"This sucker could go down"

Wrong again GWB. This sucker WILL go down.

it's night here in Cambodia... some of these nit-wits on Wall St should have their heads atop stakes Khmer Rouge style!

here's Congress bidding adieu
YouTube -

and Paulson the Creep
YouTube -

the Duke weighs in with a personal rant at
YouTube - Revenge on the Taxpayer Killing Fields of Wall Street: AIG, Goldman Sachs, Citigroup

CR did you see Rick Santelli blow a gasket?

great theatre!

"Rick said history is littered with leaders who scare people then demand power and action immediately "

I will voilate Godwin law - just once and remind people of this:

Enabling Act of 1933 - Wikipedia, the free encyclopedia

Financial Times says Morgan Stanley is going to bite the big one:
FT.com / In depth - Morgan Stanley suffers cash flight

CR, what I sent you is in a way what the Columbia head of economic school is saying. get a new owner to the banks, lert market decide on the price and let the market do it;s job with a hope that years from now there will be profit.

Catholic girl writes:
what is the profession of most on this blog

Software engineer and my wife is a homemaker/homeschooler.

Catholic girl writes:
at any rate we agree with most of you- so we must be evil doers too

We nattering nabobs of negativism

are most financial types?

Not me much is over my head and I have been reading for years

Bush to speak at 9:35.

His friends will be shorting from 9:30 until then.

Welfare for sociopaths.

what I want to know is how come we have this deep crisis while CR is in town ?

Catholic girl - if your husband is in the secret service surely he has this information?

I'm a finance type who can multi-task, unlike a certain presidential candidate I won't name.

If Republicans have serious proposals or issues, Dems should be all ears, not all mouth.

LOL. Too bad it was Paulson that shot down the House Republican "plan."

The problem is, this is too complicated for most congresscritters to understand on such short notice. Even commenters here have a hard time distinguishing between assets and liabilities, so we can't expect a random politician to understand credit default swaps.

That means, though, that the time is still ripe for alternative plans. The nation's economists need to stop whining and start producing fleshed-out ideas. If people want an RFC type plan, then put one together and bring it to the Hill.

So long as voters on the right and left are equally opposed to any bailout of banksters, the problems they are facing drafting an acceptable bill will not go away. They all (both parties) have to return to their home districts to face the music right away.

The "do nothing" voices are getting louder, and it may be right up our "do nothing" Congress's alley to do just that - nothing.

And perhaps that would be for the best. $700 billion? Are they out of their freakin' minds?

BB writes:
Wachovia looks to be in trouble.

People are finally learning about capital structure. The learning process about unwinding has begun!

Anonymous writes:
Bush going to talk about his pack of cards again.

Maybe he'll finally admit to not playing with a full deck.

JP LOL... Spilled drink on that one...

I could not believe he was trying to explain the finacial crisis and using a house of cards as an example.

Idiot

catholic girl:

I'm a drunkard which makes me in the words of Claude Raines in Casablanca
"a citizen of the world'

yeah, John Harwood was an abomination in his analysis

Economist rejecting the plan note mortgages without cram-down and basic balance-sheet insolvency are not solved by the plan...
...bigger picture is the savings rate and debt levels of the average American.

Downturns happen, but when you have no slack in the system (like having no immune system)--you suffer quickly.

Savings levels need to go up, but savers are punished and banks have yet to realize the real losses from Alt-A, auto-loan defaults, C&D, and CRE defaults. No slack.

The leadership has to drum up panic, because the minute the rank and file go back to their districts, they are going to see how much everybody hates this plan. I ran some errands this morning, and everyone I saw was talking about it, and they were getting worked up about it. Ordinary folk - can't tell you what a CDS is, but common sense is telling them they are getting screwed. This will be the next Iraq for whoever votes for the bill, perhaps even worse. People who voted for the Iraq bill can fault the intelligence information they were given (not that I think that is an excuse, but some people do). They are going to look complicit in corruption from this one.

lawyerliz writes:
Who thought Bush would say anything, or could say anything, or would persuade anybody to do anything about anything?

The halfwits who Kis was talking about.

God I wish we could get Bloomberg TV at work - these morons on CNBC are unbearable.

Talk about the Prez being an idiot, Erin makes him look like a genius.

I know this old-hat for some of you, but again just to highlight from the Feb 26, 2008 Roubini Testimony (and note the administration rejected it entirely). Here are Roubini's Twelve Steps:

Here are the twelve steps or stages of a scenario of systemic financial meltdown associated with this severe economic recession.
First, this is the worst housing recession in US history and there is no sign it will bottom out any time soon. At this point it is clear that US home prices will fall between 20% and 30% from their bubbly peak; that would wipe out between $4 trillion and $6 trillion of household wealth. While the subprime meltdown is likely to cause about 2.2 million foreclosures, a 30% fall in home values would imply that over 10 million households would have negative equity in their homes and would have a big incentive to use “jingle mail” (i.e. default, put the home keys in an envelope and send it to their mortgage bank). Moreover, soon enough a few very large home builders will go bankrupt and join the dozens of other small ones that have already gone bankrupt thus leading to another free fall in home builders’ stock prices that have irrationally rallied in the last few weeks in spite of a worsening housing recession.

