Kudos to you, CR. You are much appreciated. Thanks to the education I am receiving here, I was able to convince my elderly mother to pull her portfolio and her cash out of WaMu. I'm still working on getting her to cash out an annuity contract with AIG, but she's close to capitulating as I send her your posts and commentary.
The DOW futures are not looking happy for the morning. I figured there might be some eternal optimists who somehow interpreted that this is good for the economy and the stock market.
Maybe this was mentioned in the other thread, but the BoA buyout of MER makes some sense... for NO CASH OUTLAY the bank has essentially bought themselves a "[b]way[/b] too big to fail" put from the government.
With so many banks failing it makes me happy to be working for ShoreBank, one that has had a solid business plan for the last 35 years, and is doing well. I think part of the reason for our success is that solid business plan, we do things like help entrepreneurs invest in their local community and create economic incentives for environmental conscience: http://shorebankdirect.sbk.com/stories/rosby.asp
Shorebank is great - I am a client of their operation in Ilwaco, WA. However, no-one who uses the dollar as their currency is completely immune to this fiasco.
Look, I don't know any of you, never did, never will, but WTF is going on and why is Congress not challenging this usurping of power from Treasury? This is chaos, this is disruptive and manipulation from the highest offices in America and no one has a clue whats happening!
CR, Wilbur Ross said on CNBC Asia something that you may be interest, he said that 1000 banks could fail before this all over. Probably Reuters ou AP will pick this quote and run the history. Could be interesting to see in the future if this comes true.
Add me to the kudos for CR, and the commentary here -- nothing like finding some people who actually know what they're talking about, and can distill it down to something the non-financeheads can understand.
Loads of panic going around. Given the reputation of CNBC around here for being bullish in the face of reality, they all look and sound shit-scared.
Their stinger just now (and man, how fast did they get their voiceover guy in to do this one): "How safe is your money? The fall of Lehman Brothers". Wow.
Once again, all of these big organizations -- private and state actors -- making apparently snap decisions scares me, only because I can't imagine much forethought is going into any of this, increasing the risk of problems actually being worsened due to unforeseen consequences that could have been caught with just a bit more thought.
I've been on this site less than a year, really learned a lot, learned to talk somewhat intelligently about financial issues and I have used that knowledge to write and call congress many times this year and will keep it up.
This is an excellent site, and I really appreciate that CR and Tantas comments are well thought-out, full of facts, and keep speculation and politics out.
I've really learned that we need to get rid of many people in our government who are just cronies with wallstreet. I know we need to balance our budget and that should be a presidential priority.
Thank you CR for all the great, timely, unbiased and truthful information. This site is soo much better than cnnmoney, bloomberg, cnbc....calculatedrisk is in a league of its own.
Someday, a best selling book will be written on this complete FUBAR, and hard landing that killed the FIRE economy.
Calculated Risk will be extensively referenced in the endnotes. And you will be proud to have been online with 1,000 other born and bred dopes, to ponder the 'Black Swan' that was supposed to be impossible.
Since we won't be able to afford the book, that is.
So how about we start up a petition to put ALL Republicans on reservations? How on Gods green earth can we allow a single Republican to walk around free after this?
If this debacle has nothing to do with political parties and elected public officials, why does the Constitution talk so much about elections and voting?
Doggy Dog World, from the WSJ (interpreting the Fed release):
The Federal Reserve is expected to expand its lending facilities in the wake of the likely demise of Lehman Brothers, taking a wider array of securities, including equities, as collateral for its loans, say people familiar with the matter.
The moves, which potentially represent another landmark step in the Fed's efforts to address the deepening credit crisis, are expected to be temporary.
"why is Congress not challenging this usurping of power from Treasury? This is chaos, this is disruptive and manipulation from the highest offices in America and no one has a clue whats happening!"
Everyone of those bought and paid for whore in CONgress knows exactly what's happening. They want their fraud back.
I go watch True Blood for a relaxing hour of blood & sex, and I find a thousand people on here.
And I can't keep up with the comments, much less go back and read the threads or the interim posts.
CR, thanks for everything. Fellow posters, thanks for everything also.
You all are great.
Remember 6 degrees of relationship. Together we know a LOT of people.
Re: "The moves, which potentially represent another landmark step in the Fed's efforts to address the deepening credit crisis, are expected to be temporary."
Temporary abuse of discretionary power is still abuse!
spunkmeyer - a yup. same thing with every other hugely corrosive event in the last eight years... but dress a moose, drive a snowmobile, and we'll have you page one. idocracy indeed
NEWS! 10 banks, $7B each, new "liquidity aid". Sort of a co-op lending window.
As someone pointed out upthread, it's not out of the realm of possibility that this co-op backstop could itself be backstopped by Fed loans "backed" by stocks that might tank along with all the other toxic, wildly-inflated-value junk out there.
Are Paulson and Bernanke trying to play the role of JP Morgan in 1907 here without being quite so obvious?
<a href="http://www.bullnotbull.com/gallery/images/g-helicopter-big.jpg>I'm starting to believe this image isn't so lampoonish; though I still doubt its effectiveness
"Yelling and screaming," occurred in the session, said one participant, with many participants unaware of the rules.
[..]
A key problem: only one half of the trade has an incentive to get the deal done. If a participant owes money to Lehman, they have less incentive to clear the trade. If a participant is owed money by Lehman, they would love to clear the trade, but the price the other side is offering now is extremely high.
Debora, maybe wilbur ross based his estimate on nuber of posters online at CR? A one to one direct correlation with peak posters? Have we reached peak? Or a new permanent plateau?
If this debacle has nothing to do with political parties and elected public officials, why does the Constitution talk so much about elections and voting?
The people who wrote the constitution realized it wasn't enough to have a police force, because that police force could become corrupt. They decided we needed cops for the cops, and that the voter would play that role. It's just another aspect of the whole checks and balances process.
Alas I think much of the problems we have today are because voters have become apathetic and are too willing to believe slick-talking politicians who say one thing and do another.
When they have to spend some time building their own housing out of scraps of lumber and stand for hours in soup lines, they'll have more time to think about it and develop the motivation to understand the real issues and vote accordingly.
It takes a crisis to get Americans to think. But at least in the past they've always seemed to do so in the end.
Carlos Mendez on CNBC:
AIG publicly disclosed that they have 60 billion in ABS CDOs which reference residential mortgage securities, much of it subprime.
per Mendez, the banks are calling for more capital from AIG.
liquidity crisis indeed.
but what can the fed do?
and I thought that the Fed was running out of money? where is this money coming from?
what's interesting is that the Fed moves are "around" the issue. they are providing essentially more liquidity. (snip)
the real issue is the bad stuff on the balance sheets, and people are not selling those things. we don't have a total unwind unless people start selling these things
what's scary, dylan is that this is not really the unwind!
Fox news is reporting.....umm...oh they have a show about terrorist threats and how bad Iran is. But if Spot was missing they would have live coverage from the WH. What a joke.
My best client was sick in the hospital a couple of weeks ago, and his roommate was telling him about the fraud he was planning with phony appraisals & all. Normal re-fis can't go through, I guess 'cause they're not lying. I said, Wanna turn him in, & he said he felt too bad to note the name.
And that doesn't count the plain garden variety stupidity.
Based on my rough calculation MER leverage is about 27/1 as of 5/31/08. This equates to a capital ratio of 4%. BAC combined with MER gets a capital ratio of 6.2%, down from BAC ratio of 8.3% prior to the combination. Very close to undercapitalized IMO.
There's far too much whining going on in these threads. You're witnessing the creative destruction that's inevitable in our wonderful free market system. Rejoice!
It's like a raging forest fire that purges the old dry growth, so that life can begin anew. Whether I'm lobbying Congress for UBS, or pushing for more deregulation, I embrace this creative destruction because it always serves the greater good: Free Markets!
John McCain will double down on those Bush tax cuts, and really get this Free Market economy cranking. It's your money after all!
