TJ - I wonder if it's holding up because the peons CAN'T sell. I haven't been able to access my account on Etrade all morning (I can log in but can't get to my account info or trading screens).
he expects the rest of 2008 and most of 2009 to be tough for financial services.
Winnah winnah chicken dinnah for most underrated statement so far. In other news, I'm having some difficulty getting a date with Jess Alba and it's a little damp in Galveston right now.
"Google search finds seafaring solution
Murad Ahmed, Technology Reporter
Graphic: how Google's databarges will work
Google may take its battle for global domination to the high seas with the launch of its own computer navy.
The company is considering deploying the supercomputers necessary to operate its internet search engines on barges anchored up to seven miles (11km) offshore."
Maybe Wallstreet can do the same thing? (Once again, I have trouble discerning real news from that of the Onion.)
Seems the market is more resilient than some skeptics. No circuit breakers today.
Yeah, the problem is the government also puts a bid under these markets (via the Federal Reserve and bailouts, not the PPT).
It causes a complete breakdown of market discipline. At some point we might wake up and find our markets completely useless because we never allowed them to accurately price in economic and financial problems.
The purpose of markets are to value assets. Not to manage the economy by convincing people that things are better than they really are.
I'm angry too - and very bearish on my bets - but we are angry about different things. My anger flows from the proposition that the market seems to have disassociated itself from economic reality.
.... and I'm not at all sure what to make of it.
So far, it's early. As Nemo pointed out, the market could swing 1000 points either way TODAY. So, I'm going to put my patience hat on and pray for sanity.
he also said that we've had a Golden Era in Banking....probably referring to bonuses rather thab share price right enough....The front of these guys makes me queazy, this was a deal shoved together over the weekend. Yet they discuss it openly in terms of strategy. All that was missing was a "Mission Accomplished banner"...
ac writes: "At some point we might wake up and find our markets completely useless because we never allowed them to accurately price in economic and financial problems."
Kudlow is a shill. The fannie & freddie bailouts along with the alphabet soup facilities are the biggest bailouts in history. Thed beneficiaries - wall street firms. Absent those, all investment banks would have disappeared. And the likes of Bill Gross would be exposed as pretenders.
Anyone who has listened to Kudlow over the past decade has lost purchasing power.
The sooner these charlatans are discredited, the better.
ISLAMABAD (Reuters) - Firing by Pakistani troops forced two U.S. military helicopters to turn back to Afghanistan after they crossed into Pakistani territory early on Monday, Pakistani security officials said
"The purpose of markets are to value assets. Not to manage the economy by convincing people that things are better than they really are."
Absolutely and I fully expect that to happen over the next couple of years. The US deserves everything it has coming to it including the loss of the world reserve currency and the death of the empire.
The purpose of markets are to value assets. Not to manage the economy by convincing people that things are better than they really are.
I've had the experience of being in a fixed poker game. I walked out on that one. I can walk away from the market too. But, I'm going to be patient for a while longer.
well, I think the real trouble will come when majority people will realize that FED & Treasury are not as powerful in the preventing the meltdown as they thought.
for the moment, (till next friday) the worst might be over...or not
So when does this really affect consumers? (i.e. when do credit card limits get cut, or when do people start getting denied credit cards?) I havent seen or heard of that happening yet.
Max writes:
Don't forget, the Chinese are now making equity plays.
Max, as a matter of fact, that is my explanation of TGT. I don't really buy the notion that it's chart for the past two months suggests a bet on retail trade down. They are being bought by the folks who make the goods they sell - or that's my guess anyway.
stealth...it's been a slow ratcheting back so far. Higher down payments, marginal buyers cut out, helocs rescinded...and it is ongoing. Each time events like this weekend happen, more money is diverted from lending purposes to balance sheet propping.
Like I've been saying, the "too big to fail mantra" is nonsense.
People need to understand that bailouts don't solve problems, they merely relocate them. If you bailout people that aren't contrite you merely reinforce the behavior you had to bailout to begin with and create an assembly line of destructive behavior.
And if you relocate enough problems to the US government via bailouts then you simply run the risk of having the US government collapse.
Any time you say "too big to fail" you increase the odds of having the biggest failure of all.
The focus on price and not value is what got us into this mess.
The shills on CNBC and, more generally, all of wall street can't grasp the concept of value.
Wall street does understand marketing though. And with the help of the fed & congress, wall street has been remarkably successful in separating fools from their money.
Here's the gig America - by defintion wall street is NEGATIVE ALFA.
I don't see every post on every thread but I am surprised to see the Kudlow name pop up as infrequently as it does. To me this guy is the very definition of what is wrong. I loathe him with a passion that is unreasonable considering I have never met the man. He is a complete moron and seemingly has no ability to adapt to the realities of how bad things really are.
KEN LEWIS: You could probably look back and say, I would think, that we've gone through a golden era of banking and financial services in general
The golden age of deregulation, you mean. Yes, it's coming to an end you moron, it never works!
Just saw McCain reading off his 3x5 cards. "We'll clean up Wall St." Really? Reregulating these things tends to piss off the lobbyists running your campaign.
Wow, that was a Golden Age of banking? I could not think of a better statement to slap the face of the entire financial world after make statements like, "This is a once in a 100 year occurence," or, "This is a six sigma event." Not a lot of regret or corporate responsibility in a Golden Era of Banking... just unfortunate that it turned out this way, I guess. Whocouldaknowed?
Hey, Roubini said that when Lehman sent under we'd have systemic failure. Where's our systemic failure? Is tomorrow systemic failure day?
MiTurn | 09.15.08 - 11:15 am | #
The DeathStar is orbiting the planet and the next institution will be in firing range in 17 minutes.
size is going to matter, so the ability to have a diversified stream of earnings, the ability to maintain high degrees of funding certainty are going to continue to be very important.
Yeah, if an investor wants diversity he's not going to put all his eggs in the BofA basket. Size will be important - meaning you'd be a fool to put all your money in an outfit "too big to fail."
Popeye writes:
"The purpose of markets are to value assets. Not to manage the economy by convincing people that things are better than they really are.
I've had the experience of being in a fixed poker game. I walked out on that one. I can walk away from the market too. But, I'm going to be patient for a while longer."
I don't think the stock market values assets. Too many people behind the curtain pulling strings the Hedgies and the PPT. Between the two the market is way too sticky. I've been looking at getting money out of the US, legally of course.
