. That's it. All the rest is crap. If you're buying cash, leave out the note and mtg(deed of trust).
Would also like to see rollup for the $7T. Sounds high.
Lawyer liz
"Signing your name for 2000 years straight.
Gosh, a really vivid description of Hell."
Good one. At least the fifth circle there.
Cheers,
Got my professional start in commercial reinsurance (as
Andrew Tobias once wrote many years ago, he doesn't know what the strangest thing in the world is, but he does know that insurance accounting is the second strangest). The magnitude of what's out there is mind-boggling, but you have to remember that the pieces that are "ceded" or laid off on subordinate entities are often much smaller than you might think.
Example: Old employer covered Ford Motor. The insurance was set so that we might retain the first $2M of any physical loss. The next level, up to $5M, would be split among, perhaps, 25 secondary carriers arranged through a syndicate, so each carrier got 4% of the loss.
If Ford incurred a $4M loss - like hail damage to a lot full of factory frest Escorts in Argentina - the spread would be $2M retained by my employer and the subsequent $2M spread so that each of the 25 reinsurers got hit for only $80K (4% of their portion).
It's going to be a long, ugly road but an orderly unwind isn't impossible. That said, the insurance carriers were required by NAIC standards (as I recall) to monitor total written exposure so that it could be correlated to premium levels/capital - which the Fed/FDIC has apparently never done.
So that means everybody in the giant mythical casino table just keeps handing each other stacks and stacks of the same chips, in a musical chairs sort of way, and at the end we see who has a big stack and who doesn't even have a chair to sit on anymore?
So what, if anything does that do to the real world?
Verry interesting homedad.
The title insurance companies do that too, but I don't think the split up the excess risk among so many entities.
So what, if anything does that do to the real world?
Well, the effect is that while these stacks are being passed around, they can't be taken off the table. So the effect in the real world is to take the money off the table until it is all sorted out. That's the effect you're seeing now. Do these zeros evaporating affect you at all? Probably about as much as the dot com evaporation did.
so the real effect is to vaporize some zeros at the end of a lot of investments. big deal, we've survived that before and we will now. the real issue is that money being off the table. it's economic lubricant and the gears are now getting rusty.
that's what happens to bureaucrats in hell. they get to sign their name and stamp things for eternity!
This is beginning to remind me of the Dept of Information Retrieval, from the movie Brazil.
Re: "proportional quantities of poop."
I rate that Triple AAA (is that redundant?)
LawyerLiz:
It depends upon the size of the risk being insured - Ford v Joe's Garage - as well as the availability of what's out there at the time the policy is placed. If things are healthy, then more can sign up but if anybody on the contract failed, then that amount was retained by the carrier that wrote the policy. In our case, if Gen Re was crapped out, then my employer would have to retain their $80K portion as well.
It's kind of like financial Jenga.
Note to doom and gloomers. If you live in the city and try to grow your own food in the backyarrd, the squirrels will eat your tomatoes. So, if you want tomatoes, you must eat the squirrels.
They taste like chicken.
Re: bureaucrats in hell
NO way, these bastards are ghosts from pirate ships and they never go to hell, they just stay here causing trouble! We need an Exorcist!
ipodius,
"big deal, we've survived that before and we will now."
You are my Sebastian. The interconnecting strings are all taught and reaching failure. Which "SNAP" will cause the unraveling? I don't know. Neither do the authorities. They keep reacting to each "SNAP" as if this the "one"...and wasting ever diminishing resources. Soon it will be "The One". Will there be anything left in the kiddy to hold it together? My guess is not.
Cheers,
Paradise Lost & Bureaucrats In Hell
Plot: A flying saucer circles the world, eventually landing in Washington D.C. where a man and seven foot tall robot emerge. The man, Klaatu, produces a gift for the President, but a trigger-happy soldier thinks it is a weapon and shoots Klaatu down. In retaliation, the robot melts all the tanks and weaponry with a ray from its visor. Klaatu is taken to hospital where he affects a remarkable recovery and announces that he wishes a meeting with all world leaders. But the leaders are too scared to agree to this. So Klaatu sneaks out, signing into a boarding house under an assumed name. He contacts scientists to organize a meeting and arranges a demonstration by stopping all power on Earth for half-an-hour so that he can announce to the world that if humanity does the nuclear arms race, his people will destroy the world.
ALDM: See, you have a talent for the ratings biz. (grynne)
12th: Do rats eat tomatoes as well?
Los Angeles News - Palisades Rathouse: Unchallenged by Health Officials, Elderly Twins Fed Local Vermin Population - page 1
It shall be a Jubilee for you;
and each of you shall return to his possession,
and each of you shall return to his family...."
--Leviticus 25:8-55
Unless you've changed your handle, you are the 2nd person to post about Jubilee here. Hmmm. Anything can happen.
If you spent a million dollars a minute starting at the time Christ was born, you would NOT have spent a Trillion dollars yet.
Conversely, if you had written bad checks at the rate of one million dollars a minute since the time Christ was born, you STILL would not have written a TRILLION dollars worth of bad checks.
Two Trillion is a lot of money.
Is your math just bad, Matt, or does someone pay you to lie for a living?
If you spent a million dollars a minute since 0 A.D., you would have spent more than $1,055,667,600,000,000 = 1.056 QUADRILLION dollars, or in other words 1,056 TIMES one trillion.
I curse the day calculators were invented.
that's what happens to bureaucrats in hell. they get to sign their name and stamp things for eternity!
Actually, that would be heaven for a beaurocrat. It would be hell for a CR poster, especially if it involved money actually coming out of one's account.
Re: Miltons epic poem and its key themes: Fall of humanity and justifying Gods actions
Satan and the other fallen angels: Convergence and culmination of earlier traditions
Also: Council in heaven (prologue)
Fausts pursuit of godlike knowledge (I rode too high)
misean, i'm one of those jaded sorts who hears about the end of the world all the time and yawns. the wonderful thing about humanity is its adaptability. and the wonderful thing about this country is its resourcefulness in adversity. unlike sebastian i don't deny the adversity, and that's the difference.
so the disaster movie will have a happy ending, as all american hollywood adventures do as at the last minute, things will turn. in the meantime, sit down and enjoy the popcorn and scream as you get scared at the bad parts. while everyone was on here preaching doom, others were trying to avert that disaster and, so far, it's working. it will be a hairy ride and the end is uncertain, but i'm sure we'll pull through.
Misean,
Great looking page over there; keep up the great effort!
We don't have rats where I'm at. They are mostly down by the river. Actually our pro hockey team is called the "river rats". I saw one once. I thought it was an armadillo.
If things get to the point where I know what rat tastes like, I'm willing to bet america won't have an obesity problem anymore. I'm a glass half full bear.
On a side note, I know someone in the Dept of Health in Maine. They busted a chinese restuarant for serving what the restuarant owner called "sea chicken". They didn't call it that on the menu. They just called it chicken. It was seagull. As they say in Thailand, "Same. Same. But different!"
Jim,
Give ol' Matt a break. He's obviously a level3 freelance accountant for Goldman and Citi.
Cheers,
Homedad43
RE: your option question.
In the example you gave, the profit on a 100 share contract would be $50 ($2.00 x 100 - 1.50 x 100).
But it's a helluva lot more complicated than that. As your out of the money option approaches the strike price, the premium declines (compare, for example, deep in-the-money options vs. out-of-the money options).
What this is all about is greek -- specifically "The Greeks". I've put a link below that goes into it.
Volatility and the Greeks
Not Investment Advice.
They taste like chicken.
12th Percentile | 08.02.08 - 8:29 pm |
Is this first or second hand information?
what's with all this leviticus stuff tonight? yeesh, if you're looking for something that can read any way you want to bend it, try a derivatives contract instead. at least it wasn't written with bronze age views of the world in mind!
"Sea Chicken"
Love it.
Give ol' Matt a break. He's obviously a level3 freelance accountant for Goldman and Citi.
...and no doubt gets paid in the upper six figures for his creative accuracy.
Re-post, re-hash, redundant, remarkable and really worth another look:
Mortgage Applications Decrease in Latest MBA Weekly Survey
Nothing found for 2008-07-3 Eekly-survey-8
The Mortgage Bankers Association (MBA) released its Weekly Mortgage Applications Survey for the week ending July 25, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 420.8, a decrease of 14.1% on a seasonally adjusted basis from 489.6 one week earlier.