The sovereign fund, run by Chief Executive Officer Ho Ching, 55, said July 29 it was putting a further $900 million in Merrill after it was compensated for the initial investment. Temasek said it will use a $2.5 billion reset payment for losses from its earlier purchase toward buying $3.4 billion of Merrill stock, and the securities firm will book the reset as an expense.
I said it earlier: if these futures hold down 3%+, it will be a trend day down at least 5% and now I'm thinking trading curbs may have to be used. If these futures stick.
The U.S. (Shadow) Financial System Has Left the Building
Take a very deep breath. It looks almost certain that this week will be the one where we see the financial implosion in U.S. banking and brokerage that many have been expecting for some time. It reminds me a little of that awful feeling you have when you think you're going to vomit, but hold off for a surprisingly long time, knowing how dreadful the experience is going to be -- only to have nausea overwhelm you and be finally forced to say "f**k it" and hurl.
Mostly the same thing that always applies to non-investors: pay off your debts, set up a rainy day fund, and keep your resume polished. These days it could be added: don't buy a house for a few years and don't start playing stockbroker. All this financial tomfoolery will affect them indirectly through inflation, a job loss, or both.
It reminds me a little of that awful feeling you have when you think you're going to vomit, but hold off for a surprisingly long time, knowing how dreadful the experience is going to be -- only to have nausea overwhelm you and be finally forced to say "f**k it" and hurl.
Anyone has any info on side effects of netting the CDS. I believe that lots of bonds got AAA ratings because of CDS. Now that these CDS are evaporating, the underlying bonds should loose their AAA ratings. It is going to be one hell of a month to rerate all these bonds.
Is pizzas getting delivered to these 3 ratings agencies? Man, still there is not a even a single info on effects of these on pension funds and obligations.
Let me explain what I mean by trend day: if you short the open, and hold a loose stop (say stopped if market is down by only 1.5%), you can leverage up each additional 0.5% decline, keeping trailing stop of 1.5%, and keep shorting in your account until end of day and book profits. Good trading to all.
I've been here for two+ years now and have learned tons of hard info from people. Have used it to try to protect self for what's really coming. And I've tried to be really reasonable.
that said, the service here has been impeccable and the hosts excellent. So, for all of the hard work and weird hours - hit the tip jar. I doubt that they've made what they're worth.
Roger Altman on CNBC just said that this weekends events will have a negative effect upon the common man outside wall street due to a sharp decrease in credit. It is not natural, and not positive. It is a negative for us simple folks.
Friend of mine works at MER in the "wealth management" division in Virginia said on Friday that they'll have a huge and important meeting coming Monday.
I can't recall a sunday with this much financial news in my life.
I can't recall a WEEK that's had as much financial news as the past 4 hours. Maybe not even a month.
After years of expansion the contraction in the financial sector has begun in earnest. Weak hands have given way to strong hands with stronger balance sheets, in addition to financial backstop from the FED. Today is the dawn of the new era IMHO.
So, what happens when there is less credit available for business. Bankruptcy if the business in not solvent. Or less business spending. Too bad for the few jobs still left in this country.
Opening scene: Two dinosaurs looking at a flaming horizon under otherwise absolute black skies.
Triceratops 1: This cant be good.
Triceratops 2: Oh well, life will go on.
Triceratops 1: Would you like to cuddle up?
Scene Two: (pan out to a backlit pair of Tyrannosaurs some distance away)
T. Rex 1: I smell fear.
T. Rex 2: Panic in the Herd?
T. Rex 1: Heard that. I taste opportunity in the air.
T. Rex 2: With a hint of ash in the aftertaste.
T. Rex 1: Its times like these I love being big.
Scene Three: (cut to a group of small raptors nosing into any gaps of a smoldering thicket of brambles)
Raptor 1: (acting skittish and squirrelly) Here is another small charred mammal. Do you want it? I have no appetite these things anymore.
Raptor 2: I know, they are everywhere. This is all darkly ominous.
Raptor 3: We should gather them up and take them to the big magic mountain.
Raptor 4: Yes, like an offering in exchange for making this all go away.
Scene Four: (in a slightly distant future, faint rays of sunshine struggle to pierce the enveloping gloom as the shot pans down to a frenzy of small rat like creatures eating a next of eggs)
Iguanodon 1: (exhausted and speaking only to herself) Well thats it. Its over.
A.I.G.s extraordinary move of reaching out to the Fed for help may spur other non-investment banks to try a similar move. Companies ranging from General Electric to GMAC have been hurting badly and would desperately love the liquidity that the Fed would provide.
The fed should be preparing to protect local and regional banks. Instead, bennie and his money printing republicans are wasting our money on speculators.
How can anyone take a comment from a person with the name "Republicans are Traitors" seriously? Or "Democrats are Traitors," or "Purple People are Traitors" for that matter.
Too bad for the few jobs still left in this country.
Worse if we have to inflate the currency. - Ella
That's not the worst of it. The worst is, if the Feds drop money from helicopters, everyone picks it up.... and NOBODY spends it, because they're trying to just hold onto what they have.
I can't believe they're letting Lehman go. I have friends at Lehman that can't believe the company is going down like this when they are in a much better condition compared to how Bear Stearns was back in March. Anyone think Paulson's screwing Fuld purposefully on this one?
Gary, he will win a Oscar of it.
debora | 09.14.08 - 10:41 pm | #
Debora, the Oscar will go to Daniel Day Lewis, who will top himself ten times over by aging 300 years and somehow ridding himself of a soul to play Alan Greenspan in the film.
How can anyone take a comment from a person with the name "Republicans are Traitors" seriously? Or "Democrats are Traitors," or "Purple People are Traitors" for that matter.
Well, he's said much more interesting things than you have. That might be one reason.
Sorry,
Anyone who sends our teenagers to fight a questionable war and then imprisons them for some stupid photos, only to curry favor with our enemies is a TRAITOR.
"They (AIG insurance subs) have dedicated balance sheets, and their capital can't be used to shore up capital markets business."
per Ziggurat
Unfortunately, part of AIG salvage plan is upstreaming capital from the subs to the parent. I hope some state insurance commissioners have the stones to block it. If the feds try to interfere, the Texas commissioner should tell Bush not to plan on coming home in January. He won't be welcome after the insurance company is looted just before it is time to pay for hurricane repairs.
22:42 14Sep08 RTRS-JC FLOWERS, KKR, TPG HAVE WITHDRAWN AIG STAKE BIDS, CITING ANXIOUSNESS OVER COMPANY'S FINANCIAL HEALTH-NYT
22:45 14Sep08 RTRS-RATINGS AGENCIES THREATEN TO DOWNGRADE AIG'S CREDIT RATING BY MONDAY MORNING-NYT
22:46 14Sep08 RTRS-AIG DOWNGRADE WOULD ALLOW COUNTERPARTIES TO WITHDRAW CAPITAL FROM CONTRACTS WITH THE COMPANY-NYT
22:47 14Sep08 RTRS-AIG MAY SURVIVE FOR ONLY 48 HOURS TO 72 HOURS IF COUNTERPARTIES WITHDRAW CAPITAL-NYT
Accepting equities is the the most bullshit aspect of all of this.
All L3 equities (like LHE, FNM, FRE) and countless other's who have rec'd major haircuts can be turned in at whatever value and that cash is heaved a the market.
Sell-off will only last as long as it takes the Fed to push the money out to the primary dealers in the morning.
Consider:
(1) MER bought at 70% premium, all stock
(2) State regulated insurance company make get backstopped by FED
(3) No news on WAMU, but its failure will hollow FDIC
(4)Weekly TAF auctions with increasing amounts
(5)Equities to be traded at Fed instead of liquidated in open market
(6)CDS exposure is now "cat outta the bag"
I can't see getting the toothpaste back in the tube now. Anyone with $10 and half a brain is now clued in. Herd behaviour etc.
Mr. Bernanke, I've got this old boat that appears to be suffering from deflation. I'd like to "ring fence" it by exchanging it for treasuries.
It's totally mint, but because I paid to much and put nothing down and the country is broke I just need a loan until you start dropping $$$$$ from your helicopter.
Thanks Ben. You're a real sport. I always knew we could count on you. I never would have bought the boat at all absent your deflation speech.