The market can do whatever it wants, but just on fundamentals like P/E ratios, declining industrial production and the end of the consumer spending era it should be dropping like a rock. Add in the consequences of a burst credit bubble, Fannie and Freddie, Bear Stearns, LEH, Merrill, AIG, WaMu...
What the credit crisis gives, it also takes away. Bond giant Pimco was a huge winner on the Fannie/Freddie rescue, but Bloomberg reports that it did not fare so well with Lehman.
SEC threateend the short sellers this am with bring back the rule. Fed taking equity now. Options expiratioon friday. A dangerous brew to be short regardless of fundamentals. Oh yeah and meeting tomorrow for Fed. The volumes will be light as the troops mass at the gates.
wally writes:
The market can do whatever it wants, but just on fundamentals like P/E ratios, declining industrial production and the end of the consumer spending era it should be dropping like a rock. Add in the consequences of a burst credit bubble, Fannie and Freddie, Bear Stearns, LEH, Merrill, AIG, WaMu...
Popeye responds: As my niece would say "zeh zactly" It simply doesn't add up and sum.
I am committed to working with regulators and policymakers - including Congress - to take necessary and appropriate steps to maintain the stability and orderliness of our financial markets.
Not necessarily up...it's disconcerting that we've trended up since the open, but digestion of what this really means, post ridiculous spin by McCain, Bush, Lewis, et al, will take some time. Most of us here last night knew that the MER BAC deal was the firewall that had to be built quickly. They will make that turd look as shiny as possible today, but Im sure Kennyboy would have liked to get into IB in a different way. Buying this giant papered over infection that is MER can only happen with a big fat FED gun at your head, no matter how you deny it.
Europe's markets and what was open in Asia down 3-4%. USA about 2%. PsychOps, headfakes, illegal manipulation, presumption upon future earnings of citizenry? Priceless
Pitchforks,Torches&Pikes World writes:
"Friday is Talk Like A Pirate Day.Maybe we could have Systemic Failure Day and Talk Like A Pirate Day at the same time"
Okay, then Friday is systemic failure day. How do I dress, matey?
Sorry guys this is very long but it is how I see it.
\tFINANCIAL INSOLVENCY AND DEREGULATION\t\t
In 2004, the US SEC deregulated the leverage rules for investment banks. What had been regulated at 10-15 to 1, was eliminated. The investment banks then levered up to 30-1 and perhaps higher. When the crises broke, it was compounded by the high leverage. For every dollar lost, 30 dollars of leverage fell.
Next within the last few years the stock exchange eliminated the uptick rule. Again damaging the system.
To further encourage speculation in the markets taxes were lowered on capital gains. Many of the hedge fund managers now pay virtually no income tax by claiming that their earnings are in the form of a capital gain.
Instead of money creating production jobs in the economy, the tax benefit to the rich went into creating dividends and cap gains as they invested in the stock markets. History proves that these tax incentives always produce the same effect. Witness the tax structure before the Great Depression.
Again, the unregulated derivatives' market has helped create this mess. Instead of allowing Bear Sterns to file for bankruptcy it was bailed by the US taxpayer. All because it was too big to fail in part because of the counter party risk.
Also, the short sellers have run wild by trading naked shorts. Again, no regulation.
Hedge funds account for 40% of the market trades on any given day and yet they are not substantially regulated. Imagine the consequences of such action.
Profits of the few have overwhelmed the financial system created for the benefit of the many.
Next, the GAAP and FSAB have rules that encourage manipulation of assets on a company's balance sheet. A typical problem is company assets that are marked to model. That is computer model, not marked to market. Debts and investments can be moved off the books of a company in SIV or SPE. No transparency and certainly adverse accounting. When a crisis occurs, this too rapidly unwinds.
A company with what had appeared to be a strong balance sheet finds that mark to model was, in fact, based on little more than fantasy when these assets are sold into the market to raise capital. Thus, their ratio of assets to liabilities rapidly diminishes causing potential insolvency.
As the unwinding of the credit bubble continues, and it will, it may look like a Cat-5 Hurricane. Basel II will not settle or calm the markets. Strong regulation is needed.
We are now looking at a Cat-5 financial crises based on the Republican deregulation and free market principles. Corporate America has substituted debt and leverage for real earnings, and looks into the face of insolvency. The majority of America workers now face insolvency as their wages have stagnated and their consumption was fueled with debt. Debt was substituted for income.
I am pretty amazed about all of this. I do believe that MER needed someone to take them over, as going to the world for more capital over and over again wasn't going to work. The day of reconning is coming closer for the others, as I believe now that BAC has MER and LEH has gone the way of the dinosaur that Goldman Sachs and Morgan Stanley are going to have to start admitting what they have on their books. I have seen figures for level 3 assets at all of these firms, which are assets marked to fiction or fantasy and not to reality. I don't believe these entities were set up to act as pass throughs like mutual funds, insurance companies are actual banks and keeping evergreen assets on their books goes against all the accounting principals I learned. Robert Prechter, a guy people like to pick on because he was early in predicing this stuff, pretty much described the day we are looking at here.
My best analysis might be flawed, but where does BAC come up with $50 billion to buy MER and what do they have left once the negative net worth of MER and CFC come to the top of the water? I find it highly doubtful that BAC had $100 billion in real worth at the peak of the market, so the acquirer themselves might be soon in the boat of LEH and AIG. I am also skeptical of 10 insolvents writing $7 billion checks for a fund to bail out themselves. Lets see if any of them actually write the check and if so, is it going to be honored?
AIG is either going under today or this is the greatest buying opportunity in my lifetime? Someone tell me why I should not gobble up a few shares here??
Regardless of political views, let's give Bush a little credit this weekend. It has been basically Armageddon weekend: Ike hits and since the govt botched Katrina they were focusing on making sure that response to Ike was better; North Korean dictator has stroke so suddenly Korean issue jumps up a few DEFCON levels; Pakistan govt is chaotic and we've got Pakistani forces shooting at our choppers; high tension with Russia re Georgia; plus financial meltdown. Not saying anyone should change political views. Just saying that any US administration would be hard pressed in dealing with a period of days where the description of "all hell is breaking loose" is perfectly appropriate.
RE AIG: pound those people into dust...that's a company that deserves liquidation. However, as numerous posters here have pointed out, the insurance cos are a gorilla that's been hiding in a corner until now.