Can we get this crash over? Because even as a renter I'm still paying over-inflated rent... and its tempting to lay out some cash for a smaller monthly payment. Way too tempting...
Are condos in SoCal really going to end up at like $175k-200k?
I suppose I should just think about the extra income I'd bring in by "investing" in PMs/CDs/shorts... but still, paying $500 less per month is too tempting...
OT> Anyone know software??
Do you know software? How do I convert FLV files to quicktime?
Maybe we should ask dryfly. This recipe ran in his newspaper. It should be noted that in the culinary world, the overnight salt water soak is known as "brining". I like it that they don't use those elitist terms when printing squirrel recipes. Also, you can do without the parsley.
Good times cooking tip: If you don't brine your pork chops, you should.
Squirrels in Cream Sauce
2 squirrels, cleaned and cut into serving pieces
1 medium onion, finely chopped
1/2 tsp. leaf thyme
1 4-oz. can sliced mushrooms, drained
1 c. beef bouillon
1 c. sour cream
2 tbsp. lemon juice
3 tbsp. flour
Minced parsley
Soak squirrel in salted water overnight in refrigerator. Remove squirrel pieces and rinse. Discard salted water.
Place squirrel, onion, thyme and mushrooms in a crock pot. Pour in bouillon. Cover and cook on "low" for 8 to 10 hours. Remove squirrel to a warm platter.
Combine sour cream, lemon juice and flour. Stir sour cream mixture into crock pot. Turn on high and cook until thickened. Spoon sauce over squirrel and sprinkle with parsley.
"Is your math just bad, Matt, or does someone pay you to lie for a living?"
I haven't actually worked it out, but is it possible he is using the British definition of trillion (i.e. million million million)?
Yummy! WTF is for desert and what beverage might go with this?
The Retro Cocktail Hour Click listen now.
This talk of Roubini being a shill or schtick is ridiculous. Sure, if he just came out with this, but Roubini has been tooting this horn for a long time now. Remember, he used to be an idiot demanding to be noticed. Now that he is shown correct, he is schtick? Please...
I guess Schiff, Roubini, Thornberg, et al were all just schtick, and the reality is that "nobody could've seen this coming?"
Get a frickin grip. These guys were correct. They were brave enough to call a spade a spade when the rest of the world called them Chicken Littles. That doesn't mean they are right about the future, but give them the respect they've earned, dudes.
Shit.
"...at least it wasn't written with bronze age views of the world in mind!"
No TV commercials in the Bronze Age. How out of touch with reality can you get?
Now that people know that the Earth is an oblate spheroid, they're much more intelligent.
People in the Bronze Age were born, lived and died. That's a lot different from us.
Oh yeah...and
Full Disclosure: Stern was my "safety." I owe nothing to Nouriel.
This is, strangely enough, on topic. File under "tastes like pork"
"The French Eat Rats" by Foodways | Lawrence.com
Re: haven't actually worked it out, but is it possible he is using the British definition of trillion (i.e. million million million)?
If that were the case, he would be using pounds and thus his definition would need to be adjusted for the devalued dollar, e.g, one US (Bush) Dolar = 0.5063 U.K pounds,
So look at your math in respect to that...
Pavel: You're one of my favorites, dude. It's too bad you're not the old man in the rocking chair next door. I'd totally bring you some whiskey and a listening ear.
"and no doubt gets paid in the upper six figures for his creative accuracy."
And I would imagine that someone like yourself who becomes so incredibly aggressive and offensive over something so very minor is paid very little, if indeed he is paid at all.
The Fisher paper was quite good, I recently ran into one that comes at things from another slant that bears examination IMNSHO...
Exponential Growth as a Transient Phenomenon in Human History
UB,
I'm told Yak is very tasty and far more tender than cow, and I'm not sure why this is on topic...
CSC, in my humble opinion Roubini found his 15 minutes and is now taking it for what it's worth. bully for him. but in reality, the bulls are right for a time and then so are the bears. you can't give a guy all the credit for natural upswings in the market. am i a genius if i said for two years running that there'd be heavy rains in the midwest? You know when I'll know it's not a shtick? When he stops being a bear and starts to offer opinions about what is right that is happening now.
and btw, i've read Roubini for a long time. he was way too bearish back when you could have made a lot of money by NOT listening to him. and now he's still way too bearish in my opinion. the kernal of what he said was correct, but his timing was awful. and don't forget what i preach: you don't have to buy at the bottom or sell at the top to make money, just almost. he was way far of even almost. so in my book, being right in theory is no excuse for being wrong in practice.
"If that were the case, he would be using pounds and thus his definition would need to be adjusted for the devalued dollar, e.g, one US (Bush) Dolar = 0.5063 U.K pounds"
Not so. The British definition applies to everything, currencies included.
...thus the expression: "yacking it up."
Anyone here besides me ever eat a squirrel? It isn't worth it - they are all bones. We used to do it as kids but we ate them in the woods grilled over fires after we shot them. That and rabbits & pheasants.
Rabbits are okay and corn fed pheasants are to die for (in the fall when you clean them they are literally PACKED with corn - they just erupt when you clean them).
Squirrels are enough to make you want to become vegetarian - hind quarters have some meat (each one less than one McNugget) but that is about it.
We have discovered that none of our catalog sources still sell Ear Horns.
pavel, i'm not sure i understand your point there. but if you want to go around examining people's skin lesions and yelling "unclean unclean" while rending your garments (which are not made of linen and cotton together i hope!) don't let me stop you! also you can add a delicious recipe for locusts to this thread to go with the squirrel, which, i have no idea if fits levitical requirements. but stay away from the hare because those bronze age guys understood basic zoology not at all.
Seeing as we might be on the cusp of a renewed deceleration, I think we should ask, (as the nurse asked my wife): "How far apart are the contractions now?"
ipodius: Very fair. But let's not kid ourselves that this is any kind of natural upswing/downswing. Anyone with their head upright could see this thing coming for miles. Most just ignored it and belittled anyone who pointed out the obvious. The men I mentioned did not, and they paid for it during the boom.
I totally agree, though, that Roubini will have to come out Bullish at some point to retain credibility. Unless this really is the end of America, in which case he'll go down as a Pollyanna like the rest.
Heehee, dryfly. From the previous link:
"Advice from personal experience in cooking squirrel: Omit the ribcages from any stew. There is very little meat there, and the tiny ribs distribute themselves throughout the dish."
Wife in Chinese restaurant; this chicken tastes like cat.
Husband; I hope it's ours.
Joshua,
"and no doubt gets paid in the upper six figures for his creative accuracy."
"And I would imagine that someone like yourself who becomes so incredibly aggressive and offensive over something so very minor is paid very little, if indeed he is paid at all."
Somebody's got a snit in a twit.
CSC if this is the end of america i'll bring a jug and you bring the 420 and we'll just sit on the porch until the aliens take over
ipodius: I'll be there with a baggy and a djembe drum. But we must include Misean. Seeing that colander hat while blazed is on my "must do" list.
I'm still working with Sea Chicken garnishes and have no idea what Pollyanna has to do with rats and yak jelly. I came here for porn and find a bunch of snots blogging about Squirrels in Cream Sauce. Are you people insane? WTF are you doing, there is a discussion here about fuc-ing Roubini going out of his mind with some economic disease that no one understands. Can we please get back to helping me find how to transfer FLV files to Quicktime!
and CSC i think my point about Roubini is that the crux of his argument was on the money, and to that i paid attention. but like most economists he was thrilled with his theory and rotten about its application. and even though you can see something coming for miles, you can still profit from it
then take the money off the table until the smoke clears.
and now because his views were correct he's found some fame. i think that's great. but he's the prophet of doom and that's going to be a hard act to disengage from. so he is a one-act? or does he now have theories about how this all recovers. i'm listening for that but i'm not hearing anything from him yet.
"and don't forget what i preach: you don't have to buy at the bottom or sell at the top to make money..."
Ipodius, you have been killfiled.
killfile for Greasemonkey
CSC,
"I totally agree, though, that Roubini will have to come out Bullish at some point to retain credibility. Unless this really is the end of America, in which case he'll go down as a Pollyanna like the rest."
I think you meant Cassandra.