We fired our guns and the British kept a'comin'
There wasn't nigh as many as there was a while ago
We fired once more and they began to runnin'
On down the Mississippi to the Gulf of Mexico
mp: I doubt they have even that long.
I think Sheila missed a real opportunity to take care of them this weekend. But Treasury probably told her to hold off, having their hands full of Lehman.
If you didn't see the post earlier: Brinker told people to remove money from WaMu since they're not stable. So we can all blame him for the run tomorrow.
That ISDA trading session requires Lehman to file for bankruptcy before 11:59 tonight otherwise all the trades made become void. So far as the news goes no official filing has been made. They've only got an hour to go. Is Lehman going to do a Cinderella and stay in business past midnight just to give the finger to the world?
On Sunday, as the heads of major Wall Bloomberg. Street banks huddled for a third day of emergency meetings at the Federal Reserve Bank of New York, many rank-and-file employees were at work in their offices.
Its all hands on deck, said one senior banker.
OMG- They're starting to work weekends like the rest of us. This really must me serious.
People who held shorts on Merrill over the weekend will be screaming in the morning. This is not over. Expect more black holes to consume hedgies tomorrow.
"A complete re-thinking of the American financial system" --Dylan Ratigan
Thanks too, CR. Been lurking here over 1 1/2 years. This blog and all the comments have been invaluable in forming a big picture perspective of what I could see happening on the ground level.
Ben, it the Angry Saver again. In addition to the boat, I've got a AAA SUV that is a real budget buster now that gas prices have soared.
The thing is, my 8 year loan is underwater temporarily so I'm gonna need to swap that into the alphabet soup facility too until the helicopter drop. It's tip top just like the boat so you don't need to worry.
People who held shorts on Merrill over the weekend will be screaming in the morning. This is not over. Expect more black holes to consume hedgies tomorrow.
I'm a conservative guy, forgive me Republicans are Traitors, but had an interesting conversation yesterday.
Spoke with neighbor who's also semi-following what's going on. I spook my friends, really. We discussed war and end of "empire" and that we don't want our kids going off to die for some BS adventure in a land with a two-millenia death wish.
Actually, my kids since his are grown.
My final thought was that if it takes a reboot/collapse to keep my kids out of this nonsense, then I can live with that.
Honestly, I don't agree with the "empire" business, but whatever.
Republicans are Traitors writes:
JP, I missed the WAMU comment, where is it?
LOL. It's in one of 3000 comments of the previous 10 threads today.
Sorry, I can't lay my hands on it. In short, Bob Brinker (whoever he is, lotsa people listen to the guy) alerted folks to the shakiness of WaMu and told them to withdraw their money.
Joe Six Pack writes:
How will these events play on Money Market accounts. Can they even be considered safe?
Watch how you ask the question. Money market accounts may be FDIC insured. Money market funds that hold anything other than short term Treasuries may break the buck. It's always a risk.
am i the only one who doesn't believe this MER takeout story? there's no facts behind it..everyone keeps quoting the WSJ headline, which is from a story that provides no facts/proof...how does paying a 70% premium for worthless equity make any sense..i'll believe it when i see John Thain at a press conference..as of now, i don't believe this is actually happening (remember KDB for LEH? that didn't really work out)
Sorry homedad,
I really am not trying to make a statement about the war, just how the republicans pretend to be pro-soldiers but engage in secret trials at Camp Pendleton. Not to mention, not one person in the Country stood up for the soldiers from Abu Grabe (sp?). They were sent to PRISON for nothing, that disgusts me.
Bob Brinker has nationwide weekend program called Money Talk, here in the bay area on KGO (ABC). He's pretty conservative -- same politics as Bill Wattenburg basically -- and has been very bullish, and thus wrong, in the recent past.
I'm a conservative guy, forgive me Republicans are Traitors, but had an interesting conversation yesterday.
I'm reading a book called "The Limits of Power" right now.
It's interesting to see a guy who calls himself a conservative vilifying president Reagan while praising Jimmy Carter (or at least some of the speeches he gave).
And he seems to stick by his principles while doing it.
It really makes you wonder what's happened to this world.
I can't keep up with all new threads.
rock on CR. 1k before night is out!
"BofA buying Merrill is excellent for the market." CNBC 1 minute ago.
-Don Drapkin
Lazard Int'l
Still 2 hours left in the day! Who else might blow up tonight?
CR-
again, thanks for all you do.
CR, thanks. I can't keep up.
Mobius is sounding very scared on Bloomberg. His voice is shaking while claiming all is great.
Not looking good, Marko!!!
Where is the part of the announcement that says the Fed will take equities? I didn't see it.
Again, for people who like graphs
7th YO
Kudos to you, CR. You are much appreciated. Thanks to the education I am receiving here, I was able to convince my elderly mother to pull her portfolio and her cash out of WaMu. I'm still working on getting her to cash out an annuity contract with AIG, but she's close to capitulating as I send her your posts and commentary.
Amen, CR.
Good decisions require good information. You help immensely in this regard.
amazing day! Any predictions are the market tomorrow?
Nothing about WaMu....
1000th
994!!
Fed taking equties and AIG begging for a bailout are huge news stories
and hows about wamu?
Still 2 hours left in the day! Who else might blow up tonight?
Dick Fuld screws everyone by filing after the midnight deadline. Invalidates all of the netting out.
"BofA buying Merrill is excellent for the market." CNBC 1 minute ago.
KleptoVision never fails to deliver.
Thanks CR. Maybe new record for total threads in one day...
The DOW futures are not looking happy for the morning. I figured there might be some eternal optimists who somehow interpreted that this is good for the economy and the stock market.
It appears there are none.
last
994
Maybe this was mentioned in the other thread, but the BoA buyout of MER makes some sense... for NO CASH OUTLAY the bank has essentially bought themselves a "[b]way[/b] too big to fail" put from the government.
Let me log in with my blackberry to get the visitor count up by one...
992
992 Visitors Online
How many hedge funds blow up?
Dick Fuld screws everyone by filing after the midnight deadline. Invalidates all of the netting out.
What netting out? I thought it failed miserably...
I visit this site for almos one year and half, and jave learned alot from you guys. Congrats for the great work.
With so many banks failing it makes me happy to be working for ShoreBank, one that has had a solid business plan for the last 35 years, and is doing well. I think part of the reason for our success is that solid business plan, we do things like help entrepreneurs invest in their local community and create economic incentives for environmental conscience: http://shorebankdirect.sbk.com/stories/rosby.asp
"BoA buyout of MER makes some sense"
I a not so sure, @ $29 and after Mer reported over 20 bln in write downs (or was it ~ 30)...
it's a one hell of a rush decision....
so anybody have ideas about how one could short the NYC real estate market?
998
One thousandth?
Whoa, 998...almost there.
And I'm very nervous.
So, will there be a run on WaMu this week, accompanied by an OTS/FDIC move? Or vice versa?
I do not see how WaMu survives this week. I assume that the sheeple awaken with all of this.
Yes. How many Hedge Fund will blow up this week?
Better yet, how many don't?
Shorebank is great - I am a client of their operation in Ilwaco, WA. However, no-one who uses the dollar as their currency is completely immune to this fiasco.
BREAKING!
CNBC just announced that President Bush is closely monitoring the situation!
Now were REALLY fucked.
WTF, start another thread and hope for the best!
Julie, do you guys do a lot of construction loans?
Are any churches public?
I want to go long churches.
The PPT is at war with shorts... watch out !
1003!
1003!
CR, take good rest for next few days. We need you more than today for WaMu. That is the one which is going to affect the mass than this.
Thanks and appreciate ur work.
1003! Wow!
1003
1003 Visitors Online
Jeebus, the Rapture is here.
CR- You are a rock star!!! Great Job. Thank you.
hurray!
1005, way to go!
Somehow, Ike is responsible for this...tipping point.
WaMu has $130B in insured deposits, FDIC only has $45-50 left to play with. Zombie bank.
It's amazing what Bill Clinton can do, now nearly ten years from being in office.
