Nobody wants to own consumer debt. It is that simple. If Wells Fargo is interested I can pay 20¢ cash for my own mortgage. They can get a cash infusion and reduce their MBS exposure. Win-win.
Nobody wants to own consumer debt. It is that simple. If Wells Fargo is interested I can pay 20¢ cash for my own mortgage. They can get a cash infusion and reduce their MBS exposure. Win-win.
The $90k in 0% balance transfer arbitrage money I'm borrowing from several of the troubled banks is quite safe consumer debt, I assure you.
Hey, I'm doing them a favor: if I didn't keep their money safe, they would have lent it out to some idiot who would have defaulted and they'd have lost it all!
dr. munch writes:
Ben or Cue Ball are gonna pull a bunny out of a hat pre-market tomorrow. If they don't, today's trading could look like the Teddy Bear Picnic.
The Fed is meeting tomorrow. No bunnies in the morning--maybe in the afternoon.
Somewhat OT & I could not link to the statement but Reuters has a "breaking news" statement that some Merrill stockholders have filed suit to stop B of A's takeover/buyout.
Does anyone know if this litigation is more likely to be real (really trying to stop the buyout/takeover) or is more likely to be a way of driving up the stock purchase price for shareholders of Merrill?
Somewhat OT & I could not link to the statement but Reuters has a "breaking news" statement that some Merrill stockholders have filed suit to stop B of A's takeover/buyout.
Isn't BoA buying them out at a ridiculous premium? Sure you can stop BoA's takeover at $29, but your stock is only worth $17...
At the same time, the Federal Reserve battled to contain a ferocious storm in the overnight borrowing market as financial institutions scrambled for cash, pushing up the actual Fed funds rate at one point to about 6 per cent triple its target rate.
The US central bank unleashed first $20bn then another $50bn in overnight liquidity in the shape of repos, driving down the Fed funds rate, for a while at least, to 3.5 per cent, still far above the official rate of 2 per cent. The turmoil raised speculation that the Fed could cut interest rates at its policy meeting on Tuesday, although it appeared more likely that the Fed would indicate that it is monitoring financial developments closely and will act as needed to ensure economic stability.
"I almost feel sorry for Paulson, Bernanke & co. They just can't get a break."
The more these two fools do, the worse this will get, the longer it will last, and the more wealth that will be destroyed. A lot of this is the unintended consequences from their own actions. Your sympathy is misplaced.
What if they smell a scam: that the deal is really a ruse to buy time until other dominoes fall, making it incumbent on the Fed to bail out the big, fugly Franken-bank into which MER would be subsumed? Remember, it's a BAC stock deal. Miss Market seems to have her doubts on both sides of the trade.
What, other than gasoline on the fire, will a Fed rate cut do? This isn't a cost of borrowing issue, it's a max credit issue.
I'm very curious what the Level 3 assets are really going to turn out to be for all of these companies. Once LEH went BK we may finally see what these fantasy assets really are.
I can't even get close to an almost myself. Most of the time one doesn't get what they want, they get what they deserve and I sincerely hope these two guy's get theirs good and hard.
prairiedog writes:
The FDIC doesn't have enough money to bail out WaMu, does it? How much insured deposits does it have?
prairiedog | 09.15.08 - 5:57 pm | #
I think you're right. This is from Yves Smith at RGE Monitor:
"The alert have taken note that the failure of Washington Mutual, which looks increasingly likely, would consume the FDICs reserves and, as in the savings and loan crisis, force the agency to go hat in hand to Congress for more money."
What we observing is that the ratings agencies now need to survive in a very different marketplace. Therefore, they are now adjusting their ratings at a much quicker pace and with far less consideration for the victim.
WB is dead at 40 cents on the dollar marks for Alt-A ($120 billion portfolio). It's game over for shareholders on a mark-to-market basis. (They have a large cash position, but they'll probably burn through that within a year.)
Can't eat a $120 billion slug of toxic CA waste and poop out a diamond.
Curly and JP-
I can't get a read on Skf right now, really bounced around today...Should be at 150 already..whats your take on this next cple days..I closed out at end of day, lking for dip and get back in...
WAMU's Cali and FL junk isn't .40c to the dollar if MER sold it's stuff, net net at .22c to the dollar. What people don't realize is that WAMU was counting negative amortization buildup as income - which was all phantom to begin with what with the down turn in values out here. They may have cash, but their assets trump their cash positio
WaMu downgrade doesn't bode well; much worse, the emerging consensus that The Street expects a pony tomorrow.
With every new box of Depends that is opened, I believe that for the first time the Fed will be damned if they do (fanning fears of a liquidity trap) and damned if they don't.
cd - I closed SKF too. It rarely goes on a straight up run for days, although the runup to 200 was nice. But when you get an intervening Fed meeting, it's best to step to the sidelines briefly, even if it means having to buy back in at a price above that at which you just closed. I for one, did not want to give back all of today's gain at the open tomorrow when some stink bomb of spin/propaganda blows up the shorts before I even wake up and make it to my computer here on the west coast.
WAMU capitalization in April of o8 was 11Bil. Washington Mutual had $143bn in insured deposits on June 30 - about three times the size of the deposit insurance fund, but less than half of its $307bn assets. Who knows what the uninsured deposits are.
And the market Cap is less now that the stock is diving.
GSD, Atrios said the fundamentals are the American worker and small business. So if you criticize the economy, you're criticizing the American worker and small businesses. Like, if you criticize the Iraq war, you're criticizing the troops.
Lefty, how great was that cutover. Cramer saying how good things are, F & F nationalized, Dow up 290. Then screen blacks out for a second, today's show comes on, Dow -504, Cramer super depressed asking if we get out of this mess. Classic.
Will Wachovia make it till Friday? Will Susan find out about Ted and Alice? Can Gretchen ever find a clue, or is she doomed to the eternal bitch-slap cycle with Tanta. And what about Mish, can he ever find happiness in the arms of Ben?
Tune in tomorrow for a new Bear Bemused, and watch the fur fly as Cramer calls a new bottom while searching for his. It'll be un-bearable!!!
The Fed is in a box. I believe they have to cut tomorrow because of market expectation but at the same time are under extreme pressure attempting to keep the fed funds rate even at 2%.
cd: I last bought SKF at $103 and closed out after I got +15% (although I've done this a lot of times). I can't handle the stress of riding it for too long.
5 years from now: ...strangely Wells Fargo, decided not to help out. Bofa came to rescue of Countrywide and Merrill, JP Morgan to the rescue of Bears Stearns and Washington Mutual....so, when Wells Fargo needed a bail out, no one was interested...and they faded into obscurity.
When Joe works-for-a-living gets home and watches the 6 o'clock news, he's going to unload all the financials that his stock broker recommended as a once-in-a-lifetime buy last month. Tomorrow will be another poop sandwich for the market.
I knew WAMU was going down when they used that stupid WAMU name, and when their spokesman on TV was a smart alecky black guy who looked like a Staples employee who made fun of old white guys in suits.
From the first itulip:
"Watch for signs of recession among major US trade partners. When they are no longer able to ship their so-called "excess savings" to the US to fund America's twin deficits, the FIRE Economy will be no more, and the US will have to find a way to run its economy the old fashion way by working, saving, and investing."
Just logged into WAMU site. My internet connection has been a little buggy. But it's funny that their FDIC and Equal Housing Lender Button images are showing up as red Xs.
Upthread, it was suggested that the market would bounce tomorrow. I gotta ask - bounce off of what ?? There is no chart support unless you look several years back. Bounce off - now, I'm really looking around here - the notion that "they will come up with something" ? I'm sorry, I don't see no bounce tomorrow. What I see is a slowly growing number of people who see that we are in deep deep chit. Not that I discount the possibility of a "new rabbit out of the hat trick" - I'm just looking at the cards already on the table.
Mad Money started out as a repeat of a show from a couple weeks ago, right after the FNM/FMC bailout. Then it went to black for second, and Serious Kramer came on talking about today sucking.
OT-Re-commuter train crash in l.a. friday might have been caused by text messaging engineer..The son of bee with itch was texting in a switching area...born and bred dopes now taking lives...
Thanks Curly, wasnt sure on my exit today..trading this etf is like surfing pipeline, hawaii..
Get into the wave early and get one of the best rides of your life, drop in late and see the blood in the water after you hit the reef....
I guess the old white guys who ran Bear Sterns, Lehman and Merill Lynch (into the ground) were sensible.. Get a life.. Greed and stupidity know no bounds..
"I knew WAMU was going down when they used that stupid WAMU name, and when their spokesman on TV was a smart alecky black guy who looked like a Staples employee who made fun of old white guys in suits."
What Speed said. Brian Williams, coming right up, will be the real tell (and who shall present: CNBC ambassador Bartiromo, Burnett, or Ratigan? Suspense!)
Bob Steel: $300b in deposits at WB. Claims only $10b in bad loans, $490b in good loans. Also, he has a very nice bridge he'd like to sell us in Nebraska.
Wachovia CEO tells Cramer that his CRE exposure is 3x the size of his troubled residential: $30B vs $10B. Sure hope there is no trouble coming in commercial RE...