Cassandra:
Cassandra - Wikipedia, the free encyclopedia
Pollyana:
Pollyanna - Wikipedia, the free encyclopedia
Cheers,
oh god CSC that visual is pretty funny...misean with some colander with tin foil sticking out all over it and a glass of whiskey in his hand in a rocking chair sparking a bowl. i prefer bong hits but i'm sure misean is a roll your own sort of guy
CSC,
"Seeing that colander hat while blazed is on my "must do" list."
Dude, when the signals are coming in it glows. It's so cool. I'll bring like 25 cases of Corona.
Cheers,
Uncle Billy Vs. Mt. Pelerin writes:
Heehee, dryfly. From the previous link:
"Advice from personal experience in cooking squirrel: Omit the ribcages from any stew. There is very little meat there, and the tiny ribs distribute themselves throughout the dish."
Uncle Billy Vs. Mt. Pelerin | Homepage | 08.02.08 - 9:19 pm | #
That's accurate - but they would make okay broth or stock... cut the legs off and use the trunk for stock then pour through a fine sieve to catch the bones... then use the stock to stew the 'bigger' pieces along with potatoes, carrots, onion - etc.
I had a friend in Iowa who would do that with the squirrels he shot - pretty tasty but a lot of work for a very little bit to eat. He gave me the tails to tie flies & spinner baits (that and pheasant tails).
I tell my city friends stuff like this and they think we're nutz. Ya well, probably.
oh finally squeezed killfiled me. now i won't have to listen to his drivel anymore. time to celebrate! i'm still laughing about misean's colander.
I tell my city friends stuff like this and they think we're nutz. Ya well, probably.
Maybe not nutz, but definitely squirrelly.
Roubini is predicting a recession that'll be 12-18 months long. He thinks it started Q1 of 2008 and will end somewhere in the middle of 2009. Despite all the doom and gloom attributed to him, he does see an end to this "deceleration in growth." So he's not a perma-bear--he is just talking some realism to Pollyanna's.
Anonymous writes:
The Retro Cocktail Hour Click listen now.
Anonymous | 08.02.08 - 9:07 pm | #
So isn't 'Kansas' and 'Retro' kinda redundant? BTW - I'll be in Wichita in two weeks - I can hardly wait. Retro 24X7!!!
ipodius,
"misean is a roll your own sort of guy :)"
Hell no.
I can mount a bong on this thing. Put a water chamber on one of the handles, tubes around the Super Colander Tin Foil Hat to the other side, and mount a water chamber there. then a tube out the top of that one to the mouth. Kinda like those beer hats...but FAR more effective. I'm a two chamber bonger myself...but I don't go to that well as often as in the past...asthma ya know.
Cheers,
"but he's the prophet of doom and that's going to be a hard act to disengage from. so he is a one-act? or does he now have theories about how this all recovers. i'm listening for that but i'm not hearing anything from him yet."
There's no light at the end of the tunnel, yet.
ipodius: In fairness to Roubini, I don't see the light yet myself.
More directly to your point, there have been a bunch of doomers who have nailed this one. Pastors speaking about the end times, militia dudes fretting about runaway Fed power, etc. No doubt, when we finally get the "Big One" in Southern Cal, there will be dozens of people who "predicted" it.
But is that really Roubini? (I concede that it may turn out to be Schiff, who's predicted the end of America for a long time while selling "alternatives.") Roubini is not just some privateer, and he's been pretty specific and fairly accurate so far.
That said, I'm picking up what you're putting down.
There were many things being ignored in the mainstream during this run up. And I'm not sure how many of the "truth tellers" were really just timely contrarians. I certainly don't believe this of Thornberg, but I wouldn't go to the mat for Roubini. I just think he deserves some respect for standing up and pointing at the wolf while the financial pundits mostly laughed at him. He was, afterall, sending valid warnings.
Ha. I knew Dryfly had eaten squirrel.
Squirrels are like crabs. Too much work for the meat. But a nice plump rabbit is very tasty in my experience.
For a few years my parents raised pheasants. And we ate them. Tasty.
Misean: Yeah, Cassandra. Hah. Pollyanna better describes Kudlow.
Thanks.
Anyone here besides me ever eat a squirrel? It isn't worth it - they are all bones.
- dryfly
My mom used to always make squirrel and dumplings. She would pressure cook the squirrel meat because it was tough. You had to pick some buckshot out of it at times though if whoever killed it used a shotgun instead of a .22
Misean:
Is that you in the tinfoil chapeau on your site?
Not that I want to participate in the proposed shindig, but is this what Misean's colander hat looks like?
Scroll down a little on the page.
DIA Salsa Spotlight of the Day: In-Line WYSIWYG Editors | DemocracyInAction
I've not eaten squirrel. A rat on occasion when money was short. Does squirrel taste like rattle snake?
Cheers,
Ed S:
Thanks for the clarification.
Squirrels are like crabs. Too much work for the meat.
no, no, no .. crabs are worth the effort.
(a MD native)
Misean's protective device is much better. He is humble, so he doesn't pimp it too hard, but dude has invented a helmet that also protects from falling Chemtrails. This could not be a coincidence.
Here is the hat is all its glory:
Sorry. Page not found.
RE: roubini:
you have to remember his roots, emerging market debt crises.
the bulk of his professional life has been studying the effects of debt, debt crises, the effect of debt crises on banking systems, and how this all plays out in the international forum....
Never did the squirrel thing but ptarmigan are kind of the inverse - all the meat is in the breast and chuck the legs etc. - with a .22 you are working on the head shot to conserve the meat.
They make for some tasty fajitas (good way to stretch out the protein for larger group).
WTF is this a cooking show?
CSC,
First rate protective gear though it does have stout power consumption requirements IIRC...
homedad43,
Yep. I model me own wares. Tried to get Josie Maran
Josie Maran Picture (zy001) | mxdpi
to do it...but the ingrate...she wanted money...like I've got that. Do you know how much foil costs? And copper wire? Hell, I'd have to raid about a failed subdivision to afford her fees. So I said to myself...self just do it your self. Your an ugly old man but no one is going to buy it. And Iwent like, Hey brain cell number 3 you're back online.
So there ya go.
Cheers,
Squirrels are like crabs.
I assume you are talking blue crabs and 'NO' they aren't the same - crabs are worth picking - unbelievably delicious & tender once you get to the lump meat. Plus you can steam them in a batch and throw out on the table and pick at your leisure with buddies over lotsa drinks. I can pick crab almost as fast as a 'pro'.
There is no good way to do anything like that with squirrel... gamey and too much work to hunt & clean & cook.
Crabbing is one of the funnest ways to catch a meal I know (and yes I've done it - though obviously not here in fly over).
FWIW we ate crab tonight - a guy drives up from the gulf & sells shrimp & crabs. Dumb Midwest locals all go for the largest & most expensive 'mega jumbo shrimp' - I buy the smallest he has (25-30 count) - much sweeter. If he has lump crab meat I buy it too... tonight he did & it was fine & already picked. Outstanding!!
CV: cooking show? i thought it was, 'i'm more fly-over than you night'
although the eat the squirrels to eat my tomato's comment was pretty funny
I wanna see Bobby Flay throwdown on Dryfly. He'll have to do it while sitting in front of a laptop.
You are all drunk/stoned. Hurrah!!
Squirrels are rats with fuzzy tails. Rabbits are rats with long ears. Plump rats. You can buy frozen rabbit at the grocery store, and about every 5 years I make it for the hub. Don't eat it myself. Just watch him eat. His granddad from the poor side of the family raised rabbits for eatin'.
Yesterday, I made some orange roughy, dredged in organic bread crumbs crushed with a rolling pin with walnuts, saute'ed with half olive oil and half home made organic butter. Tasty enough to die for. Y'all can think of that when you are LEFT BEHIND in the rapture.
Ok, I'm still at the giant craps game with the money being handed around. If it's on the table, does that mean it's not being spent somewhere, and thus reducing economic activity.
My mom used to always make squirrel and dumplings. She would pressure cook the squirrel meat because it was tough. You had to pick some buckshot out of it at times though if whoever killed it used a shotgun instead of a .22
Doc at the Radar Station | 08.02.08 - 9:36 pm | #
I used an old 22 bolt action - get them clean as a whistle.
Well obviously $2T is a huge amount to lose & bank capital loss is far worse than shareholder weath destruction, since the economy still moves... but we also get ~8T or so in homeowner wealth destruction this go round. No wonder people are putting off buying that car. They took a huge net worth haircut.
dryfly,
Still have the single shot bolt rimfire that requires a manual cocking for each shot...ironsights, natch.
energy,
"power consumption requirements IIRC..."