This morning I wrote a check for $1824 to "United States Treasury" and put it in the mail for my third 2008 estimated tax payment. I am self employed. It was galling to think that this money I worked really hard for is going off to bail out people with huge personal fortunes or guarantee shit-for-assets banks. I want my money back.
Well, "they" clearly cannot allow the AIG situation to continue. However, saving the company does not necessarily mean saving the shareholders. Feel free to gamble, but realize it's a pure gamble.
I myself am going long XLF + short BAC at this juncture.
Fed can't backstop both WM and WB - which is the more logical choice? Is it just a footrace at this point to see which one hits the $2 mark first and needs help faster? Id think to short my own stock at this point and be the one that survives through its own near death.
SK, Paterson has been getting some great approval ratings by hammering on the poor economy and looking like he's in front of the crisis. I'm sure he wouldn't pass up this opportunity for the world.
I agree with essence of Ella...time to restore many regulations that were eliminated since 1992...I'm looking at Glass/Steagall
I agree with you in principle, but not unless some true pain is inflicted on the market. To agree with me, you have to have a vision of the extent to which "current buying power" was inflated by the 'shadow banking system' - which was the product of the effective repeal of Glass/Steagell.
First we need a return to reality. Only then can we consider adopting a sane view.
My bottom line is that we - to heck with you - I have money bet. It's not a serious part of my net worth, but it's my money bet. I acknowledge that it took 10 years to fully wind up to this point, and I don't expect immediate results. But, it needs to be an honest game.
"Gas on the other hand should be skyrocketing at least short term contracts"
All these clowns are selling everything they have to get cash and hedge funds lines of credit are being called in and the carry trade is being unwound. That is what happens in this environment, you oil bulls are going to get you asses handed to you.
ot paying taxes early = massive penalties and interest. finding way around = high accounting costs that negate the benefit for me. best solution, pay smallest amount to keep them off my back.
Fiduciary responsibility is a myth. That's why decisions that look dumb or short-sighted are so mysterious.
If my and my golfing buddies can get so wealthy that our families will never have to wash a dish till the end of time, what do I care if the rest of you get ruined? What do I care if the country goes bust? What do I care?
Is it really so shocking to think that a bunch of men put themselves and their families ahead of fairness, country, the markets, or a law that will never be enforced on them?
Dream on. When you realize they were playing for themselves, the myopia and recklessness looks a lot more like cunning and greed.
not paying taxes early = massive penalties and interest. finding way around = high accounting costs that negate the benefit for me. best solution, pay smallest amount to keep them off my back.
Sorry to say it dude, but if you only need to pay $1824 a quarter to uncle sam, the penalties and interest aren't massive.
I get the feeling if(when) WaMu goes down it may be both JPM & Wells picking the carcass clean; Reason is that WaMu's footprint has desirable markets for each bank, but also a lot of overlap. Wells getting East coast branches and JPM getting West coast makes sense for both.
Remember BAC & JPM are the only banks(IIRC) who are check 21 certified, that extra days' float adds $15bn to their bottom line.
Fed can't backstop both WM and WB - which is the more logical choice? Is it just a footrace at this point to see which one hits the $2 mark first and needs help faster?
Would love to see Kudlow tackle this one (let alone the question of Citi, Goldman, etc). As far as I can tell from what I saw this morning, no one at CNBC seems to have any awareness that other banks are likely to fail. This is just one bad day, then everything will be fine again. Buy buy buy!
Would love to see Kudlow tackle this one (let alone the question of Citi, Goldman, etc). As far as I can tell from what I saw this morning, no one at CNBC seems to have any awareness that other banks are likely to fail. This is just one bad day, then everything will be fine again. Buy buy buy!
Midwest Product | 09.15.08 - 12:18 pm | #
Well I suspect Krudlow is paid to be a fool. CNBC knows that their audience consists of fools so they give them what they want.
Lewis also says "absolutely no pressure" from regulators to do Merrill merger
Making predictions is hard, especially about the future.
First? No way.
B of A is also publishing a book of squirrel recipes.
Rule #1 - Don't panic.
Rule #2 - If you're going to panic, panic first.
-Jaso
he expects the rest of 2008 and most of 2009 to be tough for financial services.
Well, shit, I guess that's why they made him the CEO. Clearly he's willing to go out on a limb and make the tough predictions.
Seems the market is more resilient than some skeptics. No circuit breakers today.
It's a great time to buy stocks!
(Sooner or later some of the perpetrators will be put in stocks at the square. There will be shortages. Suppliers will set the price.)
Seems the market is more resilient than some skeptics. No circuit breakers today.
MiTurn |
Heh.
Lewis:this is too important...we will be working on this for a long time.
What, like the 2 days it took to put the shotgun marriage together?
WAAAAAAAAAMOOOOOOOOOOOO?
Come home.
Lewis expects the economy to recover in the 2nd half of 2009...
Ohhhhhh, that 2nd half recovery. LoL.
It is holding up rather well for now, isn't it?
IMO the 2nd half 2009 recovery prediction will fare as well as the 2nd half 2008 recovery.
Adult diaper sales and Val-U-Rite vodka ( in the convenient plastic pints) went pretty well this morning.
Life goes on. Like I've been saying, the "too big to fail mantra" is nonsense.
Bear Stearns should have been allowed to fail. There was no need for fed intervention or guarantees. If bondholders take haircuts so be it.
Same thing with FNM & FRE. Let the "investors" take their haircuts. The productive economy has donated enough to the financial community.
Why can't people see this?
If Ken Lewis is buying.......I'm selling
TJ - I wonder if it's holding up because the peons CAN'T sell. I haven't been able to access my account on Etrade all morning (I can log in but can't get to my account info or trading screens).
Angry,
because the folks who hold the chips speak chinese and play majong instead of the US market
Anybody seen the most recent S&P earnings estimates, especially financials and energy? Look a little frothy to me. What say you?
http:// www2.standardandpoors.com...,0,0,0,0,0.html
Tough, you mean like a nice steak that you left on the grill for say, um, a few hours while you hung out with CSC and just plain forgot it was there?
Anybody seen the most recent S&P earnings estimates, especially financials and energy? Look a little frothy to me. What say you?
http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_500/2,3,2,2,0,0,0,0,0,1,6,0,0,0,0,0.html
I had a high school geometry teacher who looked like Lewis. That guy just screamed at us for a whole year. I was happy to get a C.