From visits to Tokyo, I picture the Japanese traders getting onto the subway long about now, somberly dressed, briefcase and lunchbox in hand and that "stupid Americans" smile on their face.
I drove by a WaMu branch today at 10 am just out of morbid curiosity. No lines, but what I think was a larger than normal degree of activity. Both ATM's in use with 1 person waiting at each, constant in & out traffic at the lot. Seemed a lot for Monday at 10 am when most folks should be at work. Leads me to believe that the front end of the sheeple herd is making a move.
President George W. Bush will make a statement after meeting with his Working Group on Financial Markets on Tuesday for a briefing on market conditions, the White House said on Monday after major indices tumbled in the wake of Lehman Brothers Holdings Inc's bankruptcy.
"This means they must raise that whole $70b as collateral now to be counterparty to most banks and IBs?"
Hard to say what rating that estimate was based on, but they must have seen this coming. In any case, you have to assume that they will have to raise all of what was estimated before they are done.
Re Roubini, he said this is the worst since the great depression, no real upside until 2010 if that. I think pbs does podcasts. I was doing several things at once, didn't listen closely.
Washington Mutual will not be allowed to fail. Why? The FDIC trust fund is insufficient to cover all insured depositors and the organization does not have sufficient staff to handle an orderly reorganization or shutdown.
Also, Bush would not call Congress into emergency session to fund the FDIC trust. Doing so would only create more fear.
The solution is for another arranged marriage. Let's consider those big enough to swallow them.
Wells Fargo does not seem a likely candidate as there is too much duplication although, in this crazed environment, anything is possible.
President George W. Bush will make a statement after meeting with his Working Group on Financial Markets on Tuesday for a briefing on market conditions, the White House said on Monday after major indices tumbled in the wake of Lehman Brothers Holdings Inc's bankruptcy.
What?! He already told us that the "Markets are Resilient". What's left?
mp, you are absolutely right!, now consider ramifications to Wells Fargo, if it keeps wanting to play switzerland. I think they are either walking down the aisle in a shotgun wedding, or it can kiss it's ass goodbye.
mp:Washington Mutual will not be allowed to fail. Why? The FDIC trust fund is insufficient to cover all insured depositors and the organization does not have sufficient staff to handle an orderly reorganization or shutdown.
I just can't figure out what you do with it.
(btw, to repeat a Lehman quote: "The Treasury can't let Lehman fail, because that would be Armageddon.")
Zandi can go f-himself. He didnt see any of this coming and has been a total rear view mirror clown the whole way. Useless, and worse, works for Moody's and has had to provide them cover for their screwups. Used to be a half decent economist, then sold out completely. Buh bye Mark.
The siss of the whisp of the sigh of the softzing at the stir of
the ver grose O arundo of a long one in midias reeds: and shades
began to glidder along the banks, greepsing, greepsing, duusk
unto duusk, and it was as glooming as gloaming could be in the
waste of all peacable worlds. Metamnisia was allsoonome
coloroform brune; citherior spiane an eaulande, innemorous and
unnumerose
Whereismyretirement, why? who shit on who?
Louie Sez
From the Nikkei net:
BOJ In Close Contact With Fed, Collecting Info
Japan Govt: G7 Having Ongoing Talks On Lehman Issue
Forex Focus: Risk Aversion Won't Help Dollar Now
U.S. Continues Japan Road Show To Explain Fannie-Freddie Rescue
ipodius writes:
Wow, have most of you on this thread ever actually, ummm, run a billion dollar business never mind manage the largest economy every known in the history of the world?
So lets see...should the Fed take the comments of bloggers seriously or, ummm...go with their education and experience.
Give it rest. So far, they have done a pretty amazing job at keeping us from melting down. Next move: up .25 and you can bet on it unless there is a MAJOR dislocation. And remember...the ECB will lower before the end of the year.
ipodius | 06.25.08 - 3:54 pm |
mp - remember, it's never one action alone. It will be a cut, but combined with all sorts of other nonsense, and the possibility of at least one statement that touts some ridiculous scheme with a $100 bil tag on it. And add to that some other buffet rumor or the like, and you have your toxic spin mix. I sold out of this short run today starting an hour before the close. Missed a lot of upside, but I had no intention of getting screwed tomorrow. I'll watch the open, and buy back in if it looks tasty.
"Looks like asset deflation to me but hperinflation could occur with commodities.
Ella | 09.15.08 - 7:00 pm | "
well anything could occur, however the probability of hyperinflation to occur without the government starting to print money in order to cover the spending is close to null.
Therefore the hyperinflation is close to null, (at least within any near future,)
Nemo, what's the point of a rate cut, beyond psychological?
Everyone is hoarding cash and the Fed has already pulled out all the stops on the solvency side, allowing equities at the discount window and deposits to fund investment banking.
The FF rate is a liquidity instrument, and what we desperately need right now are policies aimed at restoring solvency.
Agree about the coin toss. Also, the worst thing that could happen to the Fed is that they cut and the market continues down. That would pretty much define the beginning of a liquidity trap.
Re WaMu merger: I can't wrap my head around who they pair it off with, esp with WB in the wings. WFC is at least suitable, but there's a log of overlap I think.
Anyway, I'm too stupid to solve this problem. I leave it to Sheila, that's how she earns her keep.
Re: inflation. A lot money has gone to heaven, but there is still a lot of money sloshing around in the system and more gushing from the virtual presses. You're going to see a bunch of cash going somewhere - perhaps not hyperinflation, because wages are not going up any time soon. But something is going to inflate big time.
BB, oil is down because since the beginning of year speculators dumped about 60 bil into contracts. Now as of last week 40Bil has come. Expect more of the same with problems with IB.
Still gas is way up bc of IKE. Also, I do not expect big oil to reduce the retail prices much, nor to I think that those who have raised prices to decrease them. Better to take the extra profit.
All bets could be off, as the R's desperate to get McSame elected drive down the price of gas before the election.
I'm raising my target on the S&P to 1600 and increasing earnings by 20%. I'm very bullish on the US economy. It's a supertanker that won't slow down. I particularly like GM, WM, and S&M.
Abby
I am not sure why I believe this but I think bonds will be important soon.
?
AIG borrows against their clients money that is on deposit with them. They lose it. The CEO gets a bonus but the clients lose pensions? General Life money?
Why is AIG so important? Their an insurance company. Can't Allstate do what they do?
WAMU, can't the gov just ignore them indefinetly? As long as your direct deposit is there and the employees get paid, whats the big deal?
I am not being funny, maybe dumb, but not funny.
Plus, why is this like being a kid again? You know there is stuff lurking out there that you can't see. Yet you know it can eat you if you don't make it to the light switch in time.
sm_landlord, theory holds that inflation is driven by wages. Not a good theory for today, witness asset inflation. Think real estate bubble, commodities, stock market, health care.
Lots of inflation around with out wage increases. Also, devaluation of the $ by 40% under Bush has driven inflation.
The Fed will cut. Perhaps not tomorrow but it is a sure fire way to help the banks recapitalize...They can't raise capital but they can grow it bit by bit.
because of their CDS profile. they have such a large CDS position that them going down takes down a lot of folk (EVERYBODY is a counterparty to AIG in a big way)
As for WaMu:
they don't have the cash that they need. A lot of their "cash" is the so called "income derived from interest accrued on negative amortisation from Option Arms" (around $350b last quarter).
in other words, the cash they have is an IOU from bankrupt homeowners not paying on their option arms.
they need liquidity to continue, but nobody's gonna give it to them because they're insolvent in a major way.
Nova, lets not forget all of the annuities, life insurance policies and health insurance policies. If they go under it will have a huge effect on main street.
Answer me this...what good would a rate cut do at this point if the FED can't even maintain the effective rate at the current 2% target? Seems to define pushing on a string, no?
If the Fed cuts, it will be seen as desperation. Markets will correct accordingly or at best won't be affected at all, considering that liquidity is not the issue nor has been.
damondidit writes:
Answer me this...what good would a rate cut do at ...
Maybe a small bump on the stock market. But it will not last and it will do not good.
The issue now is solvency. They are trying to reinflate the housing market. But it won't happen now that the game of selling bad paper in CDO's ect. is up.
I wonder if the Fed statement will say something like, "we foresee moderate growth continuing in the 3rd and 4th quarter as home prices stabilize and only a slight risk of inflation pressure....blah blah blah."
Or will they say something like:
"Get the fvck out! Everybody out! Troll in the dungeon!"
bring out yer knives boys... the blood is flowing.... yer gots no choice... Joe6pac woke up today... an he's awful scared ....blood on the street tomorow ... rate cut be damned
You did realize, of course, that I was a pirate all along.
Standard & Poors Ratings Services said Monday afternoon that it had downgraded its long-term counter party credit rating on Bank of America Corp. (BAC: 26.55 -21.31%) to AA- from AA.
The economy is strong and resilient.
Your elected leaders have your best interests at heart.
We value and protect freedom.
Real women have curves. (are fat)
I had to remove the one about real estate always going up.
"Bottom Dweller writes:
1st inning: Ended with Bear Stearns
2nd inning: Ended with Fannie/Freddie de-privitization
3rd inning: Ended with Lehman
Isn't it more like bottom of the 2nd?"