Yeah...I gotta get the lantern battery and car battery versions online.
The lattern battery one is doable tomorrow, but some asshat stole the 12 volt car battery in my parking space.
Cheers,
misean,
MOST EXCELLENT LINK
Misean, if you could only get the 4th, 5th and yes even the 6th brain cell working, just think of what you could come up with.
homedad43 writes:
I wanna see Bobby Flay throwdown on Dryfly. He'll have to do it while sitting in front of a laptop.
homedad43 | Homepage | 08.02.08 - 9:45 pm | #
I'm not that 'flyover' - just LIVE here and you'd have to be a moron not try a little of the 'when in Rome' thing.
I've tried to do that everywhere I've lived - just so happens I've been here WAY TOO LONG.
Lawyerliz: You're not drunk or stoned? You must be a T14 grad who prefers a bump of coke to go with the long hours of doc review. Otherwise, what kind of lawyer operates on an unadulterated mind?
"My mom used to always make squirrel and dumplings. She would pressure cook the squirrel meat because it was tough. You had to pick some buckshot out of it at times though if whoever killed it used a shotgun instead of a .22"
This will be hard to top. Dry?
Hillbilly
yay for me!
I don't think one trillion is a large amount. I think ten bucks is a large amount, but when you start tacking on the zeros, it ceases to have any meaning for me anyway. Look, we got to half a trillion in 9 billion chunks and nobody batted an eye (Just a flesh wound) We'll probably add the rest the same way, after all; one trillion is only one hundred chunks,...if your chunks are ten billion a pop.
It's like I said to my to my friends who came into some money. How long would it take you to save fifty thousand? Now go buy a Mercedes. How long did it take you to spend it? It takes a long time to make money, not so long to blow it.
And as far as the money on the table in a casino, well, maybe a couple players have managed to slip in their marker; all the pots are not going to be of equal value when it comes time to cash out.
Lawyerliz,
"Misean, if you could only get the 4th, 5th and yes even the 6th brain cell working, just think of what you could come up with."
There was an expedition. #1 is in the medula oblongata, #2 was in the cerebelum. Both are stable. That's good...or bad depending on your opinion...as they make basic life happen. #3 is buried deep in the cerebelum. This protects it from the repeated head butts to walls that occur as a result of all the shite coming down the financial pike.
When we had our Dr. Livingston moment and asked if others were safe, he clammed up. I suspect #3 knows where some other cerebrum cells are, but is protecting them. Though, I'm not sure I'd go as high as 6.
Cheers,
This will be hard to top. Dry?
Anonymous | 08.02.08 - 9:55 pm | #
That's pretty much SOP when eating upland game or ducks/geese that have been taken w/ a shot gun - always picking bird shot out between bites.
The funniest story I have was when I lived in Iowa... I was a process engineer slash supervisor at a large ag processing plant. One of the guys I supervised had a 'hobby farm'... 1100 acres... and he'd pick and plant before & after work. When those seasons were 'on' it was pretty much 24X7... farm work farm work - he must have been on speed or something.
When he was picking - he kept a couple shot guns in a gun rack in the cab of his combine... one with bird shot & the other with a slug. As he'd go he'd flush out deer and pheasants... and if he had time to stop, get out and shoot - he would - even though technically 'out of season'. His belief was they were eating his corn so they were his...
He would occasionally bring me venison & birds (more birds than venison)... They weren't cleaned - got them as is, do with them what you want. There were always some shot left in after I cleaned them.
dc1000,
"MOST EXCELLENT LINK"
Thanks.
That's like the 1st time you didn't yell at me. I never understood that but thanks.
Cheers,
What's a T14 grad?
I've never even seen coke except on TV, was a time I'd have tried it; not now.
dryfly,
Now venison I can cook. Rodents not so much.
Cheers,
Hey all,
I just wanted to introduce myself and let you all know how much I appreciate your comments and knowledge. I work as a CDS (Credit Default Swaps) trader at a not-to-be named major Street firm. I've been lurking here for the past year and a half now - and the comments here have both colored my view of the markets and made me some pretty significant gains on the desk. A couple of the more "forward-looking" guys on the desk have started lurking here at my prodding as well - but for the most part, folks working on the Street are completely ignorant of the larger calamity we face in the fixed income markets/equity markets/world trade/the world in general. There is a degree of subtle intimidation that gets directed at those who question the sustainability of what we do on the Street, and so, for the most part, people trade their "product" and keep their heads down while praying for this year's bonus to be flat to last year's. The looks one gets when bringing up the existence of significant unaccounted for risks in my space (counterparty risk being the greatest) are not those that correspond with large EOY bonuses. And what are us traders if not profit-maximizing incentive-internalizing machines? But I digress...
That being said, myself and a few other traders in CDS have really started to lose confidence in the validity/usefulness of our product. After all, if things really turn out the way that they look like they will, how many of our counterparties will have the money to pay up for their obligations? The fact that you are exposed to (what the street likes to call "residual", but what I consider MAJOR) counterparty risk in these transactions significantly impacts their value both as hedging and speculative instruments. For those of you more academically inclined, I would only point to the existence of the "basis trade" for proof of the contradictions within the CDS space.
Anyways, I just wanted to say hello, and let you all know that I appreciate your continued proffering of information. Know that even at those institutions that many of you vilify daily (and for the most part, rightfully so), there are those of us who are on board with you, and would like to see the business change fundamentally to once again engage in its original purpose: the proper assessment of risk and the prudent allocation of capital.
Cheers,
LawyerLiz:
Assuming you can buy frozen rabbit at the store, how much rabbit could be bought for $2T?
What if it's BOGO?
My mom and grandmother tried to make venison once. It was horrible.
We regularly eat buffalo. It's much better than beef and actually beef is gamey in comparison to buffalo.
Also, buffalo is grass fed and thus healthier.
Whoa. That was an important come to jesus moment.
Default:
Welcome to the carnage.
Feel free to throw in your two cents worth. Hell, we're doing squirrel and coke about now...
thanks for the post, but odd timing given the on going conversation.
Welcome default. I'm amazed that you are posting in the midst of a rodent explosion.
So maybe you can explain how all these defaulting zeros are gonna affect the "real" world.
T14 just refers to the top law schools. It's like the Top 10, except they use 14 (supposedly because the top 14 just trade places in the rankings, but always remain there.)
A lawyer who doesn't self-medicate? That's a new one on me. Even the DAs here are twisted.
In any case, Lawyerliz, you really should smoke ganja. I mean this; it does a mind good.
LawyerLiz:
Venison being as dry as it is, we bake ours with bacon strips on top to help keep it moist.
"I think $2 trillion is too high, but the number will definitely be huge."
Sorry, CR, but your track record ain't near as good as Roubinis.
Nope; just a nite school student here. No kidding. I can't even drink very much any more. Being 62 will do that to ya.
Homedad: after due consideration, I conclude that 2 trillion will buy enuf rabbits to cover the entire earth.
Lawyerliz & dc1000 -
I've been mulling over my first post here for a while, and I'd finally had enough red wine for the evening & decided to throw in my two cents.
Lawyerliz -
Defaulting "zeroes"? Are you thinking along the lines of Greenspan's "cascading cross-defaults"? If so, please let me know how much you currently know about CDS, and we'll move from there - no use in boring you on a Saturday night with information already locked away.
I'll be here for a while.
Cheers,
How does one try squirrel here in the OC? Can I just pop one at a regional park or will Irvine PD give me trouble? I know for a fact that Albertson's does not carry squirrel.
ODD NUMBERS
Odd Numbers - Odd Numbers - Portfolio.com
Chart of the Day: Amazingly Consistent Job Numbers
Re: come to jesus moment.
Come to dinner moment (with rodents)
FIRST (1st)
I'm going to deal with the question of the validity of the statistics proffered by our gentle and magnificent government from the perspective of the Street right now:
We all know they're complete bullshit. But we trade on them anyway.
Okay, hope that clears things up
Cheers,
My carpool rider is from W. Va. She says squirrel brains fried in butter is really good.
Dog isn't bad. Had at a friends in the PI.
Nobody is going to be right except in a general way. The unexpected always happens.
Currently Smoking Cannabis writes:
How does one try squirrel here in the OC? Can I just pop one at a regional park or will Irvine PD give me trouble? I know for a fact that Albertson's does not carry squirrel.