WM: -15%
ETFC: -9%
WB: -11%
C: -7%
IMO the 2nd half 2009 recovery prediction will fare as well as the 2nd half 2008 recovery.
Add one additional half for each failed bank?
Busniess will be slow and this did not stop BofA from paying top dollar for MER.
These are the same people who pissed away $2B buying countrywide shares at $18.
he expects the rest of 2008 and most of 2009 to be tough for financial services.
Winnah winnah chicken dinnah for most underrated statement so far. In other news, I'm having some difficulty getting a date with Jess Alba and it's a little damp in Galveston right now.
We have a crisis allright. People can't take responsibility for their actions. Wealthy & poor.
Until THAT subsides and the bailout requests end, I'll continue to be a bear. And an angry bear at that.
The 2nd Half Recovery is still on! Bring back the punch Benny! Turn on the music. And let the mental recession wash away.
Google search finds seafaring solution - Times Online
"Google search finds seafaring solution
Murad Ahmed, Technology Reporter
Graphic: how Google's databarges will work
Google may take its battle for global domination to the high seas with the launch of its own computer navy.
The company is considering deploying the supercomputers necessary to operate its internet search engines on barges anchored up to seven miles (11km) offshore."
Maybe Wallstreet can do the same thing? (Once again, I have trouble discerning real news from that of the Onion.)
i am absolutely flabbergasted that the market is holding up as well as it is.
in other news, i had no idea flabbergasted had two B's.
Seems the market is more resilient than some skeptics. No circuit breakers today.
Yeah, the problem is the government also puts a bid under these markets (via the Federal Reserve and bailouts, not the PPT).
It causes a complete breakdown of market discipline. At some point we might wake up and find our markets completely useless because we never allowed them to accurately price in economic and financial problems.
The purpose of markets are to value assets. Not to manage the economy by convincing people that things are better than they really are.
Manic Monday. A lot of panic and fear. Don't worry be happy. Bush and the PPT will save the markets.
kadomount,
Change to ThinkorSwim.
I'm angry too - and very bearish on my bets - but we are angry about different things. My anger flows from the proposition that the market seems to have disassociated itself from economic reality.
.... and I'm not at all sure what to make of it.
So far, it's early. As Nemo pointed out, the market could swing 1000 points either way TODAY. So, I'm going to put my patience hat on and pray for sanity.
AIG off only 44% - did they get the Fed Check?
he also said that we've had a Golden Era in Banking....probably referring to bonuses rather thab share price right enough....The front of these guys makes me queazy, this was a deal shoved together over the weekend. Yet they discuss it openly in terms of strategy. All that was missing was a "Mission Accomplished banner"...
ac writes: "At some point we might wake up and find our markets completely useless because we never allowed them to accurately price in economic and financial problems."
Sounds like the GDP and inflation numbers.
because the folks who hold the chips speak chinese and play majong instead of the US market
mahjong is all about accumulating perfect patterns, but being ready to drop trash if the oppo looks like costing you money
ibs seem to be favouring the latter in a bad run, as ya hafta
Kudlow is a shill. The fannie & freddie bailouts along with the alphabet soup facilities are the biggest bailouts in history. Thed beneficiaries - wall street firms. Absent those, all investment banks would have disappeared. And the likes of Bill Gross would be exposed as pretenders.
Anyone who has listened to Kudlow over the past decade has lost purchasing power.
The sooner these charlatans are discredited, the better.
Buffet now mentioned in AIG situation ....FFS, its like groundhogday
If this is a 2nd half recovery, I'd hate to see a crisis.
i am absolutely flabbergasted that the market is holding up as well as it is.
The Dow is too big to fail.
Nemo & Anon from previous thread.
Thanks for the info. Makes a little more sense now.
And now, back to life or my wife will kill me.
Gotta give props to Ken Murray of Blue Investment Planet for his call when BSC went down that it wasn't over.
(not connected to Murray or Blue Planet)
Kudlow says this mess is all the fault of Sarbanes-Oxley.
I figgure AC and I were typing at the same time. He's just more articulate than I am {among other things}.
Pakistan troop fire turns back U.S. helicopters
Pakistan says troop fire turns U.S. helicopters back
| Reuters
ISLAMABAD (Reuters) - Firing by Pakistani troops forced two U.S. military helicopters to turn back to Afghanistan after they crossed into Pakistani territory early on Monday, Pakistani security officials said
What was I supposed to do with that bazooka up my butt?
Shut up, Horatio!
Fun day eh.
Ross
"The purpose of markets are to value assets. Not to manage the economy by convincing people that things are better than they really are."
Absolutely and I fully expect that to happen over the next couple of years. The US deserves everything it has coming to it including the loss of the world reserve currency and the death of the empire.
i think its one of them iraq terror cells that i saw on the tee vee that been doing all this.
Did John Thain reiterate he saw no need to raise any capital?
Is this capitulation?
"crisis deepens"...so Dow is going up from where it started. You can sure tell that the bullfoolishness is still alive and well. No bottom in sight.
My guess is that investors are front running news from Bush and Paulson that should goose the markets.
The purpose of markets are to value assets. Not to manage the economy by convincing people that things are better than they really are.
I've had the experience of being in a fixed poker game. I walked out on that one. I can walk away from the market too. But, I'm going to be patient for a while longer.
yup...it's as if no one out there realizes how much more credit access for US consumers just got the life strangled out of it.
well, I think the real trouble will come when majority people will realize that FED & Treasury are not as powerful in the preventing the meltdown as they thought.
for the moment, (till next friday) the worst might be over...or not
"Uncle Ar writes:
Kudlow says this mess is all the fault of Sarbanes-Oxley."
I almost fell out of my chair with laughter over that one when it came out of his mouth.
We've broken the 600 visitors online barrier.
Everyone knows what that means.
Don't forget, the Chinese are now making equity plays. Pay no attention to the men behind the Whitehouse curtain.
So when does this really affect consumers? (i.e. when do credit card limits get cut, or when do people start getting denied credit cards?) I havent seen or heard of that happening yet.
is it to early to call
UP ON THE DAY!!
Max writes:
Don't forget, the Chinese are now making equity plays.
Max, as a matter of fact, that is my explanation of TGT. I don't really buy the notion that it's chart for the past two months suggests a bet on retail trade down. They are being bought by the folks who make the goods they sell - or that's my guess anyway.