Baseball analogy can go only so far. You know that in baseball, the winning team can call it quit (mercy call), thus, a game can last 4 innings or 1 inning.
OK,
For all of you glod and sliver bugs- there is no physical supply available right now at spot.
You wanna pay $3 over spot for any quantity and get on a list.
I was at the largest retail coin shop in Phoenix and it was a madhouse today with phones ringing off the hooks and the similar refrain.
Not available-no eagles- unless you want gold sovereigns, you can buy large bars, we can special order comex bars, no junk silver available at spot, you can get on the list to buy what comes in at the current markup we are charging.
Thank heaven i wanted collector type coins. That area was quiet like a tomb.
So buy CEF- they ain't no physical to be had in quantity during this panic, except at prices considerably over spot. BTW they were paying spot for stuff on the waiting list. Guess they took quite a bath riding down their inventory.
The Fed is largely politicized today. I am amazed how many times Paulson and Bernanke or Geithner stood shoulder to shoulder in this crises. Fed independence today is simply a pretense.
Therefore, the Fed will act in the interest of the treasury and cut rates because the market demands it. There is now genuine fear of a crash and IMO any tool to prevent that will be used.
If you don't think that a 500 point drop in the DOW has awakened Joe 6 Pack, then, you underestimate him. So far, the seismic changes have only been coming from the big big big players. But, now you have scared Joe - and yes, he's lazy and by 7PM on his way to another hang over - but he's becoming aware - and that's a big leg down.
I always wanted to check out Argentina.
Never thought I could just stay right here and it would come to me.
Everybody got a pot and wooden spoon at the ready?
Regarding J6P, I doubt they've called their mutual funds to redeem yet. That will be the next phase.
I think dipsters buying tomorrow is too easy...rather we may have our first follow through day on the downside. Regardless of the so-called Turnaround Tuesday effect, which does seem to work more times than not, there are just too many visible events on the horizon for investors to be bargain hunting yet.
Anyone notice the Empire Mfg. Survey released today amid all the noise? Down 7.4 vs. +1.0 consensus. Much worse than expected. Industrial production down 1.10% as well. Unrelenting bad economic news will become the norm.
Hi Popeye, let me explain. I used to think my SSN check would be for pennies and my 401K would make my life all comfy. It's beginning to look like both checks will be for pennies. Shiny little electroplated zinc disks.
@Currently Smoking Cannabis: consider the upside-- the depression saw the end of prohibition, right? If history repeats itself, your drug of choice may well be legalized.
Consider the average white-collar worker, toiling away in her cube writing her next Powerpoint presentation. Does she go to her boss and ask for a raise from $75k to $750k? Of course not.
Does the hapless waiter who is also looking to be America's Next Top Something ask his boss for a raise from $35k to $350k? Of course not.
Because that just doesn't happen in America anymore. With the level of hypercompetitiveness that the American job market has these days, and with HR and Corp Finance departments these days, you get up to a certain percentage raise each year, bing bang boom, that's it.
What we are going to see is a return of good old 70s-style stagflation. $35k waiter is going to have to get three of his buddies to be roommates so they can afford their apartment, car payment, insurance, gas, food, and cable bill. Ultimately the price of those six items will make or break the American economy.
Hyperinflation only works in an economy where you don't have Monster.com. "You want a 30% raise, Johnson? (Three mouse clicks) How about I go hire this guy who is desperately looking for work, and is willing to do your job for 10% less?"
..or the FED & Treasury Co. can just keep the stimulus coming, how many 150B does it take before hyperinflation?
Money for nothing and Zimbabwe for free.
A Fed cut? No justification at all that I can see. There is not a shred of evidence that it did any good for the housing business and we've had low rates moving right into the current crunches and nothing, anywhere, is constrained by rates. Banks can't increase their profit stream if they cannot lend out the other end... and they can't. So a cut would be pointless. On that basis, I think they will cut.
You probably know this, but student loans are almost impossible to lose or modify in bankruptcy. Income tax liens and child support are worse. Not much else is.
So, no, barring a huge change in the law. Sez I as I continue to pre-pay and deny these fools their projected interest as much as possible.
Regarding WaMu, capitalized interest recognized in earnings that resulted from negative amortization within the Option ARM portfolio has been declining from a peak of $361 million (March 31, 2007) to $255 million (June 30, 2008) in their last report. This can be either: a positive indicator (less neg. am. happening) or a negative indicator (more defaults happening).
For the past few years, a 6 pack of Sierra Nevada has been $10.00 at the two local KwikE marts in my neighborhood. Then inflation set in. One wanted $10.50, the other $10.75. Back to $10 even now. Perhaps I could grow to like inflation.
Personal pet peeve - calling it something it is not!
This is a Bad Lending and easy Money problem accelerated by greed and sharp money managers. It is not a housing problem. Housing was just the catalyst and now the visible bulls-eye.
I'm thinking of changing my tune on the inflation business. Hyperinflation requires the central bank monetize the governmental budget and that's not going to happen. However, if this gets much worse, the Fed runs out of assets and the only way to keep widening the windows will be to print money, ie monetize the bad debt. That will cause a massive but temporary inflation, similar in effect to a currency devalution. This will fix the underlying problem of overvalued assets by depreciating all monetary values. Essentially all financial institutions will go out of business because of deposit rates will soar while all the old loans remain at low interest rates. Inflationary depression.
I just came back from Wamu in Marysville. There were a lot of people there, but I'm pretty sure they were all there depositing checks. And there were a fair number of employees. Probably more employees than I've ever seen at a Wamu.
I had been thinking for quite a while of closing our accounts at wamu. I decided to take out half of them. And we had a checking account that had only a couple hundred dollars and has been relatively inactive for the past month.
Anyhow, when I went to close my account, I was asked why. I know I could have said anything, but I made the mistake of saying that I didn't want to have to mess with the fdic. Whoops! Before the words came out, I had kind of imagined that the teller might sympathize with me. But instead she took it as a personal insult. (My bad.) She gave me a VERY stern lecture about how Washington Mutual wasn't going anywhere, how their branch just hired 3 new people and they were just opening up a new branch in Yuba City, and don't I know that our money was insured up to 200k, that WAMU was strong enough to weather the housing problem, and that it was people like me withdrawing their money based on "rumors" going around today that could really put their bank out of business....
In hindsight I wish I'd asked her what rumors she was refering to. I've been concerned about having money with wamu for a year now. Now WM is less than $2 a share. And the housing crash still has a ways to go.
I turned red, regretful that I didn't make up some excuse like "we need the money to avoid foreclosing." A higher up that had to sign some stuff also tried to give me a lesson on fdic insurance. As she handed me my checks and cash, she gave me a brochure about the FDIC, rolled her eyes, and said: "You can read this, (tsk) if you want to actually read something that explains how FDIC works." I felt kind of bad, but after I left I thought, "Sheesh it's my money. She has no right getting pissy at me. She should be thanking me for ever putting my money in their bank in the first place!"
first?
What is the Fed, Treasury and FDIC going to do with this? WaMu has to go soon.
Okay, now start watching for the lines at WaMu and even other banks.
I think that all branch managers on the front lines of any bank is going to be very busy tomorrow.
Do you even think that anyone will touch Wa Mu?
Ouch! Today WaMu, tomorrow AIG?
"And the beat goes on ..."
Drums keep pounding a rhythm to the brain...
This should be the second last straw. Just before the bank runs.
This is morphing from funny to scary. I no likey like.
Do you even think that anyone will touch Wa Mu?
Isn't it worth something?
Can't there be some scenario in which it makes sense to acquire them?
Starting tomorrow, I think the fourth inning will start.
1st inning: Ended with Bear Stearns
2nd inning: Ended with Fannie/Freddie de-privitization
3rd inning: Ended with Lehman
4th inning: How will it end (I'm thinking bye bye WAMU, AIG)
the office supplies will be usable for the wood-burning stove.
some of them anyway
Ben or Cue Ball are gonna pull a bunny out of a hat pre-market tomorrow. If they don't, today's trading could look like the Teddy Bear Picnic.
True story: Just went to watch my nephew in a 10K race and, unsurprisingly, three locals banks got the three top places.
Good night WaMu. I won't miss your commercials.
Now the S&P is pulling a Schummer....
"What would those stodgy old bankers do?"
FDIC-Mu?
Will WaMu the end, or the beginning?
YouTube -
Taxpayers might soon be saying "Thanks WaMu for the WooHoo!!!"
Zuzu's petals, dammit!
Nobody wants to own consumer debt. It is that simple. If Wells Fargo is interested I can pay 20¢ cash for my own mortgage. They can get a cash infusion and reduce their MBS exposure. Win-win.
1st inning: Ended with Bear Stearns
2nd inning: Ended with Fannie/Freddie de-privitization
3rd inning: Ended with Lehman
Isn't it more like bottom of the 2nd?
Can't believe they were allowed to do that
How about SOV-WM?
Nobody wants to own consumer debt. It is that simple. If Wells Fargo is interested I can pay 20¢ cash for my own mortgage. They can get a cash infusion and reduce their MBS exposure. Win-win.
The $90k in 0% balance transfer arbitrage money I'm borrowing from several of the troubled banks is quite safe consumer debt, I assure you.