Currently Smoking Cannabis | 08.02.08 - 10:20 pm | #
LOL - don't have the answer for that but if they are like the ones on the U of Minnesota campus they come right up to you if you show them a peanut... just have a sack ready.
Similar thing can be done with geese - I had some buddies who would go golfing for geese (I've posted on this before)... pieces of bread and a nine iron... FORE!!!
And I can promise you 100% they had bongs aplenty prior to and after. That was circa 1978 in SE Minnesota not far from the Mayo Clinic.
Dryfly's buddies were quite the resource when it came to ways to poach game.
12th: So, if you want tomatoes, you must eat the squirrels. They taste like chicken
Funny, I live in the City and they eat my apples, plums, and grapes but not my tomatoes. Stringy as hell- I should have tried the crock pot or pressure cooker. Cream sauce seems a bit much. One year I trapped 13 but more just showed up - like pulling a bucket of water out of the ocean.
Is Greenspan a Better Judge of the Housing Market Now Than When He Was Fed Chairman?
Beat the Press Archive | The American Prospect
The reason for asking is that the Washington Post is reporting that Greenspan believes the housing market is nowhere near the bottom. While I strongly agree with this assessment, it is worth pointing out to readers that Greenspan spent his tenure as Fed Chairman avidly denying the existence of a bubble in the housing market.
Default,
"That being said, myself and a few other traders in CDS have really started to lose confidence in the validity/usefulness of our product."
You are the enemy. I'm chomping at the bit.
You worthless pigs sold this country down the shitter.
"Oh I was only following orders."
Got an historic ring to it, asshat?
When the fit hits the shan you and yours can expect this:
YouTube -
Cheers,
Small businesses having hard time to get loan.
YouTube - Glenn Beck: Featuring ASBL President Lloyd Chapman
Rocky Mountain oysters
Rocky Mountain oysters is a North American culinary name for edible offal, specifically buffalo, boar, or bull testicles. They are usually peeled, coated in flour, pepper and salt, sometimes pounded flat, then deep-fried. This delicacy is most often served as an appetizer.
Like chicken!
Coke. Its not just for squirrels anymore.
Dryfly: A goose and a 9 iron? I am deeply disturbed by your post.
NoVa: Squirrel brains? There just cannot be much there. I did try a PI treat called a "balut" once. You tap around the top with a spoon until a lid pops off. Inside, a tiny, soft-boned chicken baby sits there waiting to be eaten from the head down. I salted mine, and it was actually pretty decent.
California squirrel eaters;
What wine would you recommend with squirrel?
Whoops: Its a fertilized egg.
Misean -
The enemy? Do explain. I don't believe I've sold anybody "down the shitter" - if you took some time to understand what CDS is, you'd realize that although it involves implicit leverage & significant counterparty risk, no new net debt is ever created.
I'm under the assumption that you consider those who employed/encouraged/enabled the easy money environment of the past several years to be the enemy. I'm not as strongly opinionated as you are in this regard - but I do understand the frustration of watching your savings eroded by inflation before your eyes.
Cheers,
Treasury adviser likely to receive special status
Ken Wilson, the Goldman Sachs banker who is joining the US Treasury to help the country through the financial crisis, is expected to take a temporary post that will subject him to less stringent ethics rules than many other high-level officials.
FT.com / UK - Treasury adviser likely to receive special status
It must've been those danged stringent ethics that allowed all of this pandemonium.
I closed the loans that end up being squished together and then sliced and diced into the tranches that have all gone to hell.
I knew they were destined for a pool but for a long time that's all I knew.
I was at an S & L when they went from keeping most of their loans to selling them and the quality and concern for the product dropped, it seemed, in a matter of weeks.
So no, I don't know much about CDS except what I've read here.
Misean, don't chase default away, I want to read what he has to say.
I would look at the people who were signing these mtges, no fraud involved and wonder how the hell the people were gonna pay their mtges AND eat some cheerios (if not squirrel) once in a while. You are living in an abstract world (actually one hesitates to say world, existence would be better), galaxies away from the payers of that debt, that you do not know what is going on 2 steps below. It is better for your mental health that you do not find out.
But I want to know how much default there will be in dollars that real people can spend in the real world. If it's just ring around the rosy money, then there's not much harm, except for wall streeter's bonuses, which, with all due respect, none of us here care very much about. If this is real money, lotsa harm. Nobody has answered my quesion yet, tho the person with the casino example, now I forget who seems to have come the closest.
So, how big will the defaults be, default?
CSAC: How does one try squirrel here in the OC?
Get a Havahart trap. Spread some peanuts in the area and a few leading up to and in the trap. Plenty of squirrels and an occasional rat.
I'm in a relatively dense part of Alameda Co. but not downtown.
WAWAWA writes:
Small businesses having hard time to get loan.
YouTube
- Broadcast Yourself.? v=i...feature=related
WAWAWA | Homepage | 08.02.08 - 10:28 pm | #
It's happenin' - comm credit is tight, small biz especially.
[FWIW - I doubt the stats that almost all new jobs come from companies w/ less than 100 people - if so there wouldn't be many businesses w/ more than 100 employees - do the math, how do you get there if no one is hiring when >100 employees? Small biz is significant but not that significant. We all hear it but I've been told of studies indicating this story is at least partially urban myth - anyone have links?]
I always thought that the job creation was on the teeny tiny level, but who knows? My source of this infor was the MSM and NPR.
Nitey nite.
The Heart of the Economic Mess
Robert Reich's Blog: The Heart of the Economic Mess
The Federal Reserve Board's "beige book" for June and July offers a clear explanation for why the economy has slowed to a crawl. It shows American consumers cutting way back on their purchases of everything from food to cars to appliances to name-brand products. As they do so, employers inevitably are cutting back on the hours they need people to work for them, thereby contributing to a downward spiral.
2004 Krupp Brothers Estates Cabernet
Squirrel? Naw, dude... Franzia box wine at best. Boone's Strawberry Hill will be my first choice though. I'm getting a live trap next week for this.
Hillbilly!
-Secret Squirrel
Ok, I'll admit, I'm from West Appalachia. My Uncle used to go to the Okeene, OK to the rattlesnake hunts every year. Now, we are talking the '60's and '70s' here. But, OMG I just found a website on it, I'm astonished:
Okeene Diamondback Rattlesnake Hunt
Now, he told me way back then that rattlesnake tasted like chicken.
Location, Location, Location
Location Location Location - Market Movers - Portfolio.com
As a rule, expensive neighborhoods seem to be the ones which have gone up in price, while cheaper ones have gone down. But Cleveland is an exception: houses in Solon, which fell by 22% over the past year, are still 44% more expensive than houses in Amherst, which rose by 6%. The same's true in Seattle, whose worst-performing neighborhood, Magnolia, has a median listing price of more than $700,000.
Roubini is a liar and a fraud. The Whitehouse has consistently proven Roubini wrong.
Piss off, Roubini has proven time and time again that Bush is a slut!
Lawyerliz,
"don't chase default away, I want to read what he has to say."
For you, anything. Had a phone call fortunately.
Didn't know this place rocked so hard on Saturday.
I'm not happy about it...but we'll see what he has to say.
Cheers,
Don't blame Default.
Who's to blame for helocs?
Who's to blame for ninja loans?
Who's to blame for neg am loans?
Who's to blame for SUV sales?
U.S. relay team stripped of gold
The U.S. 4x400m relay team that won gold at the Sydney Games in 2000 have been stripped of their medals after Antonio Pettigrew admitted to doping, the International Olympic Committee (IOC) said on Saturday.
It was the sixth American medal from the Sydney Games lost to doping in the past eight months after U.S. sprinter Marion Jones was stripped of her five medals due to her doping confession last year.
"It was decided that the entire U.S. relay team will be disqualified from the Sydney Games," Davies said.
Business & Financial News, Breaking US & International News | Reuters.com
You Yanks cheat at everything, we have gold, cheating, couterparty loss. It's all here.
Nikkei down 400 pts and..
GM CDS hit record, price in 90 pct default risk
Credit default swaps costs jumped to a record of 45.5 percent the sum insured as an upfront payment, from 42 percent on Thursday, in addition to 500 basis point annual payments, according to Phoenix Partners Group. This means it would cost $4.55 million to insure $10 million in debt for five years, plus an additional $500,000 each year.