Look, I don't know any of you, never did, never will, but WTF is going on and why is Congress not challenging this usurping of power from Treasury? This is chaos, this is disruptive and manipulation from the highest offices in America and no one has a clue whats happening!
$70 Billion CBF - Collateralized Banking Facility $7B from 10 of the big boys each.
And the shorts are at war with the PPT. We'll see who wins.
This # of visitors speaks volumes about the lack of coverage these situations are receiving in many of the traditional media web sites and stations.
This is scary. Its what, 10:00PM on a Sunday, and the comments are coming almost faster than you can respond, especially if you have a backlog...
CR, Wilbur Ross said on CNBC Asia something that you may be interest, he said that 1000 banks could fail before this all over. Probably Reuters ou AP will pick this quote and run the history. Could be interesting to see in the future if this comes true.
CR, the word is getting out! Hope you have lots of popcorn on hand, 'cuz everyone's coming to your house!
Is it God's will that 1000 posters will come to worship at CR and to see the evils of Paulson and bernanke?
so anybody have ideas about how one could short the NYC real estate market?
Short real estate, don't worry about pinpointing a certain market.
Buy IYR Puts (Leaps)
Buy SRS
This is not investment advice, obv.
BTW I hope the Fed is waking up to the fact that they can never out-finnesse Wall Street.
The only viable tool they have to "manage" the financial system is the brute-force club-to-the-head technique.
Everything else is going to be turned around and used against them.
If they're not willing to accept this then they should stay out of the markets.
Blow jobs have a 'cascade' effect (Star Trek again) on the economy that may take years to fully digest.
OMG. Temasek owns 14% of Merrill!
Add me to the kudos for CR, and the commentary here -- nothing like finding some people who actually know what they're talking about, and can distill it down to something the non-financeheads can understand.
Loads of panic going around. Given the reputation of CNBC around here for being bullish in the face of reality, they all look and sound shit-scared.
Their stinger just now (and man, how fast did they get their voiceover guy in to do this one): "How safe is your money? The fall of Lehman Brothers". Wow.
Once again, all of these big organizations -- private and state actors -- making apparently snap decisions scares me, only because I can't imagine much forethought is going into any of this, increasing the risk of problems actually being worsened due to unforeseen consequences that could have been caught with just a bit more thought.
I'll also give my Kudos to CR.
I've been on this site less than a year, really learned a lot, learned to talk somewhat intelligently about financial issues and I have used that knowledge to write and call congress many times this year and will keep it up.
This is an excellent site, and I really appreciate that CR and Tantas comments are well thought-out, full of facts, and keep speculation and politics out.
I've really learned that we need to get rid of many people in our government who are just cronies with wallstreet. I know we need to balance our budget and that should be a presidential priority.
Thank you CR for all the great, timely, unbiased and truthful information. This site is soo much better than cnnmoney, bloomberg, cnbc....calculatedrisk is in a league of its own.
Congrats and thanks CR.
Someday, a best selling book will be written on this complete FUBAR, and hard landing that killed the FIRE economy.
Calculated Risk will be extensively referenced in the endnotes. And you will be proud to have been online with 1,000 other born and bred dopes, to ponder the 'Black Swan' that was supposed to be impossible.
Since we won't be able to afford the book, that is.
Yeah, they each dump $7B of s--t at the Fed window to collateralize...
"no one has a clue whats happening!"
You do. And you're telling us, who already know.
Are you telling your neighbors and co-workers? Are you doing your part to inform the ignorant?
Yeah, me neither, just asking....
English Major Bimbo
I like that almost as much as Armani Clad Babe With a Whart
I can't recall a sunday with this much financial news in my life.
$70B, chump change, like the SIV, SuperSIV, PDCF, etc. Too little, too late.
You are toast, I-banks and major banks. Goodbye.
Once upon a time, used to be the mighty USofA...
1006 online...
So how about we start up a petition to put ALL Republicans on reservations? How on Gods green earth can we allow a single Republican to walk around free after this?
Mr Market or Obamanation have freerepublic locked down,, dos attack
I read earlier some guy posted fearing for his job at AIG. Is anyone personal employment immediately affected by the thread's topics?
Bush and Sons, Inc.
BREAKING!
CNBC just announced that President Bush is closely monitoring the situation!
Hahaha... he can do for the markets what he did for Iraq.
If this debacle has nothing to do with political parties and elected public officials, why does the Constitution talk so much about elections and voting?
I wonder if the fact that Temasek got screw over Merrill will afect the way S. Wealth Funds deals with Wall Street.
Doggy Dog World, from the WSJ (interpreting the Fed release):
The Federal Reserve is expected to expand its lending facilities in the wake of the likely demise of Lehman Brothers, taking a wider array of securities, including equities, as collateral for its loans, say people familiar with the matter.
The moves, which potentially represent another landmark step in the Fed's efforts to address the deepening credit crisis, are expected to be temporary.
Best Wishes.
1004 Visitors Online
Amazing! However, to balance the thoughts here, also check nakedcapitalism!
OBL is sitting in a cave, saying, "Well, we did it first to Russia, now to the US...Hey Pakistan, give us your nukes now."
So wait...are taxpayers on the hook with Lehman Bros? Is the really accepting the low quality assets?
The Republican agenda of Bankruptcy and War...with Bankruptcy Argentinian style!!!
I wonder if Bush is gonna show up on Wall Street tomorrow with a bullhorn.
CR,
NEWS! 10 banks, $7B each, new "liquidity aid". Sort of a co-op lending window.
"why is Congress not challenging this usurping of power from Treasury? This is chaos, this is disruptive and manipulation from the highest offices in America and no one has a clue whats happening!"
Everyone of those bought and paid for whore in CONgress knows exactly what's happening. They want their fraud back.
I go watch True Blood for a relaxing hour of blood & sex, and I find a thousand people on here.
And I can't keep up with the comments, much less go back and read the threads or the interim posts.
CR, thanks for everything. Fellow posters, thanks for everything also.
You all are great.
Remember 6 degrees of relationship. Together we know a LOT of people.
For people wondering about the markets... AIG through their airplane leasing I believe is BA's biggest customer.
AIG = 1.25% of DJI
BA = 4.455% of DJI
Confounded effects?
These are approximate given Friday's close. On the other hand, BAC = 2.354% of DJI.
Re: "The moves, which potentially represent another landmark step in the Fed's efforts to address the deepening credit crisis, are expected to be temporary."
Temporary abuse of discretionary power is still abuse!
shit, shit shit, we lost power: 990 Visitors Online
I see 997 on line. c'mon...
...a relaxing hour of blood & sex...
Couldn't have phrased it any better myself
We did break 1000. The highest I saw was 1006 a few minutes ago.
Thanks to CR, Tanta, and fellow commentators. I learnt a lot from this blog during the past 2 years.
Suggested thread music:
YouTube
- Broadcast Yourself.
debora writes:
OMG. Temasek owns 14% of Merrill!
At an average price of around 28/share if I remember an interview i saw.
ALL ORDINARIES down 1%
SINGAPORE down 1.67%
otherwise the radar is clear
[feverishly dialing lawyer]
I need 5 reverse IPO's tomorrow morning. We need to produce LOTS of equities.
Doggy Dog World, from the WSJ (interpreting the Fed release):
Okay, thanks CR. Nothing explicit yet. I'm VERY curious as to exactly what they're taking.
So does this on paper look like a bailout for Temasek? How do they fare as a result?
spunkmeyer - a yup. same thing with every other hugely corrosive event in the last eight years... but dress a moose, drive a snowmobile, and we'll have you page one. idocracy indeed
This pool of liquidity is going to be used to manipulate equity prices. Truly sinister.
Well, BB, that's all right then, since Mer was bought at 29.
NEWS! 10 banks, $7B each, new "liquidity aid". Sort of a co-op lending window.
As someone pointed out upthread, it's not out of the realm of possibility that this co-op backstop could itself be backstopped by Fed loans "backed" by stocks that might tank along with all the other toxic, wildly-inflated-value junk out there.