Hey, I'm doing them a favor: if I didn't keep their money safe, they would have lent it out to some idiot who would have defaulted and they'd have lost it all!
dr. munch writes:
Ben or Cue Ball are gonna pull a bunny out of a hat pre-market tomorrow. If they don't, today's trading could look like the Teddy Bear Picnic.
The Fed is meeting tomorrow. No bunnies in the morning--maybe in the afternoon.
Somewhat OT & I could not link to the statement but Reuters has a "breaking news" statement that some Merrill stockholders have filed suit to stop B of A's takeover/buyout.
Does anyone know if this litigation is more likely to be real (really trying to stop the buyout/takeover) or is more likely to be a way of driving up the stock purchase price for shareholders of Merrill?
I almost feel sorry for Paulson, Bernanke & co. They just can't get a break.
On WaMu, surely this means curtains for them?
Good work S&P!!
Not a minute sooner...
What took so long?
Somewhat OT & I could not link to the statement but Reuters has a "breaking news" statement that some Merrill stockholders have filed suit to stop B of A's takeover/buyout.
Isn't BoA buying them out at a ridiculous premium? Sure you can stop BoA's takeover at $29, but your stock is only worth $17...
Reminds me of that Futurama episode...
crispy&cole writes:
What took so long?
The horses' ass was still inside the barn.
Remember the good old days when the rating agencies were scared to downgrade the monolines. WAMU you are no MBIA
At the thrift shop on Saturday I came across an unused bright-green T-shirt that read "WaMu: WOO HOO!"
Only 50 cents. I was tempted, but... nah.
Whoa!
At the same time, the Federal Reserve battled to contain a ferocious storm in the overnight borrowing market as financial institutions scrambled for cash, pushing up the actual Fed funds rate at one point to about 6 per cent triple its target rate.
The US central bank unleashed first $20bn then another $50bn in overnight liquidity in the shape of repos, driving down the Fed funds rate, for a while at least, to 3.5 per cent, still far above the official rate of 2 per cent. The turmoil raised speculation that the Fed could cut interest rates at its policy meeting on Tuesday, although it appeared more likely that the Fed would indicate that it is monitoring financial developments closely and will act as needed to ensure economic stability.
FT.com / In depth - Downgrades deepen AIG woes
BTW - one of the BRIC's got bricked today:
BVSP\tBovespa\t48,416.33 4:38PM ET\tDown 3,976.47 (7.59%)
"I almost feel sorry for Paulson, Bernanke & co. They just can't get a break."
The more these two fools do, the worse this will get, the longer it will last, and the more wealth that will be destroyed. A lot of this is the unintended consequences from their own actions. Your sympathy is misplaced.
I'm starting to see a pattern. But wait, this is Monday. Friday isn't for a few more days yet. Heck, now my pattern is ruined.
Bob, now you can own WaMu for that!
Not that you want to ...
azurite, Sparhawk:
What if they smell a scam: that the deal is really a ruse to buy time until other dominoes fall, making it incumbent on the Fed to bail out the big, fugly Franken-bank into which MER would be subsumed? Remember, it's a BAC stock deal. Miss Market seems to have her doubts on both sides of the trade.
What, other than gasoline on the fire, will a Fed rate cut do? This isn't a cost of borrowing issue, it's a max credit issue.
I'm very curious what the Level 3 assets are really going to turn out to be for all of these companies. Once LEH went BK we may finally see what these fantasy assets really are.
Your sympathy is misplaced.
Anonymous | 09.15.08 - 5:51 pm | #
I said almost!
I am not worried "McBush said the economy is strong" LOL
The FDIC doesn't have enough money to bail out WaMu, does it? How much insured deposits does it have?
Anybody want to speculate what will happen with the mkt tomorrow, or are you all so shell shocked nobody wants to opine?
"I said almost!"
I can't even get close to an almost myself. Most of the time one doesn't get what they want, they get what they deserve and I sincerely hope these two guy's get theirs good and hard.
Lawyerliz - I speculate it won't do that much, because everybody will be waiting to see what the Fed does.
Holy shit, I just saw someone on CNBC acknowledge that Wachovia is in trouble ("risk premiums are getting higher and higher").
Maybe the realization is sinking in that it doesn't end with Lehman and AIG.
prairiedog writes:
The FDIC doesn't have enough money to bail out WaMu, does it? How much insured deposits does it have?
prairiedog | 09.15.08 - 5:57 pm | #
I think you're right. This is from Yves Smith at RGE Monitor:
"The alert have taken note that the failure of Washington Mutual, which looks increasingly likely, would consume the FDICs reserves and, as in the savings and loan crisis, force the agency to go hat in hand to Congress for more money."
"...or are you all so shell shocked nobody wants to opine?"
Magic 8 ball say: Ask Again Later.
Shell shock combined with rapid intake of chemical modifiers has delayed all prognostication until much later.
WM after hours trading at $1.80
What we observing is that the ratings agencies now need to survive in a very different marketplace. Therefore, they are now adjusting their ratings at a much quicker pace and with far less consideration for the victim.
I hope the correction continues here in Brazil.
I want to go long on Petrobrás, but I now that there is further to go...
lawyerliz
normally, on a day after one like today, the market is either stable or up--but watch out for wednesday.
remember the drill from grade school--duck and cover
How big is WaMu? Anyone?
WB is dead at 40 cents on the dollar marks for Alt-A ($120 billion portfolio). It's game over for shareholders on a mark-to-market basis. (They have a large cash position, but they'll probably burn through that within a year.)
Can't eat a $120 billion slug of toxic CA waste and poop out a diamond.
OMG - can't believe I'm going to type this. BAC will test its July 15th lows - make no bones about it.
Anybody want to speculate what will happen with the mkt tomorrow,
I predict it will fluctuate.
liz,
Nothing until 2pm, then a big move based on what benny and the jets do, and whether he-man sucessfully retakes skull castle or not.
Sales of our new product, New York Lube, are going well. Business is good.
OMG - can't believe I'm going to type this. BAC will test its July 15th lows - make no bones about it.
I'd rather have SKF test its 7/15 highs.
BB, WAMU is the largest S&L in the country.
Just a reminder for those who might think bank stocks are cheap (not many here I realize):
It's the 2-month anniversary (7/15/08) of when SKF closed at 203.91!!
New Roubini post !
JP writes:
I'd rather have SKF test its 7/15 highs.
Unless Barclays goes under and drags the Proshares with them, it will.
Curly and JP-
I can't get a read on Skf right now, really bounced around today...Should be at 150 already..whats your take on this next cple days..I closed out at end of day, lking for dip and get back in...
If WAMU goes down, we need to be looking at the impact on the Federal Home Loan Banks (FHLBanks).
Surely this system under a lot of stress as well. WAMU is the second-biggest borrower in the Federal Home Loan Bank Board system at $63.9 billion.
New low for the markets tomorrow?
I just went to Costco this morning, and was noticing how much like Starbucks Washington Mutual is. They're all over the place in Sacramento.
BB writes:
How big is WaMu? Anyone?
Nemo knows:
https://self-evident.org/?p=217
Calculated Risk: WaMu: $4.5 Billion in Loan Loss Provisions, Fitch Downgrades
WAMU's Cali and FL junk isn't .40c to the dollar if MER sold it's stuff, net net at .22c to the dollar. What people don't realize is that WAMU was counting negative amortization buildup as income - which was all phantom to begin with what with the down turn in values out here. They may have cash, but their assets trump their cash positio
Does anyone know just what John McCain considers to be the fundamentals of the economy?
-GSD
Thanks.
Lawyerliz
WaMu downgrade doesn't bode well; much worse, the emerging consensus that The Street expects a pony tomorrow.
With every new box of Depends that is opened, I believe that for the first time the Fed will be damned if they do (fanning fears of a liquidity trap) and damned if they don't.
They are running Cramers show from last week. What a screw up.
Hilarious Jim Cramer rerun on CNBC right now: Dow soars 290! Mortgage crisis over thanks to Fannie/Freddie takeover.
Awesome.
Cramer on CNBC. They mistakenly are playing last Monday's show. He's cheering the Dow being up 290. Error or joke?
Its A Trap....
gsd
according to JMcC, the fundamentals are honor and country
Time for S&P to downgrade FDIC?
cd - I closed SKF too. It rarely goes on a straight up run for days, although the runup to 200 was nice. But when you get an intervening Fed meeting, it's best to step to the sidelines briefly, even if it means having to buy back in at a price above that at which you just closed. I for one, did not want to give back all of today's gain at the open tomorrow when some stink bomb of spin/propaganda blows up the shorts before I even wake up and make it to my computer here on the west coast.
The market was somewhat stable today on the expectation that FFR will be cut by 100bps tomorrow.
The real bloodbath starts tomorrow after 2:20PM EDT.
The technology companies are not yet taking part in the bloodpath. Right now they are behaiving as if they are safe heaven.
We will know in 2 weeks what is going to hanpen to Nasdaq.
I believe that there is not going to be easy day for this rest of the year 2008.
I afraid that the trainwreck speeed is going to pick-up to jet speed next month and then recoket speed after that.
Lefty, I don't think that was a screwup. Someone in the control room was having some fun.