Dont be surprised if the market is up 500 points today...
stealth...it's been a slow ratcheting back so far. Higher down payments, marginal buyers cut out, helocs rescinded...and it is ongoing. Each time events like this weekend happen, more money is diverted from lending purposes to balance sheet propping.
The DJIA is doing much better than many other global indices. Why?
Oh yeah....because we're holding the roof up with broomsticks till Uncle Nester emerges with the silverware and jewelry.
Then we out like a scout on a new route, Jack! Keep your heads down day traders; it helps the blade make a cleaner pass.
amazing stick save here..no other adjectives work as well...
I'm lking at skf and it was higher last week...
why invest into a fixed market...
rant off-need to head to reno for better odds...
Like I've been saying, the "too big to fail mantra" is nonsense.
People need to understand that bailouts don't solve problems, they merely relocate them. If you bailout people that aren't contrite you merely reinforce the behavior you had to bailout to begin with and create an assembly line of destructive behavior.
And if you relocate enough problems to the US government via bailouts then you simply run the risk of having the US government collapse.
Any time you say "too big to fail" you increase the odds of having the biggest failure of all.
Geoff....I understand mortgage lending, but what about credit card lending?
Commenters here say credit cards are/ or will be affected.
My question is...is there any evidence that credit card issuance, or limits have been cut back? Or is there any evidence that they will be.
Dont be surprised if the market is up 500 points today...
I reserve the right to be surprised. Because I will be.
It's important to reiterate:
this dow is not the same dow as in 2000-2002
The focus on price and not value is what got us into this mess.
The shills on CNBC and, more generally, all of wall street can't grasp the concept of value.
Wall street does understand marketing though. And with the help of the fed & congress, wall street has been remarkably successful in separating fools from their money.
Here's the gig America - by defintion wall street is NEGATIVE ALFA.
I don't see every post on every thread but I am surprised to see the Kudlow name pop up as infrequently as it does. To me this guy is the very definition of what is wrong. I loathe him with a passion that is unreasonable considering I have never met the man. He is a complete moron and seemingly has no ability to adapt to the realities of how bad things really are.
Hey, Roubini said that when Lehman sent under we'd have systemic failure. Where's our systemic failure? Is tomorrow systemic failure day?
If these guys get "any better at what they do" we are all in a lot of trouble.
Believer Jeff,
I've met the man and you, sir are correct.
I've got two old Bob Marley flags and a dirty glass pipe. Serious question:
tyia
KEN LEWIS: You could probably look back and say, I would think, that we've gone through a golden era of banking and financial services in general
The golden age of deregulation, you mean. Yes, it's coming to an end you moron, it never works!
Just saw McCain reading off his 3x5 cards. "We'll clean up Wall St." Really? Reregulating these things tends to piss off the lobbyists running your campaign.
BoA downgraded? is that true?
Systemic Failure Tuesday?
I can actually see MSNBC graphics and a theme jingle for this.
BAC downgrade by S&P and put on watch negative for further downgrades.
Boy oh boy, the fun hasn't even started. Where's AIG's announcement BTW?
LEH preferreds are getting killed...I wonder who holds this crap
Wow, that was a Golden Age of banking? I could not think of a better statement to slap the face of the entire financial world after make statements like, "This is a once in a 100 year occurence," or, "This is a six sigma event." Not a lot of regret or corporate responsibility in a Golden Era of Banking... just unfortunate that it turned out this way, I guess. Whocouldaknowed?
Lawrence Kudlow - Wikipedia, the free encyclopedia
According to wiki, Kudlow had a substance abuse problem - alcohol & cocaine.
Remember, Kudlow coined the term Goldilocks economy. He must live in a bunker and never talk to any real people.
popeye-
i have been having the same thoughts.
today has made me more fearful than at any other time in the markets.
i ~thought~ that maybe the cleansing process had started...appears the exact opposite is happening.
i am already 70% cash; seriously thinking about just selling it all (longs and shorts) and sitting the next couple years out.
Hey, Roubini said that when Lehman sent under we'd have systemic failure. Where's our systemic failure? Is tomorrow systemic failure day?
MiTurn | 09.15.08 - 11:15 am | #
The DeathStar is orbiting the planet and the next institution will be in firing range in 17 minutes.
It's amazing how these CEOs can lie straight face in interviews, too bad most of us can't do that.
The markets are not dumb, smell a selloff coming.
size is going to matter, so the ability to have a diversified stream of earnings, the ability to maintain high degrees of funding certainty are going to continue to be very important.
Yeah, if an investor wants diversity he's not going to put all his eggs in the BofA basket. Size will be important - meaning you'd be a fool to put all your money in an outfit "too big to fail."
The bigger they come, the harder they fall.
Anyone who believes a word either of these CEO's say is a Darwin Award Winner of the future.
So will BofA shuffle CW and MER bad debt into a "bad bank" and fail it?
With LEH and MER off the shorts list, what then about WM, WB, and DSL?
Enquiring minds want to know!
Popeye writes:
"The purpose of markets are to value assets. Not to manage the economy by convincing people that things are better than they really are.
I've had the experience of being in a fixed poker game. I walked out on that one. I can walk away from the market too. But, I'm going to be patient for a while longer."
I don't think the stock market values assets. Too many people behind the curtain pulling strings the Hedgies and the PPT. Between the two the market is way too sticky. I've been looking at getting money out of the US, legally of course.
We could have a write-in campaign asking Kudlow to be fired.
Wonder if Lewis got a wink on FF rates from Geithner to get this silly deal ?
Actually Kudlow is a decent sort of guy that got wrapped up in the power politics of DC.
He is a failed economist that found new life on entertainment bubblevision.
He may grate on you but that is exactly his job.
"Golden era of banking and financial services" And he's going to be the last one standing. Maybe he's referring to bonuses.
Red Banner on CNBC stating Dow Jones Industrials Hammered! But down only 200+change points.
BWAHAHAHAHAHA! Squeeze pens for the cattle. Brand and castrate, send to pasture, slaughter and feast months later.
Lewis starting to see the light.. of the freight train coming???
He looks worried and nervous in the interview.
blue bellied yankee writes:
Popeye writes:
The first part of what you gave me credit for belongs to AC. I'm not as articulate as he/she is.