Default,
"if you took some time to understand what CDS is, you'd realize that although it involves implicit leverage & significant counterparty risk, no new net debt is ever created."
And there are no cross connects? I know I said I'd be cool, but ...There are NO cross connects? You sold this shite? Did you not know what you were selling?
And I suppose you look at your self like you were just some cog in a wheel?
Erm...OK. Tell you what you spill your guts...and I'll believe your repentance.
Sorry Lawyeriz.
-head shakes-
Rant off
Cheers,
Default, welcome...
I too am a refuge from a major bank, only equity ledger. I suspect the sentiments you post are far more pervasive than you think. Those thinking the doom and gloomers are just nutjobs in the montana wilderness are squarely off the mark. I agree the comp structure and siloed org make for winner take all mentality damn the torpedoes. Eat what you kill is great uintil such time as canabalism. Welcome to the new world of I-banks
Currently Smoking Cannabis writes:
Treasury adviser likely to receive special status
Ken Wilson, the Goldman Sachs banker who is joining the US Treasury to help the country through the financial crisis, is expected to take a temporary post that will subject him to less stringent ethics rules than many other high-level officials.
Leaving a place (WS) with no ethics to temporarily join another place with no ethics (WH) shouldn't be a problem at all.
Default's somber, polite introduction (welcome to you, I think you'll add a very valuable perspective to these threads), followed by a comment on frozen rabbit... awesome!
I would have spilled something on the ole keyboard if I only were drinking... Lefty's where are you?
Coke. Its not just for squirrels anymore.
OH Yes It IS !!! Two legged squirrels
Default,
Great to have you posting here.
Keep it up!
Lawyerliz -
Here comes the promised long-winded explanation on the mechanics of credit default swaps:
Credit Default Swaps are an over-the-counter financial instrument used by participants in the fixed-income space to both hedge against & speculate on the risk of a company defaulting on its debt (hereafter referred to as the Reference Entity, or RE). Each CDS transaction involves two players - a "buyer" of protection on the RE, and the guy on the other side of the trade, the "seller" of protection on the RE. Essentially, the buyer of protection is "short" the creditworthiness of the RE - he is betting that the RE will default on its debt, and the seller of protection is "long" the creditworthiness of the RE - he is betting that for the duration of the CDS contract (typically 5 years), the RE will not default on its debt.
Credit Default Swaps are typically purchased in blocks of 10 million dollars - that is, a buyer of protection is buying insurance against 10 million dollars' worth of an RE's debt defaulting. Per the terms of the contract between the buyer and seller of protection, the buyer will periodically (typically yearly) remit a payment for the protection to the seller of protection. This amount is typically notated in basis points, or "bps". Think of each basis point as representing 1/100th of a percent of 10 million dollars - so a CDS contract that costs the buyer of protection "100 bps" results in the buyer of protection remitting 100,000 dollars yearly to the seller of protection. The seller of protection receives these payments in exchange for his guarantee to remit, in the case of a default by the RE, the notional value of the CDS (10 million dollars) minus the eventual recovery rate on the defaulted debt (on the Street, it is generally assumed to be about a 40% recovery rate, meaning that contracts, when an RE actually defaults, pay out about 6 million dollars per 10 million notional to the buyer of protection).
Now here is where things get tricky - what if I have bought protection from you, and when the RE defaults, you are unable to pay me? And what if shortly after I bought protection from you, the price of protection rose (lets say due to a negative earnings warning), and I sold protection to someone else, expecting my selling of protection to be fully hedged by my original purchase of protection? This is what Greenspan refers to as cascading-cross defaults - the fact that if one party in this chain of parties (and you can multiply the example I just gave by thousands of interconnected counterparties)defaults, the results can be catastrophic across the space. After all, I was relying on you paying me in order to pay the other guy, who was in turn depending on me to pay him to pay the OTHER guy...you get the picture. Something like this happening would be terribly destabilizing for the financial system, but its first-order effects are not what would hurt the average citizen - instead, it would be the complete seize-up in the financial markets (think the mortgage business in Florida today, but several orders of magnitude worse) resulting from such a situation that would hurt the average joe.
So, in summary, CDS is more like the "pass the chips around" scenario you referred to before - but with profound implications for the many banks/insurance companies/other financial institutions that depend on them to hedge out credit risks.
If you REALLY want an exciting Saturday night, ask me about monoline wrappers & synthetic CDOs...I'm ready to pop bottle number two.
Cheers,
Man, came here looking for wild game recipes and end up listening to a CDS inssider.
Default, welcome they play hard here but they also play fair. Counterparty risk doesn't seem to be a working model. Seems everyone insured each other meaning no one can collect on a claim. Of course everyone has already collected their fees. Funny that. Anyway, I expect the next shoe to be insurance companies. Not only the payouts but the reduced business when new rates scare away a segment of clients. Then there's the fallout, insurance pools are backed by municipal and other large retirement investors who have been ramping benefits based on the broken returns model of recent years. Wadda ya think?
Default,
"If you REALLY want an exciting Saturday night, ask me about monoline wrappers & synthetic CDOs...I'm ready to pop bottle number two."
Do it dude. 'Cause I understand CDS. And i have been hammering monoline shite for years.
If you're real and in the mood to confess I'm all for it.
But ya' don't get to excuse yourself from f**king this country. Ya still gotta pay.
Cheers,
defalt,
what do you make of the argument that BS was rescued to basically save JPM given their massive CDS book 1T! Also don;t you think is it is interestong that Chrysler got a bridge loan conduit after all but admitting that it was going bankrupt from none other than JPM? Then they say it is a relief that they can now go on offering incentives and 0 financing so they can lose more money. Astounding but this has fed footprints all over it. The link here several days ago about the fed leaning on JPM derivatives book to swing markets (interest rates and gold futures) was pretty fascinating. Don;t have the link but well worth the read. Also, comment on why you think the fed is so desperately trying to keep lehman alive? Makes little sense. Clearly seems another case of massive interest rate and cds books that are too great a risk to the system?
Rob Dawg,
"Man, came here looking for wild game recipes and end up listening to a CDS inssider. "
Yeah I know...squirrelly gun all loaded and no where to go.
Cheers,
Fred,
Nice!
Cheers,
Default: Thanks for that, man. Please pop that bottle and continue. Excellent post.
The US is a short across the board, bond, dollar and equities. Enough said.
default,
also comment on the transferability of the cds..astounding after Gtretchen Morganseon NYT wrote that article in the NYT re CDS and the risks Jamie "the one" Diampond (you have to hand it to the Ministry of Truth) said on the conference call quite assuredly that she simply didnt understand the CDs market ie the dif between notional and risk exposure. He then went on to say he was having his very own FI research tem craft a CDS basics report and white paper on the subjkect which would be released for all to see the real mechanics. Pray tell, never showed up.
Misean -
I'm assuming when you mentioned "cross-connects" in your previous post, you were referring to potential cascading cross-defaults & counterparty risk, no? If not, please explain.
Rob Dawg -
You have more or less identified the weak link in the CDS space. For now, at least, folks on the Street believe that the Fed will ensure that counterparty risk never actually rears its ugly head - that major counterparties (a la Bear) will be continuously bailed out either by 1) a "strategic purchase" by another IB/CB, or 2) the Fed turning the notch on the firehose of "liquidity" it has directed at broker-dealers from "high" to "tear-apart-the-WTO-protesters" level.
Misean (again)
What exactly do I have to confess for? I'm doing my best to try and explain an esoteric product to people who have been nice enough over the year and a half I've been lurking here to provide reams of information within their body of knowledge/experience...sheesh.
Synthetic CDOs, anyone?
Cheers,
how about some jump Z bonds
Re: Coke. Its not just for squirrels anymore.
That's not funny!
This is: Causes of the United States housing bubble
Causes of the United States housing bubble - Wikipedia, the free encyclopedia
Furthermore, one way to assess the quality of any investment is to compute its price-to-earnings (P/E) ratio, which for houses can be defined as the price of the house divided by the potential annual rental income, minus expenses including property taxes, maintenance, insurance, and condominium fees. For many locations, this computation yields a P/E ratio of about 3040, which is considered by economists to be high for both the housing and the stock markets;[22] historical price-to-rent ratios are 1112.[2] For comparison, just before the dot-com crash the P/E ratio of the S&P 500 was 45, while in 20052007 around 17.[24] In a 2007 article comparing the cost and risks of renting to buying using a buy vs. rent calculator, the New York Times concluded, "Homeownership, [realtors] argue, is a way to achieve the American dream, save on taxes and earn a solid investment return all at the same time. ... [I]t's now clear that people who chose renting over buying in the last two years made the right move. In much of the country ...