Why in the did my crappy former employer just air a full two-three minutes of an OLD "Mad Money" Corner bug: Dow UP 290 points.
Conspiracy, I tells 'ya!
They are rerunning Cramer's show from last week because they can't get him to come out of the bathroom today.
BB, more on WAMU.
WAMU capitalization in April of o8 was 11Bil. Washington Mutual had $143bn in insured deposits on June 30 - about three times the size of the deposit insurance fund, but less than half of its $307bn assets. Who knows what the uninsured deposits are.
And the market Cap is less now that the stock is diving.
GSD, Atrios said the fundamentals are the American worker and small business. So if you criticize the economy, you're criticizing the American worker and small businesses. Like, if you criticize the Iraq war, you're criticizing the troops.
AM Best downgrades AIG. Seen on Marketwatch, sorry no link yet.
Last Nail, or more to come?
Lefty, how great was that cutover. Cramer saying how good things are, F & F nationalized, Dow up 290. Then screen blacks out for a second, today's show comes on, Dow -504, Cramer super depressed asking if we get out of this mess. Classic.
Thanks Ella.
Cramer is a doofus. Why anyone takes these morons seriously is beyond comprehension.
So, do you guys and gals read iTulip?
FIRE Economy D-Day - iTulip.com
Fed Funds spread signals crash - iTulip.com
I have been hoping these guys would be wrong for roughly two years now.
What's 500 points between friends.
Errr, well, if you add 504 to 290 you get a lot.
AIG downgrade and still NOTHING FROM THEM...
Someone with a DVR needs to get this classic Mad Money moment up on YouTube stat.
Will Wachovia make it till Friday? Will Susan find out about Ted and Alice? Can Gretchen ever find a clue, or is she doomed to the eternal bitch-slap cycle with Tanta. And what about Mish, can he ever find happiness in the arms of Ben?
Tune in tomorrow for a new Bear Bemused, and watch the fur fly as Cramer calls a new bottom while searching for his. It'll be un-bearable!!!
The Fed is in a box. I believe they have to cut tomorrow because of market expectation but at the same time are under extreme pressure attempting to keep the fed funds rate even at 2%.
Everyone likes to see if Cramer the clown has any new horns or funny shoes from time to time.
JohnW writes:
Its A Trap....
<a href="http://www.youtube.com/watch?v=ckhasegf2wA>Admiral Ackbar Cereal - "Now with brine shrimp"
Ignore my link. Bad Youtube video
Nigeria militants 'raze' Shell oil complex
http://edition.cnn.com/2008/WORLD/africa/09/15/nigeria.oil.war/index.html?iref=werecommend
And oil drops... just how much deleveraging left is there for hedge funds?
I interpret Cramers screw up that the gods are angry.
Ha! Cramer almost a year ago: "I wish I could tell people to just go out and buy WaMu, but I'm just too darn old!"
Ahh, the good ole days...
I'm going to get dinner before I get to the point that I can't eat.
The sun will come up tomaorrow. I guess. . .
A friend of mine is a WM VP and actually said that the recession is all psychological. I thought he was kidding and laughed. Awkward.
Booya time, click off.
cd: I last bought SKF at $103 and closed out after I got +15% (although I've done this a lot of times). I can't handle the stress of riding it for too long.
I always take the money and run.
5 years from now: ...strangely Wells Fargo, decided not to help out. Bofa came to rescue of Countrywide and Merrill, JP Morgan to the rescue of Bears Stearns and Washington Mutual....so, when Wells Fargo needed a bail out, no one was interested...and they faded into obscurity.
And oil drops...
as it will as fewer can afford to buy
"Someone with a DVR needs to get this classic Mad Money moment up on YouTube stat."
Is Cramer chewing the carpet again? No feed right now, can you describe?
S&P = Tounces the driving cat!
...so I decided to go to lunch, afterall I would need something to throw up, would'nt I?
"Does anyone know just what John McCain considers to be the fundamentals of the economy?"
The religious right.
link to AIG downgrade
AM Best downgrades AIG ratings - MarketWatch
RE Itulip,yes the free stuff. The links are to the subscription service.
When Joe works-for-a-living gets home and watches the 6 o'clock news, he's going to unload all the financials that his stock broker recommended as a once-in-a-lifetime buy last month. Tomorrow will be another poop sandwich for the market.
"Nothing until 2pm, then a big move based on what benny and the jets do"
Hmmmm. I think it depends on the degree of the carnage in Asia. I think the Fed cuts 75pts before the open. Any rally needs to be shorted, hard.
I knew WAMU was going down when they used that stupid WAMU name, and when their spokesman on TV was a smart alecky black guy who looked like a Staples employee who made fun of old white guys in suits.
From the first itulip:
"Watch for signs of recession among major US trade partners. When they are no longer able to ship their so-called "excess savings" to the US to fund America's twin deficits, the FIRE Economy will be no more, and the US will have to find a way to run its economy the old fashion way by working, saving, and investing."
Isn't that treason?
Looking forward to Christmas.
Just logged into WAMU site. My internet connection has been a little buggy. But it's funny that their FDIC and Equal Housing Lender Button images are showing up as red Xs.
Oh Jesus, Bob Steel on CNBC right now blowing sunshine up Cramer's ass. Too bad Cramer won't ask him whether WB will be sold tomorrow or next week.
well, at least Cramer is smart enough to just pretend he's tying his shoelaces (at least I hope so)
I closed most of my WB puts today. This is a pretty solid indicator that they crash tomorrow.
How much sunshine do you need for that?
Upthread, it was suggested that the market would bounce tomorrow. I gotta ask - bounce off of what ?? There is no chart support unless you look several years back. Bounce off - now, I'm really looking around here - the notion that "they will come up with something" ? I'm sorry, I don't see no bounce tomorrow. What I see is a slowly growing number of people who see that we are in deep deep chit. Not that I discount the possibility of a "new rabbit out of the hat trick" - I'm just looking at the cards already on the table.
Mad Money started out as a repeat of a show from a couple weeks ago, right after the FNM/FMC bailout. Then it went to black for second, and Serious Kramer came on talking about today sucking.
Go short the sun.
Ella --
Re: iTulip
I believe you can get those for free, but you do have to register.
Have a look :
Personal finance news, how to make money, how to save money - Telegraph
OT-Re-commuter train crash in l.a. friday might have been caused by text messaging engineer..The son of bee with itch was texting in a switching area...born and bred dopes now taking lives...
Thanks Curly, wasnt sure on my exit today..trading this etf is like surfing pipeline, hawaii..
Get into the wave early and get one of the best rides of your life, drop in late and see the blood in the water after you hit the reef....
After 4 hours sleep and a day of cubicle dwelling, I am home to a little e-bay and CR. The drama continues.
Now, I have to confess that I thought we would see at least an 800 pt drop. WTF w/AIG? Did they all of a sudden become mutes?
Roubini is on Lehrer show, now.
I guess the old white guys who ran Bear Sterns, Lehman and Merill Lynch (into the ground) were sensible.. Get a life.. Greed and stupidity know no bounds..
"I knew WAMU was going down when they used that stupid WAMU name, and when their spokesman on TV was a smart alecky black guy who looked like a Staples employee who made fun of old white guys in suits."
bounce tomorrow
Current futures point to "no"
I love the smell of bank failures on a Friday.
What Speed said. Brian Williams, coming right up, will be the real tell (and who shall present: CNBC ambassador Bartiromo, Burnett, or Ratigan? Suspense!)
Whoa - WaMu, Wachovia, etc...
I understand the printing press can go into overdrive if big banks start to fail, but in the long run, will the paper be worth anything?
..."Annie, get your gun"
a fake out is a fake out
YouTube - Milli Vanilli - Blame It On The Rain
A.M. Best = Tounces the driving cat!
Ratigan??
The European markets were down about what we were today. (3-4%). Let's see what the Nikkei thinks in about 35 minutes.
And to think Asian investors are about to return from a holiday.
What did Roubini tell Lehrer?
Bob Steel: $300b in deposits at WB. Claims only $10b in bad loans, $490b in good loans. Also, he has a very nice bridge he'd like to sell us in Nebraska.
The son of bee with itch was texting in a switching area...born and bred dopes now taking lives...
Easy to blame an accident on a dead man - I think that's why this was the first explanation out the door.
Wachovia CEO tells Cramer that his CRE exposure is 3x the size of his troubled residential: $30B vs $10B. Sure hope there is no trouble coming in commercial RE...
From visits to Tokyo, I picture the Japanese traders getting onto the subway long about now, somberly dressed, briefcase and lunchbox in hand and that "stupid Americans" smile on their face.
I drove by a WaMu branch today at 10 am just out of morbid curiosity. No lines, but what I think was a larger than normal degree of activity. Both ATM's in use with 1 person waiting at each, constant in & out traffic at the lot. Seemed a lot for Monday at 10 am when most folks should be at work. Leads me to believe that the front end of the sheeple herd is making a move.
So, AIG's downgraded. Is A.M. Best enough to matter? Or is it like the monolines where they could ignore Fitch but listen to S&P and Moodys?
This means they must raise that whole $70b as collateral now to be counterparty to most banks and IBs?
Whereismyretirement, why? who shit on who?