Are Paulson and Bernanke trying to play the role of JP Morgan in 1907 here without being quite so obvious?
1001 on line.
AIG rejected private equity investment and has asked the Fed for help. A restructuring plan will be announced tonight or early tomorrow morning.
OK, why should the Fed bail them out if private equity is available?
A temporary bailout ...
a few decades ...
<a href="http://www.bullnotbull.com/gallery/images/g-helicopter-big.jpg>I'm starting to believe this image isn't so lampoonish; though I still doubt its effectiveness
Who thought this was a good idea? trying to disintermediate lehman on a sunday
Page not found - - CNBC.com
Funny stuff
"Yelling and screaming," occurred in the session, said one participant, with many participants unaware of the rules.
[..]
A key problem: only one half of the trade has an incentive to get the deal done. If a participant owes money to Lehman, they have less incentive to clear the trade. If a participant is owed money by Lehman, they would love to clear the trade, but the price the other side is offering now is extremely high.
Additional kudos to CR. Analysis will have to wait until the bullets stop flying for a moment.
Is anyone else worried about the knock-on effects on the regional banks?
Who owns what, and who owes what to whom?
Debora, maybe wilbur ross based his estimate on nuber of posters online at CR? A one to one direct correlation with peak posters? Have we reached peak? Or a new permanent plateau?
I will certainly not be productive tomorrow.
1001!!!!!!!!
Score for CR!!!!!
Meltdown for Wallstreet!!!!
Someday this war's gonna end....
ronon, that's what I was thinking. Just because you don't like your options doesn't mean you get to go to the taxpayers. WTF?
Bove on CNBC Asia Live. Now.
If this debacle has nothing to do with political parties and elected public officials, why does the Constitution talk so much about elections and voting?
The people who wrote the constitution realized it wasn't enough to have a police force, because that police force could become corrupt. They decided we needed cops for the cops, and that the voter would play that role. It's just another aspect of the whole checks and balances process.
Alas I think much of the problems we have today are because voters have become apathetic and are too willing to believe slick-talking politicians who say one thing and do another.
When they have to spend some time building their own housing out of scraps of lumber and stand for hours in soup lines, they'll have more time to think about it and develop the motivation to understand the real issues and vote accordingly.
It takes a crisis to get Americans to think. But at least in the past they've always seemed to do so in the end.
Maybe there's hope.
I have, on occassion, been a bit critical of the quality of the postings on this site.
However, I just perused the Yahoo! message boards for BAC and MER, and I must say this board rocks (relatively speaking, of course).
I have to go back to Miami tomorrow; if I wasn't I think I'd be hiding under the bed.
TOW, hopefully they get told to pound sand.
And the anchor just said that the Japanese gov. confirmed to Dow Jones that the G-7 were talking about Lehman on the weekend.
so I'm a little scared
Carlos Mendez on CNBC:
AIG publicly disclosed that they have 60 billion in ABS CDOs which reference residential mortgage securities, much of it subprime.
per Mendez, the banks are calling for more capital from AIG.
liquidity crisis indeed.
but what can the fed do?
and I thought that the Fed was running out of money? where is this money coming from?
I am assuming the Fed is talking abouts prefs when they mention accepting equities.
Umm, good luck Mr Bernanke
It's 10:00 o'clock ...
Do you know where your hedge fund manager is ... ?
I'm just a doofus, so help me out, please.
Merrill was selling for $17 on Friday. WTF would BoA buy for $29? A 80% or so premium? What the f#ck?
Or am I way wrong?
The Reagan Economy of supply side economics and deficits don't matter has finally matured i.e. we've all been trickled on with a golden shower.
Great comment above from KM4 over at Big Picture.
"I am thinking about worms, too. We have AIG"
Bove said that Morgan Stanley may be the next target for shorts.
1025 visitors online.
Woahh
CR:
I would really appreciate your thoughts on this.
I love having so many people on line right now, but it is simply overwhelming.
It sez 1006 for me.
Why have I not seen Citigroup's pending implosion mentioned?
I'm telling the world -- my mailing lists have been informed.
For all the good it will do them... if they aren't out of debt and bad investments after me screaming at them for two years now, it's too late.
So is this new consortium of banks gonna create a new private 'fed' window, that maybe AIG will tap?
Asian markets gathering downhill momentum:
Major World Indices - Yahoo! Finance
So what do you tell non-investors? Please, I'm serious - no "bend over and kiss your ass goodbye" jokes.
The Reagan Economy of supply side economics and deficits don't matter has finally matured i.e. we've all been trickled on with a golden shower.
Great comment above from KM4 over at Big Picture.
Just a friendly reminder that you'll see some of us folks here commenting on the Big Picture and other sites all the time....
Even though this is the only site we comment on.
I for one am amazed at the things I say there.
Bove said that he does not belive on SEC. And that what they think, SEC, is useless.
wow.
CR,
Not mentioned is the $50 billion fund (reported by NBC) being set up by US and foreign banks. This is a red herring that is news in and of itself.
This $50B fund idea is really a SuperSIV idea that has come back from the dead. This is financial jaw-boning at its finest, and will die again.
Charlie Gasparino is finally getting it (gasp)
he said: (dictated from Tivo):
what's interesting is that the Fed moves are "around" the issue. they are providing essentially more liquidity. (snip)
the real issue is the bad stuff on the balance sheets, and people are not selling those things. we don't have a total unwind unless people start selling these things
what's scary, dylan is that this is not really the unwind!
Fox news is reporting.....umm...oh they have a show about terrorist threats and how bad Iran is. But if Spot was missing they would have live coverage from the WH. What a joke.
To get Americans to think and come up with rational solutions you have to some how get through the misdirection that is television, print and radio.
So taxpayers are on the hook for some of Lehmans losses?
Does this mean the 2nd half recovery is officially cancelled? LMFAO!!!!!!!
There is no way all the fraud can be covered.
My best client was sick in the hospital a couple of weeks ago, and his roommate was telling him about the fraud he was planning with phony appraisals & all. Normal re-fis can't go through, I guess 'cause they're not lying. I said, Wanna turn him in, & he said he felt too bad to note the name.
And that doesn't count the plain garden variety stupidity.
Based on my rough calculation MER leverage is about 27/1 as of 5/31/08. This equates to a capital ratio of 4%. BAC combined with MER gets a capital ratio of 6.2%, down from BAC ratio of 8.3% prior to the combination. Very close to undercapitalized IMO.
Not mentioned is the $50 billion fund (reported by NBC) being set up by US and foreign banks. This is a red herring that is news in and of itself.
This $50B fund idea is really a SuperSIV idea that has come back from the dead. This is financial jaw-boning at its finest, and will die again.
Financial Engineering = Creative Lying
It's a 70 Billion dollar fund from ten banks each contributing 7 billion a piece. No one bank can get more than 1/3rd at a time.
I want to know why this was done.
There's far too much whining going on in these threads. You're witnessing the creative destruction that's inevitable in our wonderful free market system. Rejoice!
It's like a raging forest fire that purges the old dry growth, so that life can begin anew. Whether I'm lobbying Congress for UBS, or pushing for more deregulation, I embrace this creative destruction because it always serves the greater good: Free Markets!
John McCain will double down on those Bush tax cuts, and really get this Free Market economy cranking. It's your money after all!
AIG is not even an US company. They are Bermuda based(or Cayman Islands),
why should they get ant FED help?
Now I am angry too.
To finish, Bove said that he expects that the reaction of the market tomorrow will be worse than the aftermath of Bear Stearns.
funny moment on nbc right now as cab parked in front of camera at Lehman with Gentlemens club filling up half the screen...
It's a 70 Billion dollar fund from ten banks each contributing 7 billion a piece. No one bank can get more than 1/3rd at a time.
Do these guys really have $7 billion to be throwing around? Something doesn't add up.
I don't think that this a liquidity problem. I am in Roubini's camp, this is a solvency problem. The new lending facility will not solve the problem.