The market can do whatever it wants, but just on fundamentals like P/E ratios, declining industrial production and the end of the consumer spending era it should be dropping like a rock. Add in the consequences of a burst credit bubble, Fannie and Freddie, Bear Stearns, LEH, Merrill, AIG, WaMu...
What the credit crisis gives, it also takes away. Bond giant Pimco was a huge winner on the Fannie/Freddie rescue, but Bloomberg reports that it did not fare so well with Lehman.
Their is justice!
And today the market will finish up.
I just don;t get it. I really don't.
SEC threateend the short sellers this am with bring back the rule. Fed taking equity now. Options expiratioon friday. A dangerous brew to be short regardless of fundamentals. Oh yeah and meeting tomorrow for Fed. The volumes will be light as the troops mass at the gates.
The once-in-a-century thing cracks me up. Does Greenspan not realize he is saying that this meltdown is worse than the Great Depression?
I'm sure Thain saw plenty of "synergy" with his recent purchase of MER stock plunging daily.
He is a POS...
But I'm sure he'll end up back in his old job as a "consultant"....
Ciao
MS
Wow. Lewis just said the investment bank model doesn't work. He just bought one at a premium. Ionesco, anyone.
wally writes:
The market can do whatever it wants, but just on fundamentals like P/E ratios, declining industrial production and the end of the consumer spending era it should be dropping like a rock. Add in the consequences of a burst credit bubble, Fannie and Freddie, Bear Stearns, LEH, Merrill, AIG, WaMu...
Popeye responds: As my niece would say "zeh zactly" It simply doesn't add up and sum.
I am committed to working with regulators and policymakers - including Congress - to take necessary and appropriate steps to maintain the stability and orderliness of our financial markets.
And I will decide what is appropriate.
Not necessarily up...it's disconcerting that we've trended up since the open, but digestion of what this really means, post ridiculous spin by McCain, Bush, Lewis, et al, will take some time. Most of us here last night knew that the MER BAC deal was the firewall that had to be built quickly. They will make that turd look as shiny as possible today, but Im sure Kennyboy would have liked to get into IB in a different way. Buying this giant papered over infection that is MER can only happen with a big fat FED gun at your head, no matter how you deny it.
Friday is Talk Like A Pirate Day.Maybe we could have Systemic Failure Day and Talk Like A Pirate Day at the same time. COMEDY GOLD!
Meanwhile at 70 Pine Street in lower Mnahattan:
[crickets]
you may fire when ready....
Europe's markets and what was open in Asia down 3-4%. USA about 2%. PsychOps, headfakes, illegal manipulation, presumption upon future earnings of citizenry? Priceless
Pitchforks,Torches&Pikes World writes:
"Friday is Talk Like A Pirate Day.Maybe we could have Systemic Failure Day and Talk Like A Pirate Day at the same time"
Okay, then Friday is systemic failure day. How do I dress, matey?
And today the market will finish up.
I just don;t get it. I really don't.
I'm sorry, I refuse to believe that the events of the past weekend are bullish.
If the market goes green, I will short the bejesus out of it.
Okay, then Friday is systemic failure day. How do I dress, matey?
Naked, of course.
I hope that both of their cellmates wear magnums.
"... and we're going to have to be better at what we do"
Gee. Ya think ??
@Pitchforks,Torches&Pikes World
I'd like a Lance, pike, oh and a chalice to drink blood from.
Angry Saver writes:
Lar...ki/ - Wikipedia, the free encyclopedia Larry_Kudlow
According to wiki, Kudlow had a substance abuse problem - alcohol & cocaine.
Has...
market no likey like "wouldnt seek WAMU" comment by Lewis.
Dougie Kass doesn't even realize total luck as he's too busy patting himself on the back.
Kass: I Nailed It on My MER Trade | Financial Advisor Update | Financial Articles & Investing News | TheStreet.com
Luck and nothing else...."So you know"
Ciao
MS
AIG cratering to new day lows. Couldnt happen to a nicer bunch.
Sorry guys this is very long but it is how I see it.
\tFINANCIAL INSOLVENCY AND DEREGULATION\t\t
In 2004, the US SEC deregulated the leverage rules for investment banks. What had been regulated at 10-15 to 1, was eliminated. The investment banks then levered up to 30-1 and perhaps higher. When the crises broke, it was compounded by the high leverage. For every dollar lost, 30 dollars of leverage fell.
Next within the last few years the stock exchange eliminated the uptick rule. Again damaging the system.
To further encourage speculation in the markets taxes were lowered on capital gains. Many of the hedge fund managers now pay virtually no income tax by claiming that their earnings are in the form of a capital gain.
Instead of money creating production jobs in the economy, the tax benefit to the rich went into creating dividends and cap gains as they invested in the stock markets. History proves that these tax incentives always produce the same effect. Witness the tax structure before the Great Depression.
Again, the unregulated derivatives' market has helped create this mess. Instead of allowing Bear Sterns to file for bankruptcy it was bailed by the US taxpayer. All because it was too big to fail in part because of the counter party risk.
Also, the short sellers have run wild by trading naked shorts. Again, no regulation.
Hedge funds account for 40% of the market trades on any given day and yet they are not substantially regulated. Imagine the consequences of such action.
Profits of the few have overwhelmed the financial system created for the benefit of the many.
Next, the GAAP and FSAB have rules that encourage manipulation of assets on a company's balance sheet. A typical problem is company assets that are marked to model. That is computer model, not marked to market. Debts and investments can be moved off the books of a company in SIV or SPE. No transparency and certainly adverse accounting. When a crisis occurs, this too rapidly unwinds.
A company with what had appeared to be a strong balance sheet finds that mark to model was, in fact, based on little more than fantasy when these assets are sold into the market to raise capital. Thus, their ratio of assets to liabilities rapidly diminishes causing potential insolvency.
As the unwinding of the credit bubble continues, and it will, it may look like a Cat-5 Hurricane. Basel II will not settle or calm the markets. Strong regulation is needed.
We are now looking at a Cat-5 financial crises based on the Republican deregulation and free market principles. Corporate America has substituted debt and leverage for real earnings, and looks into the face of insolvency. The majority of America workers now face insolvency as their wages have stagnated and their consumption was fueled with debt. Debt was substituted for income.
JP writes:
Okay, then Friday is systemic failure day. How do I dress, matey?
Naked, of course.
Popeye is ROTFL
I think you're only supposed to be naked if you're...uh...'long.'
That's why I always cover anyway.
AIG making new lows.... but darn, Dow tried to rally real bad.