President George W. Bush will make a statement after meeting with his Working Group on Financial Markets on Tuesday for a briefing on market conditions, the White House said on Monday after major indices tumbled in the wake of Lehman Brothers Holdings Inc's bankruptcy.
Bush to make statement after market advisers meeting
| Reuters
Hummmmmmmm
Via the News Hour, Goldman reports earnings tomorrow. That should be fun.
popeye
re: bounce
look at october 1987, for example
i'm with you on the longer term trend, but for a day, or a coupla hours...
"This means they must raise that whole $70b as collateral now to be counterparty to most banks and IBs?"
Hard to say what rating that estimate was based on, but they must have seen this coming. In any case, you have to assume that they will have to raise all of what was estimated before they are done.
Anyone who's spent the last year listening to Roubini, Janzen, and Schiff is smiling today. "I toldja this would happen...."
Nemo, thanks.
Re Roubini, he said this is the worst since the great depression, no real upside until 2010 if that. I think pbs does podcasts. I was doing several things at once, didn't listen closely.
Washington Mutual will not be allowed to fail. Why? The FDIC trust fund is insufficient to cover all insured depositors and the organization does not have sufficient staff to handle an orderly reorganization or shutdown.
Also, Bush would not call Congress into emergency session to fund the FDIC trust. Doing so would only create more fear.
The solution is for another arranged marriage. Let's consider those big enough to swallow them.
Wells Fargo does not seem a likely candidate as there is too much duplication although, in this crazed environment, anything is possible.
Conjure proposes JP Morgan/Chase.
As their stocks drop, it'll be harder to raise the cash. As it gets harder for them to raise the cash, their stock will drop.
It's a death spiral similar to the flush in a toilet.
And they both carry the same thing down.
Before this all thing ends, JPMorgan will end up buy the whole gov...
Mark Zandi on PBS says US is triple A and will always be triple A.
WaMu has over three hundred billion in assets, is chock full of option-ARMS, which might get forty cents on the dollar on the market.
With numbers like these (and knowing that even the pitiful FDIC fund is nothing but IOU's, since the gov't has already spent that money)...
How can anyone with half a brain not see that hyperinflation is right around the next corner?
Got greenbacks for when Paulson announces a two-week bank holiday?
And gold for after that?
Walmart has always wanted to get into banking.
Where can you access after hours stock trading quotes?
President George W. Bush will make a statement after meeting with his Working Group on Financial Markets on Tuesday for a briefing on market conditions, the White House said on Monday after major indices tumbled in the wake of Lehman Brothers Holdings Inc's bankruptcy.
What?! He already told us that the "Markets are Resilient". What's left?
Mission Accomplished?
Heckuva Job Hanky?
The solution is for another arranged marriage. Let's consider those big enough to swallow them.
Wells Fargo does not seem a likely candidate as there is too much duplication although, in this crazed environment, anything is possible.
Conjure proposes JP Morgan/Chase.
What about one of the cash-rich regionals? USB, or any other of them that doesn't have such a huge collection of shit loans?
mp, you are absolutely right!, now consider ramifications to Wells Fargo, if it keeps wanting to play switzerland. I think they are either walking down the aisle in a shotgun wedding, or it can kiss it's ass goodbye.
AIG workers on edge as once-safe company in turmoil
| Reuters
mp:Washington Mutual will not be allowed to fail. Why? The FDIC trust fund is insufficient to cover all insured depositors and the organization does not have sufficient staff to handle an orderly reorganization or shutdown.
I just can't figure out what you do with it.
(btw, to repeat a Lehman quote: "The Treasury can't let Lehman fail, because that would be Armageddon.")
BB writes:
Have a look :
Telegraph | Error 404 | Sorry, the page you have requested is not available bcnbank115.xml
Thanks.
"What about one of the cash-rich regionals? USB, or any other of them that doesn't have such a huge collection of shit loans?"
OK, Conjure and I are game for that, especially in the current environment, but we don't buy the USB idea.
The Grundhofer brothers aren't smart enough to make it work.
"Remission Accomplished"
Has Cramer said the bottom is in for financials again?
We got whacked on open, dollar down and 2% drop for stocks, ouch!
JP, Lehman wasn't a BANK. It was an investment bank. Big difference.
"How can anyone with half a brain not see that hyperinflation is right around the next corner?"
Please, just look the definition of hyperinflation up.
Zandi can go f-himself. He didnt see any of this coming and has been a total rear view mirror clown the whole way. Useless, and worse, works for Moody's and has had to provide them cover for their screwups. Used to be a half decent economist, then sold out completely. Buh bye Mark.
he says the gov'ment MUST bail out AIG.
The siss of the whisp of the sigh of the softzing at the stir of
the ver grose O arundo of a long one in midias reeds: and shades
began to glidder along the banks, greepsing, greepsing, duusk
unto duusk, and it was as glooming as gloaming could be in the
waste of all peacable worlds. Metamnisia was allsoonome
coloroform brune; citherior spiane an eaulande, innemorous and
unnumerose
The pie smells like it's got an interest rate cut baked in it. Not sure if it would have much impact.
Whereismyretirement, why? who shit on who?
Louie Sez
From the Nikkei net:
BOJ In Close Contact With Fed, Collecting Info
Japan Govt: G7 Having Ongoing Talks On Lehman Issue
Forex Focus: Risk Aversion Won't Help Dollar Now
U.S. Continues Japan Road Show To Explain Fannie-Freddie Rescue
You don't detect just a hint of glee?
DrChaos writes:
"How can anyone with half a brain not see that hyperinflation is right around the next corner?"
Looks like asset deflation to me but hperinflation could occur with commodities.
Tabulator went crazy...
were way past #4500
"(btw, to repeat a Lehman quote: "The Treasury can't let Lehman fail, because that would be Armageddon.")"
reminds me.. king has died - all hail the new king.
Lehman wasn't a BANK. It was an investment bank. Big difference.
Understood mp. But my point was: Just because we can't imagine it happening doesn't mean it can't happen.
The bigger point: What do we do with it? What is a logical outcome?
I can't think of a sensible answer to my own question.
I tells ya, these ratings guys are smart cookies. WaMu below $2 and they pull the switch.
BTB Roubini on Bloomberg.
Cheers,
I'd put the odds of a rate cut tomorrow as a coin toss. I agree that it will have no macro impact at this point.
Hopefully, they won't cut. They really need to keep their powder dry at this point.
maybe, we will securitize Japan to China.
ipodius writes:
Wow, have most of you on this thread ever actually, ummm, run a billion dollar business never mind manage the largest economy every known in the history of the world?
So lets see...should the Fed take the comments of bloggers seriously or, ummm...go with their education and experience.
Give it rest. So far, they have done a pretty amazing job at keeping us from melting down. Next move: up .25 and you can bet on it unless there is a MAJOR dislocation. And remember...the ECB will lower before the end of the year.
ipodius | 06.25.08 - 3:54 pm |
any retractions or adjustments?
WaMu can only be saved by foreigners. But they won't do it. They might flirt with the idea, and then withdraw.
Conjure proposes JP Morgan/Chase.
Weren't they sniffing around WM last week? Never heard anymore.
well i think that obama's gona raise eveything sky high.Now that influction has gone up and after ike we'll see busy busy the next week
mp - remember, it's never one action alone. It will be a cut, but combined with all sorts of other nonsense, and the possibility of at least one statement that touts some ridiculous scheme with a $100 bil tag on it. And add to that some other buffet rumor or the like, and you have your toxic spin mix. I sold out of this short run today starting an hour before the close. Missed a lot of upside, but I had no intention of getting screwed tomorrow. I'll watch the open, and buy back in if it looks tasty.
Ella writes:
Looks like asset deflation to me but hperinflation could occur with commodities.
Spot on, deflation in some areas and inflation in others.
Although if oil keeps going lower and stays there then I would be very worried indeed.
JP, what we do with it is marry it to another, hopefully better, bank.
The combination would have compromised capital, but that's better than forcing a liquidation.
The forced liquidation of an FDIC-insured bank is unthinkable, especially in this environment.
At this point, don't they pretty much have to cut the rate tomorrow, just to make it look like they're doing something?
conjure has been reading the threads on Google finance...that's where the Chase suitor story was an hour or go or so.
mp --
Hopefully, they won't cut. They really need to keep their powder dry at this point.
I dunno, mp... I do not think they can allow this to continue unchallenged. The entire banking system is in severe danger.
I think it is likely we see a rate cut before the week is out, and virtually certain we get something from them tomorrow. Maybe tonight.
"Looks like asset deflation to me but hperinflation could occur with commodities.
Ella | 09.15.08 - 7:00 pm | "
well anything could occur, however the probability of hyperinflation to occur without the government starting to print money in order to cover the spending is close to null.
Therefore the hyperinflation is close to null, (at least within any near future,)
The only way we see hyperinflation at this point is if the government is forced to default on the national debt.
I think a liquidity trap and deflation are the bigger concerns at this point. I think we're headed for Japanese style stagnation.
Post mortem starting now on CNBC. All talking heads are on deck. Prepare for a dose of the obvious.
Nemo, what's the point of a rate cut, beyond psychological?