Second, losses for the financial system from the subprime disaster are now estimated to be as high as $250 to $300 billion. But the financial losses will not be only in subprime mortgages and the related RMBS and CDOs. They are now spreading to near prime and prime mortgages as the same reckless lending practices in subprime (no down-payment, no verification of income, jobs and assets (i.e. NINJA or LIAR loans), interest rate only, negative amortization, teaser rates, etc.) were occurring across the entire spectrum of mortgages; about 60% of all mortgage origination since 2005 through 2007 had these reckless and toxic features. So this is a generalized mortgage crisis and meltdown, not just a subprime one. And losses among all sorts of mortgages will sharply increase as home prices fall sharply and the economy spins into a serious recession. Goldman Sachs now estimates total mortgage credit losses of about $400 billion; but the eventual figures could be much larger if home prices fall more than 20%. Also, the RMBS and CDO markets for securitization of mortgages – already dead for subprime and frozen for other mortgages - remain in a severe credit crunch, thus reducing further the ability of banks to originate mortgages. The mortgage credit crunch will become even more severe.
Also add to the woes and losses of the financial institutions the meltdown of hundreds of billions of off balance SIVs and conduits; this meltdown and the roll-off of the ABCP market has forced banks to bring back on balance sheet these toxic off balance sheet vehicles adding to the capital and liquidity crunch of the financial institutions and adding to their on balance sheet losses. And because of securitization the securitized toxic waste has been spread from banks to capital markets and their investors in the US and abroad, thus increasing – rather than reducing systemic risk – and making the credit crunch global.

Third, the recession will lead – as it is already doing – to a sharp increase in defaults on other forms of unsecured consumer debt: credit cards, auto loans, student loans. There are dozens of millions of subprime credit cards and subprime auto loans in the US. And again defaults in these consumer debt categories will not be limited to subprime borrowers. So add these losses to the financial losses of banks and of other financial institutions (as also these debts were securitized in ABS products), thus leading to a more severe credit crunch. As the Fed loan officers survey suggest the credit crunch is spreading throughout the mortgage market and from mortgages to consumer credit, and from large banks to smaller banks.

Fourth, while there is serious uncertainty about the losses that monolines will undertake on their insurance of RMBS, CDO and other toxic ABS products, it is now clear that such losses are much higher than the $10-15 billion rescue package that regulators are trying to patch up. Some monolines are actually borderline insolvent and none of them deserves at this point a AAA rating regardless of how much realistic recapitalization is provided. Any business that required an AAA rating to stay in business is a business that does not deserve such a rating in the first place. The monolines should be downgraded as no private rescue package – short of an unlikely public bailout – is realistic or feasible given the deep losses of the monolines on their insurance of toxic ABS products.
Next, the downgrade of the monolines will lead to another $150 of writedowns on ABS portfolios for financial institutions that have already massive losses. It will also lead to additional losses on their portfolio of muni bonds. The downgrade of the monolines will also lead to large losses – and potential runs – on the money market funds that invested in some of these toxic products. The money market funds that are backed by banks or that bought liquidity protection from banks against the risk of a fall in the NAV may avoid a run but such a rescue will exacerbate the capital and liquidity problems of their underwriters. The monolines’ downgrade will then also lead to another sharp drop in US equity markets that are already shaken by the risk of a severe recession and large losses in the financial system.

Fifth, the commercial real estate loan market will soon enter into a meltdown similar to the subprime one. Lending practices in commercial real estate were as reckless as those in residential real estate. The housing crisis will lead – with a short lag – to a bust in non-residential construction as no one will want to build offices, stores, shopping malls/centers in ghost towns. The CMBX index is already pricing a massive increase in credit spreads for non-residential mortgages/loans. And new origination of commercial
real estate mortgages is already semi-frozen today; the commercial real estate mortgage market is already seizing up today.

Sixth, it is possible that some large regional or even national bank that is very exposed to mortgages, residential and commercial, will go bankrupt. Thus some big banks may join the 200 plus subprime lenders that have gone bankrupt. This, like in the case of Northern Rock, will lead to depositors’ panic and concerns about deposit insurance. The Fed will have to reaffirm the implicit doctrine that some banks are too big to be allowed to fail. But these bank bankruptcies will lead to severe fiscal losses of bank bailout and effective nationalization of the affected institutions. Already Countrywide – an institution that was more likely insolvent than illiquid – has been bailed out with public money via a $55 billion loan from the FHLB system, a semi-public system of funding of mortgage lenders. Banks’ bankruptcies will add to an already severe credit crunch.