Blast from the past :
Temasek Has `Great Confidence' in Merrill's CEO Thain (Update5)
Temasek Has `Great Confidence' in Merrill's CEO Thain (Update5) - Bloomberg.com
The sovereign fund, run by Chief Executive Officer Ho Ching, 55, said July 29 it was putting a further $900 million in Merrill after it was compensated for the initial investment. Temasek said it will use a $2.5 billion reset payment for losses from its earlier purchase toward buying $3.4 billion of Merrill stock, and the securities firm will book the reset as an expense.
Do these people have the authority to commit this much without Board approval?
Arrrgh. Roger Altman is talking on CNBC. He says there is no way to bail out housing.
I said it earlier: if these futures hold down 3%+, it will be a trend day down at least 5% and now I'm thinking trading curbs may have to be used. If these futures stick.
The U.S. (Shadow) Financial System Has Left the Building
Take a very deep breath. It looks almost certain that this week will be the one where we see the financial implosion in U.S. banking and brokerage that many have been expecting for some time. It reminds me a little of that awful feeling you have when you think you're going to vomit, but hold off for a surprisingly long time, knowing how dreadful the experience is going to be -- only to have nausea overwhelm you and be finally forced to say "f**k it" and hurl.
Paul Kedrosky: The U.S. (Shadow) Financial System Has Left the Building
So what do you tell non-investors?
Mostly the same thing that always applies to non-investors: pay off your debts, set up a rainy day fund, and keep your resume polished. These days it could be added: don't buy a house for a few years and don't start playing stockbroker. All this financial tomfoolery will affect them indirectly through inflation, a job loss, or both.
Short this banana republic.
This would be a good time to privatize Social Security, and ensure everyone gets in on the party.
"what's scary, dylan is that this is not really the unwind!"
No, it is not...
So we wake up to a new day tomorrow.
I wonder if the markets will open?
It reminds me a little of that awful feeling you have when you think you're going to vomit, but hold off for a surprisingly long time, knowing how dreadful the experience is going to be -- only to have nausea overwhelm you and be finally forced to say "f**k it" and hurl.
A $2 trillion hurl is massive spewage, duude.
SRS
may depend if your time zone, wally.
The United States of America:
Government of the People
By Goldman Sachs
For China
...............
How many choices do you think your next democraticaly elected leader has?
Banana is a good fruit.
7:30PM. Do I eat the 5 grams of dried psilocybin mushrooms? It seems almost preordained at this point.
Tanta,
No apologies for lack of analysis necessary. Your fans know what is happening - the "blue light" special is now on shoppers.
Anyone has any info on side effects of netting the CDS. I believe that lots of bonds got AAA ratings because of CDS. Now that these CDS are evaporating, the underlying bonds should loose their AAA ratings. It is going to be one hell of a month to rerate all these bonds.
Is pizzas getting delivered to these 3 ratings agencies? Man, still there is not a even a single info on effects of these on pension funds and obligations.
Let me explain what I mean by trend day: if you short the open, and hold a loose stop (say stopped if market is down by only 1.5%), you can leverage up each additional 0.5% decline, keeping trailing stop of 1.5%, and keep shorting in your account until end of day and book profits. Good trading to all.
Altman sounds scared. "This is the worst I have ever seen" "Is it over, I doubt it" "..A further withdrawal of credit from the broader economy"
Man too much is going on, it turns out there was no man behind the curtain...
House of cards ... Smoke and Mirrors ...
No unwind, no CDS netting, no clothes on the emperor ...
For what it's worth.
I've been here for two+ years now and have learned tons of hard info from people. Have used it to try to protect self for what's really coming. And I've tried to be really reasonable.
that said, the service here has been impeccable and the hosts excellent. So, for all of the hard work and weird hours - hit the tip jar. I doubt that they've made what they're worth.
Julie,
If you can have a successful, ethical bank operating today in Chicago, Detroit and Cleveland, as it seems Shore Bank is, then god bless.
Nothing new.
To reprise,
The Fed may lend to whomever they wish in an emergency. Period.
Even a chicken farmer in Arkansas.
That's how we got Clinton?
I would certainly hope that no one tries to catch the falling knife.
We could be talking minus 20 to 30% in the next few weeks.
We have no idea where the big boys have their books marked.
Saying this, many hedge funds are toast.
Margin clerks know no mercy.
Roger Altman on CNBC just said that this weekends events will have a negative effect upon the common man outside wall street due to a sharp decrease in credit. It is not natural, and not positive. It is a negative for us simple folks.
OK. Eaten. I'll check back tomorrow to see who had a weirder evening.
Friend of mine works at MER in the "wealth management" division in Virginia said on Friday that they'll have a huge and important meeting coming Monday.
Coincidence? I don't know.
Cinch
*neutral
not natural
CS, that is a 'heroic' dose, depending upon your weight. Put on Tales From Topographic Oceans and you should be fine.
People, and the media, will get it more so when WaMu or Wachovia fail or have a run on the bank or something.
A-mouse:
I've been reading that O'Brien book that you suggested.
Unfortunately, I think that it's probably a little late for any practical use.
I hate that.
CNBC is on and I am listening. A few moments ago I decided to watch. I have never seen so many sad, long, and frightened faces.
Better to listen and blog.
I can't recall a sunday with this much financial news in my life.
I can't recall a WEEK that's had as much financial news as the past 4 hours. Maybe not even a month.
I will wager that the FED is backstopping a lot of these deals, all in the details.
Looks like buying gold was a good call after all.
Double suicide in the news..... Investigators are trying to decode what SEB and O-Joe may mean.
homedad43,
Thanks for the feedback. I remember recommending that to you and hope it's been helpful. Yeah - lol - too late now! We're all f***ed.
After years of expansion the contraction in the financial sector has begun in earnest. Weak hands have given way to strong hands with stronger balance sheets, in addition to financial backstop from the FED. Today is the dawn of the new era IMHO.
Soon the ATM will quit working for O-Joe, then he won't know what to do.
90 minutes and counting. There is still time for WaMu and Lehman to do something.
Paul Thomas Anderson is working on a film piece of historical fiction based on these recent years of "financial innovation".
It's called, "There Will Be Blood In Your Stool".
WaMu will be gone by the end of the month.
So, what happens when there is less credit available for business. Bankruptcy if the business in not solvent. Or less business spending. Too bad for the few jobs still left in this country.
Worse if we have to inflate the currency.
Bad business here.
"Looks like buying gold was a good call after all."
They'll trash the gold market too ...
Their gonna whipsaw everything until the futures markets are in pieces.
This is what the Chinese call "Interesting times".
NSA - wouldn't Close To The Edge be more appropriate?
Opening scene: Two dinosaurs looking at a flaming horizon under otherwise absolute black skies.
Triceratops 1: This cant be good.
Triceratops 2: Oh well, life will go on.
Triceratops 1: Would you like to cuddle up?
Scene Two: (pan out to a backlit pair of Tyrannosaurs some distance away)
T. Rex 1: I smell fear.
T. Rex 2: Panic in the Herd?
T. Rex 1: Heard that. I taste opportunity in the air.
T. Rex 2: With a hint of ash in the aftertaste.
T. Rex 1: Its times like these I love being big.
Scene Three: (cut to a group of small raptors nosing into any gaps of a smoldering thicket of brambles)
Raptor 1: (acting skittish and squirrelly) Here is another small charred mammal. Do you want it? I have no appetite these things anymore.
Raptor 2: I know, they are everywhere. This is all darkly ominous.
Raptor 3: We should gather them up and take them to the big magic mountain.
Raptor 4: Yes, like an offering in exchange for making this all go away.
Scene Four: (in a slightly distant future, faint rays of sunshine struggle to pierce the enveloping gloom as the shot pans down to a frenzy of small rat like creatures eating a next of eggs)
Iguanodon 1: (exhausted and speaking only to herself) Well thats it. Its over.
(fade to black)
Gary, he will win a Oscar of it.
He deserve.
World markets in crisis?
USA DOD , Army,Navy,Airforce,Marines
Recaptialized value $1.3trillion
World in crisis -anarchy around the next curve
USA DOD dot.com multiple of 60 x =
USA DOD = $78trillion
Buy Treasuries.
In a panic, nothing is a safe asset class.