Everyone is hoarding cash and the Fed has already pulled out all the stops on the solvency side, allowing equities at the discount window and deposits to fund investment banking.
The FF rate is a liquidity instrument, and what we desperately need right now are policies aimed at restoring solvency.
it's hard to believe ben or the bankers (or even j6p) would see even zirp as much of a stick-save.
i think leaving rates unchanged costs them pretty much nothing politically.
You can't have hyperinflation without inflating wages. Raises aren't likely. Pink slips certainly are.
So what do you get when you run out of people who can buy your goods and services?
Agree about the coin toss. Also, the worst thing that could happen to the Fed is that they cut and the market continues down. That would pretty much define the beginning of a liquidity trap.
Re WaMu merger: I can't wrap my head around who they pair it off with, esp with WB in the wings. WFC is at least suitable, but there's a log of overlap I think.
Anyway, I'm too stupid to solve this problem. I leave it to Sheila, that's how she earns her keep.
"Mark Zandi on PBS says US is triple A and will always be triple A."
I agree. Not because we have strong economic fundamentals but we have the hammer of the world's strongest military force.
We may be running a global protection racket however to maintain the AAA.
How Asia see us, from the Asia Times:
Asia Times Online :: Asian news and current affairs
"I think a liquidity trap and deflation are the bigger concerns at this point. I think we're headed for Japanese style stagnation."
ABSOLUTELY, UNLESS THEY START THE PRESSES.
hahahahaha
classifieds - craigslist
Re: inflation. A lot money has gone to heaven, but there is still a lot of money sloshing around in the system and more gushing from the virtual presses. You're going to see a bunch of cash going somewhere - perhaps not hyperinflation, because wages are not going up any time soon. But something is going to inflate big time.
I think JPM buys Washington Mutual, this will also give them a strong west coast presence.
Thank you dk.
all right,,the death pool says WM this weekend,,I think before that..
"the world's strongest military force"
with only a few hundred arabic speakers...
how about, "the world's most expensive toys... paid for with debt borrowed from the people they're pointed at"
BB, oil is down because since the beginning of year speculators dumped about 60 bil into contracts. Now as of last week 40Bil has come. Expect more of the same with problems with IB.
Still gas is way up bc of IKE. Also, I do not expect big oil to reduce the retail prices much, nor to I think that those who have raised prices to decrease them. Better to take the extra profit.
All bets could be off, as the R's desperate to get McSame elected drive down the price of gas before the election.
I'm raising my target on the S&P to 1600 and increasing earnings by 20%. I'm very bullish on the US economy. It's a supertanker that won't slow down. I particularly like GM, WM, and S&M.
Abby
Chase would make perfect sense. I'd say the deal is 95% certain.
Ok, economic brainiacs,
I am not sure why I believe this but I think bonds will be important soon.
?
AIG borrows against their clients money that is on deposit with them. They lose it. The CEO gets a bonus but the clients lose pensions? General Life money?
Why is AIG so important? Their an insurance company. Can't Allstate do what they do?
WAMU, can't the gov just ignore them indefinetly? As long as your direct deposit is there and the employees get paid, whats the big deal?
I am not being funny, maybe dumb, but not funny.
Plus, why is this like being a kid again? You know there is stuff lurking out there that you can't see. Yet you know it can eat you if you don't make it to the light switch in time.
"AJ Cohen writes: "
I needed it, thank you.
Thank you Abbey!
given that Abbey is so smart I will reiterate:
YEARNING TO LEARN IS STILL A WILLING COUNTERPARTY TO LEHMAN ACROSS ALL BUSINESSES.
Oh, and to WaMu too.
sm_landlord, theory holds that inflation is driven by wages. Not a good theory for today, witness asset inflation. Think real estate bubble, commodities, stock market, health care.
Lots of inflation around with out wage increases. Also, devaluation of the $ by 40% under Bush has driven inflation.
This not the inflation of the 70's.
The Fed will cut. Perhaps not tomorrow but it is a sure fire way to help the banks recapitalize...They can't raise capital but they can grow it bit by bit.
Inflationary? Of course.
Why is AIG so important?
because of their CDS profile. they have such a large CDS position that them going down takes down a lot of folk (EVERYBODY is a counterparty to AIG in a big way)
As for WaMu:
they don't have the cash that they need. A lot of their "cash" is the so called "income derived from interest accrued on negative amortisation from Option Arms" (around $350b last quarter).
in other words, the cash they have is an IOU from bankrupt homeowners not paying on their option arms.
they need liquidity to continue, but nobody's gonna give it to them because they're insolvent in a major way.
1 business destination: BAC, largest bank/brokerage in the world..
Lest I forget
Fitch = Tounces the driving cat!
"This not the inflation of the 70's."
maybe it is only it is the LATIN AMERICAN inflaton of the 70s!
an economy marked by severe and growing social inequality, based on tourism, agricultural commodities and money laundering...
U - S - A! U - S- A!
QUE VIVA SARAH!
Nova, lets not forget all of the annuities, life insurance policies and health insurance policies. If they go under it will have a huge effect on main street.
Answer me this...what good would a rate cut do at this point if the FED can't even maintain the effective rate at the current 2% target? Seems to define pushing on a string, no?
increase exports,,,,a little
If the Fed cuts, it will be seen as desperation. Markets will correct accordingly or at best won't be affected at all, considering that liquidity is not the issue nor has been.
got CNBC World?
Fed funds traded at 6% but not for long.
Yes, they are pushing on a string. At some point they will use a broom.
damondidit writes:
Answer me this...what good would a rate cut do at ...
Maybe a small bump on the stock market. But it will not last and it will do not good.
The issue now is solvency. They are trying to reinflate the housing market. But it won't happen now that the game of selling bad paper in CDO's ect. is up.
I wonder if the Fed statement will say something like, "we foresee moderate growth continuing in the 3rd and 4th quarter as home prices stabilize and only a slight risk of inflation pressure....blah blah blah."
Or will they say something like:
"Get the fvck out! Everybody out! Troll in the dungeon!"
Thank you for your replies. I am going to look under the bed now.
OK.
Seriously, I just know enough to know that the world is in the process of changing in a major way.
Even more strange is that blogs, an idea that barely existed a few years ago, is my only source of news now.
bring out yer knives boys... the blood is flowing.... yer gots no choice... Joe6pac woke up today... an he's awful scared ....blood on the street tomorow ... rate cut be damned
You did realize, of course, that I was a pirate all along.
Standard & Poors Ratings Services said Monday afternoon that it had downgraded its long-term counter party credit rating on Bank of America Corp. (BAC: 26.55 -21.31%) to AA- from AA.
"At some point they will use a broom"
I was more thinking 'leafblower'. A really loud one.
Nova, blogs are better then the faux news hour nationally and the murder and mayhem hour locally.
Daily Affirmations:
The economy is strong and resilient.
Your elected leaders have your best interests at heart.
We value and protect freedom.
Real women have curves. (are fat)
I had to remove the one about real estate always going up.
Well, I do not think it will just be a rate cut.
And I seriously doubt we get a basic "monitoring market conditions closely" statement.
We will know soon enough.
" a strong west coast presence."
At this point wouldn't a thinking person want to be reducing their exposure to the West Coast if you were in what they used to call "banking"?
What are the two worst words you will ever want to hear?
Has the Fed statement ever been released largely redacted?
Were I Bernanke, I would recognize a lost cause when it was screaming at me, and I would save my bullets. But, he ain't me, and I ain't him.
"Bottom Dweller writes:
1st inning: Ended with Bear Stearns
2nd inning: Ended with Fannie/Freddie de-privitization
3rd inning: Ended with Lehman
Isn't it more like bottom of the 2nd?"
Baseball analogy can go only so far. You know that in baseball, the winning team can call it quit (mercy call), thus, a game can last 4 innings or 1 inning.
Cinch
OK,
For all of you glod and sliver bugs- there is no physical supply available right now at spot.
You wanna pay $3 over spot for any quantity and get on a list.
I was at the largest retail coin shop in Phoenix and it was a madhouse today with phones ringing off the hooks and the similar refrain.
Not available-no eagles- unless you want gold sovereigns, you can buy large bars, we can special order comex bars, no junk silver available at spot, you can get on the list to buy what comes in at the current markup we are charging.
Thank heaven i wanted collector type coins. That area was quiet like a tomb.
So buy CEF- they ain't no physical to be had in quantity during this panic, except at prices considerably over spot. BTW they were paying spot for stuff on the waiting list. Guess they took quite a bath riding down their inventory.
Someday this war's gonna end...
mr thinking person (Dr. N) you are right if you thought west coast prices were still going up!
I wouldnt cut rates,,i'd say,,"you were delt that hand,,,so play it and shut up".
Cinch,
Switch to soccer, it's becoming more popular and possession of the ball is more frequent.
Geopolitics of oil, war and the loss of the dollar as a global reserve currency are the main worries.
Things are definitely heating up judging by the news.
If this is only the bottom of the second then there's no way we make it the whole 9.
Anonymous writes:
President George W. Bush will make a statement after meeting with his Working Group on Financial Markets
JC! If only he would not try to make things right all the time.
How many more months of this Prez?
OTS now working on "revised" banking / accounting rules of course the Fed is in the working group
Barley, you got a link on the OTS thing?