Shiller, Robert (2005-06-20). "The Bubble's New Home", Barron's. "The home-price bubble feels like the stock-market mania in the fall of 1999, just before the stock bubble burst in early 2000, with all the hype, herd investing and absolute confidence in the inevitability of continuing price appreciation. My blood ran slightly cold at a cocktail party the other night when a recent Yale Medical School graduate told me that she was buying a condo to live in Boston during her year-long internship, so that she could flip it for a profit next year. Tulipmania reigns." Plot of inflation-adjusted home price appreciation in several U.S. cities, 19902005:
Where Mary Meeker Went Wrong She may be the greatest dealmaker around. The problem is, she's supposed to be an analyst.
Where Mary Meeker Went Wrong She may be the greatest dealmaker around. The problem is, she's supposed to be an analyst. - May 14, 2001
Default,
Of course I am talking cascading cross defaults. I'm calming down. And it's Saturday night so...
But your posts lead me me to believe you were a part of this scam.
If such...then no apology. If not then I am sorry.
Cheers,
"Man, came here looking for wild game recipes and end up listening to a CDS inssider. "
Its the season - political season - we're getting a lot of astroturfers around here lately.
dryfly,
"Its the season - political season - we're getting a lot of astroturfers around here lately."
Would not suprise me for a second.
Cheers,
if you have to ask what an astroturfer is does that mean you are one
default, pray tell us the synthetic CDS story. Does it have a bad ending?
And don't worry about the moralizing. I come here for information and entertainment. I don't listen to any preaching.
It's true that the $482 billion deficit chasm estimated for fiscal year 2009 doesn't look so deep when taken as a percentage of the overall economy 3.3 percent of gross domestic product compared to the 1983 nadir of about 6 percent.
This $482B number is a joke. It does not include "off budget" items, or the war in Iraq, or even the amount they are "borrowing" from Social Security Trust Fund. If they did the true deficit for the year would be closer to $800 Billion. For one year!!
Good God man; WAKE UP SHEEPLE!!
Default,
Between GM, Citi and LEH, who is in the worst position for Monday in your opinion? The cost they are all paying is getting above the danger zone, but WTF do you think tonight?
patientrenter,
"default, pray tell us the synthetic CDS story. Does it have a bad ending? "
Naw it's all good. Just a blip. Nothing to see here move along.
Cheers,
Re: Synthetic CDOs
How are the off-balance sheet mechanics going with Level 3 (FASB) disclosure and the new QSPE problems?
well majority still refuse to believe that housing prices have long road ahead before any stabilization.
somehow when people hear about RE losses, they think it can't happen to them and continue flipping, flipping their wallets that is.
One moment you have plenty of savings, than you flip and most of your savings are....
Default,
Welcome and thanks for your calm in the face of some less than civil greetings.
Question: can you estimate the extent to which people have GM coverage? I presume it exceeds GM's own bonds. What would happen if GM went down (before a bailout, presumably)?
thanks,
So why would any financial shoot up like they did last week?
WB up over $4.00 BoA up over $3.00...
BoA has a yet to even address credit cards...the next shoe that will drop.
BoA has the heaviest exposure to mtg. and credit cards...
Astroturfing in American English is a neologism for formal public relations campaigns in politics and advertising which seek to create the impression of being spontaneous "grassroots" behavior, hence the reference to the artificial grass, AstroTurf.
The goal of such a campaign is to disguise the efforts of a political or commercial entity as an independent public reaction to some political entitya politician, political group, product, service or event. Astroturfers attempt to orchestrate the actions of apparently diverse and geographically distributed individuals, by both overt ("outreach", "awareness", etc.) and covert (disinformation) means. Astroturfing may be undertaken by an individual pushing a personal agenda or highly organized professional groups with financial backing from large corporations, non-profits, or activist organizations. Very often the efforts are conducted by political consultants who also specialize in opposition research.
Whew! I'm not an astroturfer.
Plantagenet,
WTF did you come from, with such a nice welcome?
Tiger Coach writes:
So why would any financial shoot up like they did last week?
WB up over $4.00 BoA up over $3.00...
The mother of all short squeezes before the mother of all corrections.
FRED writes:
if you have to ask what an astroturfer is does that mean you are one
FRED | 08.02.08 - 11:36 pm | #
LOL - probably IS the case in many situations.
:::
For those who don't know - an 'astroturf organization' is a group sponsored by deep pocketed special interests - like say MBA or NAR - trying to appear like they are 'grass roots organizations' with broad support. Think artifical 'grassroots'.
'Spokesman' for these folks are increasingly common on large & popular blogs - which CR's now is - though they try to hide that they are sponsored. Get used to it - they aren't going away.
FRED -
Your belief that the Fed bailout of Bear Stearns was really a bailout of JPM is the general belief across the Street. Like I wrote in my previous post, the Fed has a big firehose, and an even bigger lake to draw water from if the tank on the truck runs dry. They will do anything to keep this space from blowing up. The ramifications as far as future confidence in the U.S. financial markets, insurance companies who purchased expensive hedges for the riskier assets in their portfolios, hedge funds heavily involved in this space (who have state & local pension funds as major investors)...you get the picture.
I don't really know a whole lot about the JPM derivatives book/gold manipulation rumor you mentioned - send me a link and I'll try and give color if I have any.
Don't know anything about Chrysler either...
Oh, and Lehman is alive because the Fed wants them alive. That's really all I can gather from the situation - after the Bear Stearns blowup,CDS traders across the Street were given a stern talking-to, with the message being that all firms will take all other firms as counterparties - full stop. What killed Bear was the Street essentially saying that it would no longer take Bear on as a counterparty - no CDS, no repos, no rate swaps, no complex hedges.
Do I like Lehman as a counterparty? No. If I ran a hedge fund would I trade with them? No. But the Fed giveth and the Fed taketh away, and the Fed has spoken.
As far as the transferability of CDS, what you are referring to is whats called "novation" of an existing contract. Essentially, if I have bought protection from you, and then decide that I really don't like you as a counterparty (or find that I need to rebalance my counterparty exposure away from you because you have been on the other side of too many trades of mine), I can ask a third party to step in and take your place on the other side of the trade (all parties must agree to this, and it can be pretty tough to get done). If the price of the CDS has increased, as a buyer of protection, I would have to make up the difference to the third party stepping into the space that you once occupied as my counterparty. Similarly, if the price of protection has decreased, I would have to make it up to you, the original seller of the protection (which is derived through a simple PV calculation of the future periodic payments I was to make to you, minus the lower payments I am to make to the new counterparty).
Its only 11:43 out here, 2nd bottle popped and first glass poured.
Cheers,
Wb bank benefitted from a rumor that an unnamed bank was interested. JPM was named. Steel going there is a tell that the fix is in.
BAC benefited from the ABK news that they will write up a conduit CDO they settled with said bank. They takre a $150M gain. LEH benefited from the 345 leak to gasshole that they were to offload 30B in CMBS to blackrock in a deal similiar to MER.
like one big circlej$r^
Anonymous writes: "WTF did you come from, with such a nice welcome?"
I'm here frequently. I learn more listening than talking. Default may know things that we don't. Let's keep him talking, even at the expense of acting politely.
ok
Currently Smoking Cannabis writes:
Astroturfing in American English is a neologism for formal public relations campaigns in politics and advertising which seek to create the impression of being spontaneous "grassroots" behavior, hence the reference to the artificial grass, AstroTurf.
Man when a guy who smokes dope beats you to the answer you know you're getting slow...
Chrysler deal win FT this weekend...private compny actually came out and released financials and said they have $11B in liquidity. Yeah that is what LEH said before they went beggin again. Interesting that Tress. Paulson included large Hedge funds in his TBTF mantra. Guess that means Cerebus - have to wonder about these guys - Chryselr GMAC seriously what were they thinking
test
And, WTF about those new LCDS things and LCDXs and that stuff?
Misean,
Test ok!
Ok, that was close, he or she is gone, can we get back to road kill again?
I give up on this tonight. Haloscan has to go.