When the margin clerk calls, you sell what you can, not necessarily what you want.
NSA writes:
This is what the Chinese call "Interesting times"
2008 is Chinese Year of the Rat. go fig
"The Fed has expanded its lending facilities, including accepting equities"
Treason.
If BoA stands behind all of MER trades, is FDIC implicated?
So, if Mer goes and effects BoA balance sheet and BOA goes then FDIC steps in and...
I don't understand how AIG can turn to Fed for help on the same day when the Fed is letting Lehman go down the tube. Is the argument "AIG is TBTF"?
So we wake up to a new day tomorrow.
I wonder if the markets will open?
If things are still screwed up when the sun rises, perhaps the NYSE will invoke Rule 48 "Exemptive Relief Extreme Market Volatility Condition"
The flowers, KKR, and TPG bids for AIG were just withdrawn per CNBC
7 more weeks to go before this is someone elses problem.
A-mouse:
Hey, I'm a scorpio born in the year of the rat.
This is my time, baby!
/snark
Now the suitors of AIG what to leave the dance alone. Unless the FED comes to the ball.
Where does this end.
From the NYT
A.I.G.s extraordinary move of reaching out to the Fed for help may spur other non-investment banks to try a similar move. Companies ranging from General Electric to GMAC have been hurting badly and would desperately love the liquidity that the Fed would provide.
Really wanna open that bag?
The fed should be preparing to protect local and regional banks. Instead, bennie and his money printing republicans are wasting our money on speculators.
Dios Mio!!!!!
876 online
Sunday Night
&
We all got more action than a UFC highlight reel...
......
Note: today has been a VERY heavy news day, and I'm still digesting all the news - so I apologize for no analysis.
As I always say, too damn modest CR...
This might have been echoed above in the 215+ posts but:
good f'in work, I'm off to the tip jar, this has been outstanding....
~n
.........
There can be no doubt that this is a direct result of illegal immigration.
How can anyone take a comment from a person with the name "Republicans are Traitors" seriously? Or "Democrats are Traitors," or "Purple People are Traitors" for that matter.
ot really REbear...they dont take office til Jan 20ish...meaning we have many more trainwrecks to witness on the watch of the current inept admin.
I don't understand how AIG can turn to Fed for help on the same day when the Fed is letting Lehman go down the tube. Is the argument "AIG is TBTF"?
Nobody understands. We're making it up as we go along.
Stability baby. That's what I'm talking about.
Too bad for the few jobs still left in this country.
Worse if we have to inflate the currency. - Ella
That's not the worst of it. The worst is, if the Feds drop money from helicopters, everyone picks it up.... and NOBODY spends it, because they're trying to just hold onto what they have.
That's a 'liquidity trap'...
IF, the guy on the street really internalizes what is going on, there could be a Bailey Building and Loan moment.
A 5% withdrawl of cash from the system, crashes FDIC.
Do not scare Aunt Effie. Could be bad for our health and wealth.
I can't believe they're letting Lehman go. I have friends at Lehman that can't believe the company is going down like this when they are in a much better condition compared to how Bear Stearns was back in March. Anyone think Paulson's screwing Fuld purposefully on this one?
Ella,
that is the scam. Put the FDIC and the federal government (taxpayer) on the hook.
treason.
Excellent job CR keeping up with all this news.
It appears that they're all busy rearranging the chairs on the deck of the Titanic.
from UrbanDictionary.com
"This is a situation when someone tries to futilly reform the way things are done in a failing system."
Gary, he will win a Oscar of it.
debora | 09.14.08 - 10:41 pm | #
Debora, the Oscar will go to Daniel Day Lewis, who will top himself ten times over by aging 300 years and somehow ridding himself of a soul to play Alan Greenspan in the film.
Truly a tour-de-force performance.
I believe John Madden just made a reference to Auction Rate Securities.
"If the helicopters are not in the air by midnight, you are all facing a firing squad"
--Subcommander Bernanke
(taxpayer) on the hook...
Free markets for the profits, debt slavery for the taxpayers. Yep, a very good plan.
Dead beat debtors R's. Borrow and spend
Anyone think Paulson's screwing Fuld purposefully on this one
NOPE.
Paulson thought he was smarter than MR. Market. Looks like he was the George W in the room.
How can anyone take a comment from a person with the name "Republicans are Traitors" seriously? Or "Democrats are Traitors," or "Purple People are Traitors" for that matter.
Well, he's said much more interesting things than you have. That might be one reason.
Board of Governors of the Federal Reserve System
I'm seriously contemplating a request for help from the fed. I figure it's less work than a garage sale or ebay.
Sorry,
Anyone who sends our teenagers to fight a questionable war and then imprisons them for some stupid photos, only to curry favor with our enemies is a TRAITOR.
Looks like he was the George W in the room...
Nodoubt GWB was teaching Paulson how to read "My Pet Goat".
Always asleep at the wheel. Ya' think it might be a plan?
"They (AIG insurance subs) have dedicated balance sheets, and their capital can't be used to shore up capital markets business."
per Ziggurat
Unfortunately, part of AIG salvage plan is upstreaming capital from the subs to the parent. I hope some state insurance commissioners have the stones to block it. If the feds try to interfere, the Texas commissioner should tell Bush not to plan on coming home in January. He won't be welcome after the insurance company is looted just before it is time to pay for hurricane repairs.
Damn, I'm starting to sound like JasJ.
22:42 14Sep08 RTRS-JC FLOWERS, KKR, TPG HAVE WITHDRAWN AIG STAKE BIDS, CITING ANXIOUSNESS OVER COMPANY'S FINANCIAL HEALTH-NYT
22:45 14Sep08 RTRS-RATINGS AGENCIES THREATEN TO DOWNGRADE AIG'S CREDIT RATING BY MONDAY MORNING-NYT
22:46 14Sep08 RTRS-AIG DOWNGRADE WOULD ALLOW COUNTERPARTIES TO WITHDRAW CAPITAL FROM CONTRACTS WITH THE COMPANY-NYT
22:47 14Sep08 RTRS-AIG MAY SURVIVE FOR ONLY 48 HOURS TO 72 HOURS IF COUNTERPARTIES WITHDRAW CAPITAL-NYT
Angry Saver, I think I have a plan. Let us lowly taxpayers ban together so we are TBTF and go begging with our hands out.
One thing for sure--New York is gonna lose a lot of income tax revenue and office rentals. The Financial capital will go broke.
We are going to ZIRP. No question...
Two percent times loans is a whole lot of moola for the system.
There will be a nationalized solution to this problem. Our creditors will demand it or goodbye greenback.
New Christy Minstrels....Greenback Dollar. Linc? Anyone to help the techno impaired?
BREAKING NEWS (REALLY):
KKR, TPG, JC Flowers withdraw their AIG bids per the NYT.
Have savings accounts officially been outlawed?
Accepting equities is the the most bullshit aspect of all of this.
All L3 equities (like LHE, FNM, FRE) and countless other's who have rec'd major haircuts can be turned in at whatever value and that cash is heaved a the market.
Sell-off will only last as long as it takes the Fed to push the money out to the primary dealers in the morning.
THis sums up my feelings:
YouTube -
Fucking Facist Pigs
BTW nice to see Vettel win today....thoroughly deserving driver and team.
Forza Minardi!!
Ciao
MS
Maybe BoA will buy WaMu too. . . .
How much of the real estate bubble (fraud and stupidity) do you think we can link directly to the great Democratic Republik of Kalifornia?
Seems to be right on the heels of another bubble that had Kalifornia roots....hmmmmm......
Consider:
(1) MER bought at 70% premium, all stock
(2) State regulated insurance company make get backstopped by FED
(3) No news on WAMU, but its failure will hollow FDIC
(4)Weekly TAF auctions with increasing amounts
(5)Equities to be traded at Fed instead of liquidated in open market
(6)CDS exposure is now "cat outta the bag"
I can't see getting the toothpaste back in the tube now. Anyone with $10 and half a brain is now clued in. Herd behaviour etc.