Yearning to Learn yea but why now? Why the immediate panic? What happened? Were they trying to bet the float and it went wrong?
Can find a dam thing!
fix bayonets.......
Popeye,
I love soccer! But where is the analogies?
Cinch
tell me if I'm uncreative!
The Fed is largely politicized today. I am amazed how many times Paulson and Bernanke or Geithner stood shoulder to shoulder in this crises. Fed independence today is simply a pretense.
Therefore, the Fed will act in the interest of the treasury and cut rates because the market demands it. There is now genuine fear of a crash and IMO any tool to prevent that will be used.
mp
find it here:
Office of Thrift Supervision - Press Releases
Louie Sez writes:
fix bayonets.......
Yeah, no shit.
Barley, thanks.
If you don't think that a 500 point drop in the DOW has awakened Joe 6 Pack, then, you underestimate him. So far, the seismic changes have only been coming from the big big big players. But, now you have scared Joe - and yes, he's lazy and by 7PM on his way to another hang over - but he's becoming aware - and that's a big leg down.
Let it crash,,you can bet that when its over they will 'really be looking for someone to blame..
I always wanted to check out Argentina.
Never thought I could just stay right here and it would come to me.
Everybody got a pot and wooden spoon at the ready?
Regarding J6P, I doubt they've called their mutual funds to redeem yet. That will be the next phase.
I think dipsters buying tomorrow is too easy...rather we may have our first follow through day on the downside. Regardless of the so-called Turnaround Tuesday effect, which does seem to work more times than not, there are just too many visible events on the horizon for investors to be bargain hunting yet.
Anyone notice the Empire Mfg. Survey released today amid all the noise? Down 7.4 vs. +1.0 consensus. Much worse than expected. Industrial production down 1.10% as well. Unrelenting bad economic news will become the norm.
Bush Countdow
Cinch writes:
Popeye,
I love soccer! But where is the analogies?
Cinch
tell me if I'm uncreative!
Soccer is dangerous it could lead to witchcraf.
CNN.com - Page not found
"Everybody got a pot and wooden spoon at the ready?"
Currently, Conjure says, "This is 'it.'"
Hi Popeye, let me explain. I used to think my SSN check would be for pennies and my 401K would make my life all comfy. It's beginning to look like both checks will be for pennies. Shiny little electroplated zinc disks.
Oops:
200 days 12 hours and counting.
and yes, he's lazy and by 7PM on his way to another hang over
Hey, you're cutting a little close to the bone here. There's nothing wrong with being a lazy drunk.
Roubini's going off on PBS right now.
@Currently Smoking Cannabis: consider the upside-- the depression saw the end of prohibition, right? If history repeats itself, your drug of choice may well be legalized.
Midwest Product writes: There's nothing wrong with being a lazy drunk.
One persons lazy is another persons conservation of energy resources. DONT question my patriotism. I'm doing my part for our energy future.
HYPERINFLATION IS NOT POSSIBLE IN AMERICA TODAY.
Let me repeat that.
HYPERINFLATION IS NOT POSSIBLE IN AMERICA TODAY.
Consider the average white-collar worker, toiling away in her cube writing her next Powerpoint presentation. Does she go to her boss and ask for a raise from $75k to $750k? Of course not.
Does the hapless waiter who is also looking to be America's Next Top Something ask his boss for a raise from $35k to $350k? Of course not.
Because that just doesn't happen in America anymore. With the level of hypercompetitiveness that the American job market has these days, and with HR and Corp Finance departments these days, you get up to a certain percentage raise each year, bing bang boom, that's it.
What we are going to see is a return of good old 70s-style stagflation. $35k waiter is going to have to get three of his buddies to be roommates so they can afford their apartment, car payment, insurance, gas, food, and cable bill. Ultimately the price of those six items will make or break the American economy.
Hyperinflation only works in an economy where you don't have Monster.com. "You want a 30% raise, Johnson? (Three mouse clicks) How about I go hire this guy who is desperately looking for work, and is willing to do your job for 10% less?"
Not quite Mark- you can also have argentina- inflation with no jobs.
Ask them.
Mark:
..or the FED & Treasury Co. can just keep the stimulus coming, how many 150B does it take before hyperinflation?
Money for nothing and Zimbabwe for free.
For the MBAs who chose Finance or Consumer Packaged Goods Marketing as their concentrations, are there going to be cramdowns on student loans?
$60k is a lot of money to a Wal*Mart greeter.
If they had just applied this rating to the crap WaMu was peddling to Wall Street 5 years ago, we would just be talking about Tina Fey on SNL.
I like how the cable bill is now in the American list of necessities.
Gotta have my Oprah!
BW, they got the ratings they were "paying" for from the rating companies.
No hyperinflation this cycle. Looks more like England in the 60's 70's.
Just my 2 bits.
kind of like the desperate housewife, upon being handed a bill from the plumber.
You've been paid!
A Fed cut? No justification at all that I can see. There is not a shred of evidence that it did any good for the housing business and we've had low rates moving right into the current crunches and nothing, anywhere, is constrained by rates. Banks can't increase their profit stream if they cannot lend out the other end... and they can't. So a cut would be pointless. On that basis, I think they will cut.
A.M. Best = Tounces the driving cat!
Toonces without a cause
YouTube - Toonces without a cause
Thanks, Doc!
You're welcome! Just ..one more quick one:
Toonces drives a lawnmower
YouTube - Lawn Mower
CSC,
Re cramdowns:
You probably know this, but student loans are almost impossible to lose or modify in bankruptcy. Income tax liens and child support are worse. Not much else is.
So, no, barring a huge change in the law. Sez I as I continue to pre-pay and deny these fools their projected interest as much as possible.
Wow,
Just saw the 10yr treasury on the tape at 3.39%. Looks like and interesting opening tomorrow if this holds.
Regarding WaMu, capitalized interest recognized in earnings that resulted from negative amortization within the Option ARM portfolio has been declining from a peak of $361 million (March 31, 2007) to $255 million (June 30, 2008) in their last report. This can be either: a positive indicator (less neg. am. happening) or a negative indicator (more defaults happening).
For the past few years, a 6 pack of Sierra Nevada has been $10.00 at the two local KwikE marts in my neighborhood. Then inflation set in. One wanted $10.50, the other $10.75. Back to $10 even now. Perhaps I could grow to like inflation.
"be looking for someone to blame"
Personal pet peeve - calling it something it is not!
This is a Bad Lending and easy Money problem accelerated by greed and sharp money managers. It is not a housing problem. Housing was just the catalyst and now the visible bulls-eye.
I'm thinking of changing my tune on the inflation business. Hyperinflation requires the central bank monetize the governmental budget and that's not going to happen. However, if this gets much worse, the Fed runs out of assets and the only way to keep widening the windows will be to print money, ie monetize the bad debt. That will cause a massive but temporary inflation, similar in effect to a currency devalution. This will fix the underlying problem of overvalued assets by depreciating all monetary values. Essentially all financial institutions will go out of business because of deposit rates will soar while all the old loans remain at low interest rates. Inflationary depression.
FE,
You've been over at iTulip haven't you. We're in the the KA of KA-BOOM at the moment. BOOM will come.
cnbc just said aig got downgraded to A-...still on negative credit watch...cnbc said this was the equivalent to a "financial atomic bomb"
For all of you "inflationists" out there, eat crow
http://www.ntrs.com/popups/popup_noprint.html?http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0809/document/us0908.pdf
I just came back from Wamu in Marysville. There were a lot of people there, but I'm pretty sure they were all there depositing checks. And there were a fair number of employees. Probably more employees than I've ever seen at a Wamu.
I had been thinking for quite a while of closing our accounts at wamu. I decided to take out half of them. And we had a checking account that had only a couple hundred dollars and has been relatively inactive for the past month.
Anyhow, when I went to close my account, I was asked why. I know I could have said anything, but I made the mistake of saying that I didn't want to have to mess with the fdic. Whoops! Before the words came out, I had kind of imagined that the teller might sympathize with me. But instead she took it as a personal insult. (My bad.) She gave me a VERY stern lecture about how Washington Mutual wasn't going anywhere, how their branch just hired 3 new people and they were just opening up a new branch in Yuba City, and don't I know that our money was insured up to 200k, that WAMU was strong enough to weather the housing problem, and that it was people like me withdrawing their money based on "rumors" going around today that could really put their bank out of business....
In hindsight I wish I'd asked her what rumors she was refering to. I've been concerned about having money with wamu for a year now. Now WM is less than $2 a share. And the housing crash still has a ways to go.
I turned red, regretful that I didn't make up some excuse like "we need the money to avoid foreclosing." A higher up that had to sign some stuff also tried to give me a lesson on fdic insurance. As she handed me my checks and cash, she gave me a brochure about the FDIC, rolled her eyes, and said: "You can read this, (tsk) if you want to actually read something that explains how FDIC works." I felt kind of bad, but after I left I thought, "Sheesh it's my money. She has no right getting pissy at me. She should be thanking me for ever putting my money in their bank in the first place!"
so I'm a WaMu banking customer, should I be closing out my account?!?!
I know checking and savings are insured, but still. not sure how much i trust anything beyond a chunk of gold at this point..