I am pretty amazed about all of this. I do believe that MER needed someone to take them over, as going to the world for more capital over and over again wasn't going to work. The day of reconning is coming closer for the others, as I believe now that BAC has MER and LEH has gone the way of the dinosaur that Goldman Sachs and Morgan Stanley are going to have to start admitting what they have on their books. I have seen figures for level 3 assets at all of these firms, which are assets marked to fiction or fantasy and not to reality. I don't believe these entities were set up to act as pass throughs like mutual funds, insurance companies are actual banks and keeping evergreen assets on their books goes against all the accounting principals I learned. Robert Prechter, a guy people like to pick on because he was early in predicing this stuff, pretty much described the day we are looking at here.
My best analysis might be flawed, but where does BAC come up with $50 billion to buy MER and what do they have left once the negative net worth of MER and CFC come to the top of the water? I find it highly doubtful that BAC had $100 billion in real worth at the peak of the market, so the acquirer themselves might be soon in the boat of LEH and AIG. I am also skeptical of 10 insolvents writing $7 billion checks for a fund to bail out themselves. Lets see if any of them actually write the check and if so, is it going to be honored?
Ella, been there, done that. Got a link for you:
Chris Martenson | chapters - The Crash Course - chapters, Crash Course, Economy, Energy, environment, Peak Oil, videos
WB now is the crosshairs
mannfm11 --
My best analysis might be flawed, but where does BAC come up with $50 billion to buy MER
They don't; it is an all-stock transaction.
WB now is the crosshairs
Long overdue.
And LMAO to mahi's comeback.
And today the market will finish up.
I just don;t get it. I really don't.
You aren't supposed to get it. Get it now?
ella writes:
Sorry guys this is very long but it is how I see it.
FINANCIAL INSOLVENCY AND DEREGULATION\t
In 2004, the US SEC deregulated the leverage rules for investment banks. What had been regulated at 10-15 to 1, was eliminated.
Ella,
I'm going to re-read your post, but if will allow, the crux of the problem arose when they began to ignore 10-b-5
Has Our Fearless Leader spoken yet? Don't miince words, what, pray tell, did he have to add to our happy little party?
Had a sell order in on my Jan. BAC calls for this morning, gonna wait for the price to get hammered before I got back in for Feb 15 calls.
The Dow snapback would have carried to black if it wasn't for WB, WM and AIG all cratering simultaneously.
Too many corpses lashed onto this dinghy for it to remain afloat.
Bear, stearns was really a save for JPMorgan, and Merrill is the save for B of A.
AIG is either going under today or this is the greatest buying opportunity in my lifetime? Someone tell me why I should not gobble up a few shares here??
b/a on skf right now 123.20/122.50...
wierd stuff happening right now on xlf and skf...
Regardless of political views, let's give Bush a little credit this weekend. It has been basically Armageddon weekend: Ike hits and since the govt botched Katrina they were focusing on making sure that response to Ike was better; North Korean dictator has stroke so suddenly Korean issue jumps up a few DEFCON levels; Pakistan govt is chaotic and we've got Pakistani forces shooting at our choppers; high tension with Russia re Georgia; plus financial meltdown. Not saying anyone should change political views. Just saying that any US administration would be hard pressed in dealing with a period of days where the description of "all hell is breaking loose" is perfectly appropriate.
RE AIG: pound those people into dust...that's a company that deserves liquidation. However, as numerous posters here have pointed out, the insurance cos are a gorilla that's been hiding in a corner until now.
sounds like Japan in the 1990's and we were so proud that we weren't like them. As the ancient Greeks said "hubris comes before the fall"
Ella - your comment was so well written and cogent, I actually saved it to my word processor.
I don't offer compliments like that easily.
This morning I wrote a check for $1824 to "United States Treasury" and put it in the mail for my third 2008 estimated tax payment. I am self employed. It was galling to think that this money I worked really hard for is going off to bail out people with huge personal fortunes or guarantee shit-for-assets banks. I want my money back.
crispy&cole --
Well, "they" clearly cannot allow the AIG situation to continue. However, saving the company does not necessarily mean saving the shareholders. Feel free to gamble, but realize it's a pure gamble.
I myself am going long XLF + short BAC at this juncture.
Looks like AIG shoulda said YES PLEASE to that private equity offer yesterday.... Dow would be up 34 points by now.
Fed can't backstop both WM and WB - which is the more logical choice? Is it just a footrace at this point to see which one hits the $2 mark first and needs help faster? Id think to short my own stock at this point and be the one that survives through its own near death.
coldhardcash-
Paying taxes early is not what I would call smart. Did it once and the "benefit" was virtually nil.
Never again....each time they bailout something my expenses increase as well
Ciao
MS
Geez, into the 4s with AIG.
Citi getting hammered.
WB getting hammered.
Must be correlated to Bush's statement that "the markets are resilient"
Can't we just allow higher leverage, lower reserve requirements, and cheap loans direct to consumers?
I don't mean 'is this a good idea?"
I mean can we?
Or should we just start burying jars of cash around the country so the peeps can dig them up?
"WB raised to marketweight from Underperform by Morgan Keegan"
Gotta love that....
Ciao
MS
"sounds like Japan in the 1990's and we were so proud that we weren't like them."
We aren't like them. They have savings and we don't.
Hey, oil is down around $97...what's up with that? I thought shutting down 90% of Gulf of Mexico was bullish:)
I agree with essence of Ella...time to restore many regulations that were eliminated since 1992...I'm looking at Glass/Steagall.
IB's can go 100:1
Banks can loan 20:1
1% loans to Joe Sixer on sig loans.
And we're roaring again.
Astonishing how well BAC is holding up.
There is a mountain of hope here to slide down on.
AIG down to 4.39...OMG!!
No kidding?!
Remember, Kudlow coined the term Goldilocks economy. He must live in a bunker and never talk to any real people.
if your producers keep your dressing room supplied with coke.... you feel like it was a goldilocks economy also.
so AIG continues to tank - CNBC news ticker said that the NY governor Patterson would talk about AIG at 12 Eastern - thats 10 minutes away.
Why not Dinallo ?
The regulator for AIG would be the state so I guess the big cheese wants to be out there.. Any other ideas ?
-K
SK, Paterson has been getting some great approval ratings by hammering on the poor economy and looking like he's in front of the crisis. I'm sure he wouldn't pass up this opportunity for the world.