Seventh, the banks losses on their portfolio of leveraged loans are already large and growing. The ability of financial institutions to syndicate and securitize their leveraged loans – a good chunk of which were issued to finance very risky and reckless LBOs – is now at serious risk. And hundreds of billions of dollars of leveraged loans are now stuck on the balance sheet of financial institutions at values well below par (currently about 90 cents on the dollar but soon much lower). Add to this that many reckless LBOs (as senseless LBOs with debt to earnings ratio of seven or eight had become the norm during the go-go days of the credit bubble) have now been postponed, restructured or cancelled. And add to this problem the fact that some actual large LBOs will end up into bankruptcy as some of these corporations taken private are effectively bankrupt in a recession and given the repricing of risk; convenant-lite and PIK toggles may only postpone – not avoid – such bankruptcies and make them uglier when they do eventually occur. The leveraged loans mess is already leading to a freezing up of the CLO market and to growing losses for financial institutions.

Eighth, once a severe recession is underway a massive wave of corporate defaults will take place. In a typical year US corporate default rates are about 3.8% (average for 1971-2007); in 2006 and 2007 this figure was a puny 0.6%. And in a typical US recession such default rates surge above 10%. Also during such distressed periods the RGD – or recovery given default – rates are much lower, thus adding to the total losses from a default. Default rates were very low in the last two years because of a slosh of liquidity, easy credit conditions and very low spreads (with junk bond yields being only 260bps above Treasuries until mid June 2007). But now the repricing of risk has been massive: junk bond spreads close to 700bps, iTraxx and CDX indices pricing massive corporate default rates and the junk bond yield issuance market is now semi-frozen. While on average the US and European corporations are in better shape – in terms of profitability and debt burden – than in 2001 there is a large fat tail of corporations with very low profitability and that have piled up a mass of junk bond debt that will soon come to refinancing at much higher spreads. Corporate default rates will surge during the 2008 recession and peak well above 10% based on recent studies. And once defaults are higher and credit spreads higher massive losses will occur among the credit default swaps (CDS) that provided protection against corporate defaults. Estimates of the losses on a notional
value of $50 trillion CDS against a bond base of $5 trillion are varied (from $20 billion to $250 billion with a number closer to the latter figure more likely). Losses on CDS do not represent only a transfer of wealth from those who sold protection to those who bought it. If losses are large some of the co

Americans think $700 billion is a big number. They should consider it in light of the fact that (1) other funds will be spent on behalf of Fannie and Freddie, homeowner assistance, picking up the tab on Bear's portfolio, etc. and (2) market participants are saying $700 billion is not enough. Bill Gross says another $500 billion is necessary.

and i do not mean to insult the differently abled. and im a republican. so is shelby. bush is an excrescence and humiliation.

Funny, I'm a democrat (safeway version) and was jumping up and down when one of the house republicans said that Wall Street needed a workout, not a bailout.

(For nonfinancial types: workout = debt workout plan, not exercise at the gym. Both parties could use the latter.)

Catholic girl-

In the beginning there was the internet, and it was without form and void, and Bill said, “Let there be Calculated Risk!” And there were charts! And Bill divided the news into MSM and blogs and he saw that it was good,…, on the second day Bill separated the RE from the CRE, on the third day he gazed upon the CPI and GDP, on the fourth day he looked upon the BLS and TED, on the fifth day he established the confessional,… and the on the sixth day Tanta breathed snark into the blog, and Bill looked upon it and said it was good,…and on the seventh day he went hiking.
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And there was a beautiful pathway (the Tao) encapsulated in a photograph of the forest in Canada that filled the soul. But mankind sinned and listened to the NAR and Bill took away the vision of Eden, and we were allowed to gaze upon it no more.
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Now in those times there were giants on the earth, and they spoke one language. And the lurkers said,”Hey, I got a keyboard and an opinion. Let us build this blog to the heavens.” But Sheila saw them doing this and said,”If we allow the free and unfettered exploration into economics the jig is up!” So she sent down the PPT to infuse the blog with a confused noise and politics so that none of the commenters could understand one another or even stand one another and so it came to naught.
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Now these are the tribes of CR: bankers, industrialists, day traders, fund managers, mortgage brokers, real estate agents, economists, landlords, laborers, lawyers, doctors, IT workers and students.
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And in those times Dryfly wandered the land preaching renounciation. And the people came to mock him saying,”Inflation will save us.” And there came up two bears out of the forest and tare up forty and two of them.
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