Cheers,
WTF is this anyway??
Markit RED CDS
Products and Services Overview
Markit RED (Reference Entity Database) CDS is the market standard that confirms the legal relationship between reference entities that trade in the credit default swap market and their associated reference obligations, known as pairs.
Rob 3Dawg said it all way up the thread,
Better than I could ever had. With halo acting weird...I should and will see all and sundry laterz.
Nite all.
Cheers,
Oh, I get it:
Products and Services Overview
Trading LCDS requires efficient access to detailed information including entity characteristics, credit agreements and loan tranche data. While of critical importance, this information is also a challenge to gather, manage and access efficiently.
Misean, I think it was that second glass from the new bottle!!!
Good reading, thanks for the post!!!
OT to Doc at the Meth Lab -
my brother caught a FAT four foot timber rattler today and sent me the pics.
He let it go - no snake eating in our family.
I've suspected Brady Bonds for about a year; what's the scoop there?
In the event of a default on collateralized Brady Bonds for which obligations are accelerated, the collateral for the payment of principal will not be distributed to investors, nor will such obligations be sold and the proceeds distributed. The collateral will be held by the collateral agent to the scheduled maturity of the defaulted Brady Bonds, which will continue to be outstanding, at which time the face amount of the collateral will equal the principal payments which would have then been due on the Brady Bonds in the normal course.
I think someone got sick or food poison? Remember, always cook your rodents and or monkeys fully and never eat raw meat.
See: SARS
The best return on your money for 2009
Fed Up by Food Prices, Many Grow It Alone - washingtonpost.com
Thank you Gary,
God Bless!
Oh wait:
Based upon current market conditions, a Fund would not intend to purchase Brady Bonds which, at the time of investment, are in default as to payment. However, in light of the residual risk of Brady Bonds and, among other factors, the history of default with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds, investments in Brady Bonds are to be viewed as speculative. A substantial portion of the Brady Bonds and other sovereign debt securities in which the Emerging Markets Debt Fund invests are likely to be acquired at a discount, which involves certain additional considerations.
Whoa! Lots of stuff to reply to.
First things first: I am not an "astroturfer", whatever the hell that is. Merely a longtime lurker here & a participant in a corner of the market that I've begun losing confidence in.
GM, Citi, LEH
GM 5-years trade 2600 bps or so...of course, that means big points-up-front (due to the huge risk of default in the near-term), and probably 600-800 bps running yearly for the duration of the contract. I don't have my handy bloomberg & its CDSW function with me at home, so I'm stuck with the garbage that markit partners puts up.
Citi, LEH
Honestly, at this point, CDS on big financials like these are pretty much pointless. They have been getting bailed out. They will continue to be bailed out. If they fail, you probably wouldn't even get paid out on the CDS that you bought on them because they're probably a counterparty to your counterparty...and we're back to the problem I mentioned earlier, which the Fed will do everything in its power to keep from occurring.
Plantagenet -
In the scenario you present, with the notional value of protection sold/bought on GM bonds far outweighing the value of the cash bonds outstanding, CDS buyers and sellers would do what's called a "cash settle." Essentially, (and this is probably a complete misrepresentation of the way it works, I can try and find the 200 page PDF on the process that I got from our research team), a very complicated auction is held in which the true recovery value of the GM bonds is discovered, and then applied across the board to all outstanding CDS contracts (remember, the buyer of protection only gets the notional value MINUS the recovery value in the case of a default). This has happened only once so far to my knowledge - the bankruptcy of Delphi (whoa, coincidence?)
Anonymous -
LCDX is simply an index of leveraged loans that was put together by Markit. It works much the same way CMBX & CDX work, except its 100% 1st lien syndicated secured debt. Essentially, debt from LBOs. Hopefully that helps.
Now for synthetic CDOs...coming right up
And the story ends horribly, just horribly.
Cheers,
I love bad endings, take your time..
OT to Doc at the Meth Lab -
my brother caught a FAT four foot timber rattler today and sent me the pics.
He let it go - no snake eating in our family.
Gary
Catch and Release is best, I suppose. Saw a snake crossing the road the other night, but wasn't sure what it was. There were a bunch of toads hopping across the roadway, so I figured he was after them. I've got to say though, that late at night this place is starting to get a little like a David Mamet screenplay, especially tonight. Something is brewing for sure I think.
Konnoppolious -
You have discovered Markit. Before Markit, the CDS market was, to use a very technical term, a complete shitshow.
However, the pricing on single-name CDS (especially the more thinly traded REs) can be dodgy...(insert plug for your friendly local broker-dealer).
Back to this synthetic CDO post...I'm debating between the "magic box" explanation or just telling you all that its much worse than you ever believed possible, but not as bad as CDO-squareds...talk about the epitome of ratings-agency arbitrage.
Cheers,
If you spent a million dollars a minute starting at the time Christ was born, you would NOT have spent a Trillion dollars yet.
Actually you would have; slightly over one million minutes have passed 6024365*2000=1,051,200,000. Still, I agree with you: a trillion dollars is a big, big number.
CR says $2T is too much.
In total somewhere between $7T and $9T in phantom equity is exposed in any retracement to the mean. An orderly retreat will allow inflation to eat away much of this. A decline in the dollar may result in a disproportionate amount of pain to be taken by foreign investors. No matter how the pain is spread, there will be consumer pain. Likewise because of govt spending policies that resemble the proverbial cricket in summer we can expect massive deficits and even larger tax increases. I hope everyone likes their neighbors because nobody is moving for a very long time. The new immobility class has moved in to stay.
[reposted from Aug 2006]
Default, you're even scarier than Roubini. You don't work at D.E. Shaw, do you?
This should make you feel at ease:
Bear Stearns Tell All Blames Goldman Sachs and Hank Paulson For Bear's Collapse
Bear Stearns Tell All Blames Goldman Sachs and Hank Paulson For Bear's Collapse - Dealbreaker - A Wall Street Tabloid - Business News Headlines and Financial Gossip
A senior managing director at Bear Stearns derivatives trading desk has reportedly anonymously authored a book about the bank's demise. The book, called "Bear Trap: The Fall of Bear Stearns and the Panic of 2008,″ was obtained by Fox Business anchor Liz Claman. It tells the story of Bear's demise from the inside, and insists that Treasury Secretary Hank Paulson may have born a grudge against Bear Stearns stemming back from Bear's refusal to playball when Wall Street organized to bail-out Long Term Capital Management. And, of course, it all turns out to have been a plot hatched by Goldman Sachs, which Paulson ran before going to the Treasury department.
Default,
"Now for synthetic CDOs...coming right up
And the story ends horribly, just horribly."
If you're legit...all right then.
Had people coming into the guild needing a piece that their guild was ahead of us on...just to get that piece. (WOW stuff...I Know it's senseless for most).
Do I look like a man with a plan?
Gawd...I really liked that movie.
Cheers,
UB,
How strange that you are back?
Default - Thank you taking up your time to explain and educate us.
Is it possible/probable that many sellers of CDS sold multiple CDSes on the same RE, and for which they will not be able to make good in the event of default by the RE?
Is the "magic box" like "the pot of gold" with derivatives?
Anon: This is great stuff. Had to take that "gotta-cook-squirrel-for-the-family-dinner" break, but I'm all eyes now.
First things first: I am not an "astroturfer", whatever the hell that is. Merely a longtime lurker here & a participant in a corner of the market that I've begun losing confidence in.
Welcome aboard.
BTW - I'd be okay even if you were associated with an 'organization with an agenda'... we've had those here before. Different opinions even with a strong inside POV make for interesting discourse - we just like people to disclose their interests & agenda while respecting their anonymity.
Many here do - it makes for a pretty fun read & informative at times.
So do you work the trade or are you an analyst, MP in a hedge - what? Don't want specifics, just somewhat camouflaged generalities.
My understanding is that the CDS market is nothing like a casino with chips that will just have to be moved from one party to another. My understanding is that it is more like a bunch of hedge funds writing insurance policies for which they have no capability of making good on. And the buyers of the insurance policies are counting on those policies in case of default by the RE. If my house burns down and my insurance company can not pay, I have no place to live, so I have to rent, and I have to keep making my mortgage payment. When I default on my mortgage payment, the bank loses and when the bank loses ...
This is not just some chips being shoved around. If the defaults cascade, Joe6pack will be affected mightily. His pension may literally disappear overnight.