Some kind of criminal investigation?
oil should drop, there are millions of barrels not being used by refineries that are shut down.
Gas on the other hand should be skyrocketing at least short term contracts
The spread should be blowing up right now.
Maybe the governor's parents are with AIG...
Actually, that should be an interesting conversation.
"Hey, AIG. How's it going?"
"Fine, fine."
"Good, good... No, seriously. HOW. IS. IT. GO. ING."
WB complete free fall right now.
McCain says "fundamentals of economy are still very strong"
God almighty, this man cannot be president.
say goodnight AIG.
NY Governor webcast link
Not live yet.
If anyone is looking for AIG she's behind the wood shed.
4.22...somebody knows something.
Has a member of the Dow every gone bankrupt? I don't think has ever happened.
OT:
I don't understand why the dollar is holding up so well. Does anybody have a plausible explanation?
3.99...where is my bunker!
wow looks like WB trades aren't even clearing, it's gone straight down.
AIG oct5p's
GH
Kung Fu Panda writes:
I agree with essence of Ella...time to restore many regulations that were eliminated since 1992...I'm looking at Glass/Steagall
I agree with you in principle, but not unless some true pain is inflicted on the market. To agree with me, you have to have a vision of the extent to which "current buying power" was inflated by the 'shadow banking system' - which was the product of the effective repeal of Glass/Steagell.
First we need a return to reality. Only then can we consider adopting a sane view.
My bottom line is that we - to heck with you - I have money bet. It's not a serious part of my net worth, but it's my money bet. I acknowledge that it took 10 years to fully wind up to this point, and I don't expect immediate results. But, it needs to be an honest game.
AIG and WB out to the shed .....and C is following.
Ciao
MS
AIG now $3.70
Like I said, there's going to be a run on their policies unless the state puts their insurance companies into receivership.
There's people who have millions of dollars of cash value in AIG life insurance policies. And there's no backstop other than the company itself.
"Gas on the other hand should be skyrocketing at least short term contracts"
All these clowns are selling everything they have to get cash and hedge funds lines of credit are being called in and the carry trade is being unwound. That is what happens in this environment, you oil bulls are going to get you asses handed to you.
The once-in-a-century thing cracks me up. Does Greenspan not realize he is saying that this meltdown is worse than the Great Depression?
And don't forget Vockler said something similar. He basically suggested we were going to see a period of "growth" like the 1930s.
AIG is (when I can read it) 3.80, now 4.00 in aboout 30 sec.
On the lighter side... sort of...
The front page headline of today's LA Times:
"Wall St. scrambles as banks teeter"
next to a picture of a train wreck.
z went belly up...was taken out of dow, then shot
"Golden era of banking and financial services"
Scumbag.
Cell number X at Guantanamo.
its helps to be more of a financial bear than an oil bull.
anon at 12:03-
True dat.....
Ciao
MS
ot paying taxes early = massive penalties and interest. finding way around = high accounting costs that negate the benefit for me. best solution, pay smallest amount to keep them off my back.
This was banking and finance's darkest era you prick.
Apologies to those with sensitive eyes. Just a little ticked off this morning.
Fiduciary responsibility is a myth. That's why decisions that look dumb or short-sighted are so mysterious.
If my and my golfing buddies can get so wealthy that our families will never have to wash a dish till the end of time, what do I care if the rest of you get ruined? What do I care if the country goes bust? What do I care?
Is it really so shocking to think that a bunch of men put themselves and their families ahead of fairness, country, the markets, or a law that will never be enforced on them?
Dream on. When you realize they were playing for themselves, the myopia and recklessness looks a lot more like cunning and greed.
There's people who have millions of dollars of cash value in AIG life insurance policies. And there's no backstop other than the company itself.
Who would have thought that the bank runs of the 1930s could have morphed like this.
"not paying taxes early = massive penalties and interest."
Absolutely and categorically not true....you need to talk to a good accountant.
Ciao
MS
AIG: $4.30 and rising.
ColdHardCash-
not paying taxes early = massive penalties and interest. finding way around = high accounting costs that negate the benefit for me. best solution, pay smallest amount to keep them off my back.
Sorry to say it dude, but if you only need to pay $1824 a quarter to uncle sam, the penalties and interest aren't massive.
Talking to Buffet saves AIG.... I see.
I get the feeling if(when) WaMu goes down it may be both JPM & Wells picking the carcass clean; Reason is that WaMu's footprint has desirable markets for each bank, but also a lot of overlap. Wells getting East coast branches and JPM getting West coast makes sense for both.
Remember BAC & JPM are the only banks(IIRC) who are check 21 certified, that extra days' float adds $15bn to their bottom line.
Prudential is still worth 32 billion?
don't they have CA exposure?
what's this about Buffet?
AIG had an all-time high at 98.56. Now 4.44
Anybody know how to short the state of New York?
Remember, Kudlow coined the term Goldilocks economy. He must live in a bunker and never talk to any real people.
Well, in some versions Goldilocks did end up getting eaten by the bears after she finished looting their house. So perhaps a workable analogy.
mal,
the typical rumor.
NY gov in 2 minutes.
werent we supposed to see a run on WaMu today?
"AIG had an all-time high at 98.56. Now 4.44"
Fidelity fund load up on it a couple of days ago that's going to leave a mark.
Fed can't backstop both WM and WB - which is the more logical choice? Is it just a footrace at this point to see which one hits the $2 mark first and needs help faster?
Would love to see Kudlow tackle this one (let alone the question of Citi, Goldman, etc). As far as I can tell from what I saw this morning, no one at CNBC seems to have any awareness that other banks are likely to fail. This is just one bad day, then everything will be fine again. Buy buy buy!
Is this lady saying that they will move capital to the holding company? Does that make sense?
thanks for the free money AIG...
This is like taking coke from a banker.
Ciao
MS
If you were the sub, would you cough up the money to the host?
Would love to see Kudlow tackle this one (let alone the question of Citi, Goldman, etc). As far as I can tell from what I saw this morning, no one at CNBC seems to have any awareness that other banks are likely to fail. This is just one bad day, then everything will be fine again. Buy buy buy!
Midwest Product | 09.15.08 - 12:18 pm | #
Well I suspect Krudlow is paid to be a fool. CNBC knows that their audience consists of fools so they give them what they want.
Even Paulson knows that robots don't poop their pants.