Mr. Bernanke, I've got this old boat that appears to be suffering from deflation. I'd like to "ring fence" it by exchanging it for treasuries.
It's totally mint, but because I paid to much and put nothing down and the country is broke I just need a loan until you start dropping $$$$$ from your helicopter.
Thanks Ben. You're a real sport. I always knew we could count on you. I never would have bought the boat at all absent your deflation speech.
We fired our guns and the British kept a'comin'
There wasn't nigh as many as there was a while ago
We fired once more and they began to runnin'
On down the Mississippi to the Gulf of Mexico
Great work CR.
CR for President!
Oh, never mind. . . .
Why ruin a good thing.
oh crap...
someone upped the bidding for LEH to $99MM on ebay
I want to see the seller's fee for this one
link directly to the great Democratic Republik of Kalifornia... almost the same amount as AZ, Bush's Fl and NV
Below 800? How can you go to sleep... wait, maybe they are going to sleep, permanently
Ella Asks: Why BAC pays $29 for ML $17 stock?
Hedge funds short on ML: sept + 9 months out = realized gain of circa $16.2billion at average cover of $12.00
Ml pops to $29 on market open Hedgies sale almost $9billion of anything they got to cover.
Some fun huh?
Only Bush's FL by a few hanging chads.
mp: I doubt they have even that long.
I think Sheila missed a real opportunity to take care of them this weekend. But Treasury probably told her to hold off, having their hands full of Lehman.
If you didn't see the post earlier: Brinker told people to remove money from WaMu since they're not stable. So we can all blame him for the run tomorrow.
Heard Jeb was a big player in the Fl RE market. Making easy for developers and no doubt lenders.
Whoa MS holy shit never seen a rant Like that from you. We're in agreement. The US now rivals Pakistan in defending free market principals.
ANOTHER BS NEW RULE:
it looks as though the curtain between investment and commercial bank will be dropped.
therefore a bank like BofA/Merrill can go to the fed and use that money on it's investment banking side.
how exactly can Goldman or Morgan Stanley compete with that?
(not that I care... just wondering who those two will merge with)
Here you go MiTurn:
Presidential Election Coverage 2008
That ISDA trading session requires Lehman to file for bankruptcy before 11:59 tonight otherwise all the trades made become void. So far as the news goes no official filing has been made. They've only got an hour to go. Is Lehman going to do a Cinderella and stay in business past midnight just to give the finger to the world?
JP, I missed the WAMU comment, where is it?
On Sunday, as the heads of major Wall Bloomberg. Street banks huddled for a third day of emergency meetings at the Federal Reserve Bank of New York, many rank-and-file employees were at work in their offices.
Its all hands on deck, said one senior banker.
OMG- They're starting to work weekends like the rest of us. This really must me serious.
People who held shorts on Merrill over the weekend will be screaming in the morning. This is not over. Expect more black holes to consume hedgies tomorrow.
"A complete re-thinking of the American financial system" --Dylan Ratigan
CNBC special report signing off.
"JP writes:
mp: I doubt they have even that long."
JP, I agree with you. I try to be conservative here.
Anyone notice CNBC's camera shot of The White House?
There's a screen covering the pillars so no one can see who's coming and going. It's serious.
Thanks too, CR. Been lurking here over 1 1/2 years. This blog and all the comments have been invaluable in forming a big picture perspective of what I could see happening on the ground level.
Ben, it the Angry Saver again. In addition to the boat, I've got a AAA SUV that is a real budget buster now that gas prices have soared.
The thing is, my 8 year loan is underwater temporarily so I'm gonna need to swap that into the alphabet soup facility too until the helicopter drop. It's tip top just like the boat so you don't need to worry.
Thanks bud. You're aces with me.
Yes, but will WAMU make it past OPEX?
WTF is going on with this new international consortium of 10 banks contributing 7 billion a piece to a fund.
WTF is going on here?
Wow. AIG. God almighty, I was not expecting them to go with hat in hand to the Fed tonight.
If AIG goes under, much more Hell than I was envisioning, has been unleashed today.
I can't even put words to it. It's like we've pulled back the curtain from the Wizard, and discovered nothing but ourselves behind the curtain...
How will these events play on Money Market accounts. Can they even be considered safe?
Does this mean BAC gets a roughly 30% haircut on Monday?
People who held shorts on Merrill over the weekend will be screaming in the morning. This is not over. Expect more black holes to consume hedgies tomorrow.
They're going to try to poke holes in the deal...
So,
how much is your house worth?
"OMG- They're starting to work weekends like the rest of us. This really must me serious."
Does this mean that rest of us can get the fat bonuses now?
Just asking...
So, are the hedgies going down over this? I think it is time to regulate the CDS's and hedgies.
I'm a conservative guy, forgive me Republicans are Traitors, but had an interesting conversation yesterday.
Spoke with neighbor who's also semi-following what's going on. I spook my friends, really. We discussed war and end of "empire" and that we don't want our kids going off to die for some BS adventure in a land with a two-millenia death wish.
Actually, my kids since his are grown.
My final thought was that if it takes a reboot/collapse to keep my kids out of this nonsense, then I can live with that.
Honestly, I don't agree with the "empire" business, but whatever.
Money markets are not safe.
"How will these events play on Money Market accounts. Can they even be considered safe?"
Not a damn thing in this banana republic is friking safe.
Screens up around White House entrance...
Republicans are Traitors writes:
JP, I missed the WAMU comment, where is it?
LOL. It's in one of 3000 comments of the previous 10 threads today.
Sorry, I can't lay my hands on it. In short, Bob Brinker (whoever he is, lotsa people listen to the guy) alerted folks to the shakiness of WaMu and told them to withdraw their money.
Joe Six Pack writes:
How will these events play on Money Market accounts. Can they even be considered safe?
Watch how you ask the question. Money market accounts may be FDIC insured. Money market funds that hold anything other than short term Treasuries may break the buck. It's always a risk.
"A 5% withdrawl of cash from the system, crashes FDIC.
Do not scare Aunt Effie. Could be bad for our health and wealth.
Ross | 09.14.08 - 10:47 pm | #"
if so, whoever cashes in first - WINS (bank panic unlike the economy is ZERO SUM game).
is it a time I disclose my interests in WaMu and some others to go down, duh since Gross didn't disclose his, why should I?
I am bronevik 1 calling for bronevik 2, are the comrades ready for the storm?
S&P futes just set a new low.
I can't stand it anymore.
Nitey nite.
I think this will be an Ambien nite.
am i the only one who doesn't believe this MER takeout story? there's no facts behind it..everyone keeps quoting the WSJ headline, which is from a story that provides no facts/proof...how does paying a 70% premium for worthless equity make any sense..i'll believe it when i see John Thain at a press conference..as of now, i don't believe this is actually happening (remember KDB for LEH? that didn't really work out)
hm i meant
others going down.
duh
5% You sh---ing me!
Sorry homedad,
I really am not trying to make a statement about the war, just how the republicans pretend to be pro-soldiers but engage in secret trials at Camp Pendleton. Not to mention, not one person in the Country stood up for the soldiers from Abu Grabe (sp?). They were sent to PRISON for nothing, that disgusts me.
DaddieMac writes:
Does this mean BAC gets a roughly 30% haircut on Monday?
Those suggesting that BAC will do anything other than gap down are delusional. I'll find a good approx. figure
Bob Brinker has nationwide weekend program called Money Talk, here in the bay area on KGO (ABC). He's pretty conservative -- same politics as Bill Wattenburg basically -- and has been very bullish, and thus wrong, in the recent past.
He's a big proponent of DCAing.
A-mouse:
If you have access to Vanguard, then plug what you can into their Federal Money Market Account. It's all Treasuries.
It's all good.
Suh-weet.
I'm a conservative guy, forgive me Republicans are Traitors, but had an interesting conversation yesterday.
I'm reading a book called "The Limits of Power" right now.
It's interesting to see a guy who calls himself a conservative vilifying president Reagan while praising Jimmy Carter (or at least some of the speeches he gave).
And he seems to stick by his principles while doing it.
It really makes you wonder what's happened to this world.