Well here is the message to Wall Street. Bailouts only on bk's for critical industries.
Equity is not dead, just mostly dead.
In other words, all of the fools who have geared up, well, you just might lose as we go Japanese and start printing mucho dinero to bail out things we must not allow to fail.
LEH is now going to spion off their assets and put $8 billion of equity into it per headline...so basically we now know that the equity losses embedded are lareger than $8B as they feel like they can sacrifice the $8 for getting $32B of MBS off the books...
"HW reported yesterday that GMAC/ResCap had decided to shutdown its wholesale and retail mortgage origination channels, a move that will cost 5,000 employees their jobs; but GMAC officials told National Mortgage News Thursday that the move wouldnt likely impact production. Much.
Which either means the company was carrying dead weight to the tune of 60 percent of its existing staff base, evidence of surprisingly inept management or it means that the company is planning on growing its other origination channels. Via NMN:
A company spokeswoman said Residential Capital will aggressively market its Ditech direct-to-consumer brand and maintain a presence as a correspondent buyer of mortgages. Asked about origination volume, she cautioned, I dont want to make any predictions, but volumes may not drop much. The company is maintaining direct originations via its DiTech brand."
I'll buy the deadweight and inept management angle...
Sept. 4 (Bloomberg) -- Moody's Investors Service said it may cut the ratings of 854 million euros ($1.2 billion) of constant proportion debt obligations after disclosing a second error in the way it assesses the securities.
Moody's review was ``prompted by the identification of a coding error in a model used for monitoring CPDOs,'' the New York-based firm said in a statement today. Moody's will probably downgrade the affected CPDOs by one or two levels, it said. The securities were sold by banks including ABN Amro Holding NV, JPMorgan Chase & Co. and Lehman Brothers Holdings Inc.
Moody's ousted the head of its structured finance unit two months ago, saying employees broke rules by failing to change the way CPDOs were assessed after discovering a fault in its rating model. Moody's awarded the top Aaa ratings to at least $4 billion of the securities, funds backed by credit-default swaps, before they lost as much as 90 percent of their value.
This highlights the problems that Moody's and the other ratings firms had in modeling structured credit,'' said Jeroen van den Broek, head of investment-grade credit strategy at ING Bank NV in Amsterdam. <b>That's why they wound up giving Aaa ratings to deals that should never, ever have received them.''
"Ex-Refco Chief Bennett Begins 16-Year Term for Fraud
By David Glovin and Thom Weidlich
Sept. 4 (Bloomberg) -- Former Refco Inc. Chief Executive Officer Phillip Bennett entered a federal prison to begin a 16-year sentence for cheating investors out of $2.4 billion in what prosecutors said was one of the worst white-collar frauds.
Bennett, 60, surrendered to the Federal Correctional Institution at Fort Dix, New Jersey, at 12:15 p.m. today, according to Bureau of Prisons spokeswoman Felicia Ponce. In February, he pleaded guilty to bank fraud and money laundering stemming from an eight-year scheme to deceive banks, auditors and investors, including Boston-based buyout firm Thomas H. Lee Partners LP.
``He has reported and he's at Fort Dix,'' Ponce said.
Once the biggest independent U.S. futures trader, New York- based Refco collapsed in October 2005, two months after raising $670 million in an initial public offering. The company, which provided clearing and prime-brokerage services, filed for bankruptcy after disclosing that a Bennett-controlled firm owed hundreds of millions of dollars to Refco.
Bennett becomes the latest CEO to land behind bars for fraud. Former WorldCom Inc. CEO Bernard Ebbers is serving 25 years for accounting fraud, and Enron Corp. ex-CEO Jeffrey Skilling got a 24-year term for the same crime. Bayou Group LLC's Samuel Israel was sentenced in April to 20 years."
There's more at the original article...apparently whether you go to prison or not depends on who you steal from.
I smell a rate cut coming. Everything is in place to allow it, except for another "crisis" in the markets that can't be solved by new lending facilities. Maybe LEH falling apart and a re-test of the previous lows would suffice?
FDIC chair to speak at dinner today
"Sheila Bair, chairman of the FDIC, will address a sold-out dinner tonight at the Sarasota Hyatt. The dinner is being sponsored by the Florida Bankers Association and about 520 bankers are expected to attend, said Tramm Hudson, a local banking consultant who will participate in the event." BradentonHerald.com 404
ehman May Shift About $32B In Assets To New Entity-Bloomberg
Last update: 9/4/2008 3:31:36 PM
DOW JONES NEWSWIRES
Lehman Brothers Holdings Inc. (LEH) may shift about $32 billion in commercial mortgages and real estate into a new company that will be spun off, Bloomberg reported Thursday, citing sources. The new company would receive $8 billion in equity from Lehman and would borrow the remaining $24 billion from Lehman or outside investors. Lehman would replace capital put into the bank. The new entity would be owned by current Lehman shareholders.
The answer is the same as the economic prescription in 1966. Get the commercial (money creating) depository institutions out of the savings business. Impose interest rate ceilings on these banks, lower them gradually, until interest payments are eliminated on depositor's balances. But extend any restraints on the non-banks. (this is way over the head of all economists).
In almost every instance in which Keynes wrote the term bank in the General Theory, it is necessary to substitute the term financial intermediary in order to make the statement correct. Perhaps this is the source of the pervasive error that characterizes the Keynesian economics, the Gurley-Shaw thesis, Reg Q, the DIDMCA of March 31st, 1980, the Garn-St. Germain Depository Institutions Act of 1982, etc.
Recession? Impossible. We are just a nation of whiners who imagine that things are bad. What we need is Palin as President. She would castrate any recession before it got even close and then machinegun it to death. If only she were in the White House now.
How does the FED follow a "tight" money policy and still advance economic growth.? What should be done? The commercial banks should get out of the savings business (REG Q in reverse-but leave the non-banks unrestricted-compensated for transition). What would this do? The commercial banks would be more profitable - if that is desirable. Why? Because the source of all time deposits within the commercial banking system, is demand/transaction deposits - directly or indirectly through currency or their undivided profits accounts. Money flowing "to" the intermediaries (non-banks) actually never leaves the com. banking system as anybody who has applied double-entry bookkeeping on a national scale should know. The growth of the intermediaries/non-banks cannot be at the expense of the com. banks. And why should the banks pay for something they already have? I.e., interest on time deposits.
crispy&cole writes:
CNN reporting several black helicopters crashed into the Hudson river...transformed into missle launching submarines and continued firing.
Merrill Lynch Employee Killed At Light Rail Station -Report
Last update: 9/4/2008 3:52:46 PM
DOW JONES NEWSWIRES
A Merrill Lynch & Co. employee was stabbed to death near a light rail station in Jersey City Thursday morning, according to a Jersey Journal report on the nj.com Web site. Metuchen, N.J., resident Michael J. Fuccile, 36, was on his way to work in Jersey City, officials said. A Jersey City man was charged with the stabbing, which had no apparent motive, authorities said. Police said the suspect has a history of mental illness.
Full story at Metuchen commuter stabbed to death at Liberty State rail station | New Jersey Real-Time News - - NJ.com
The Euro is basically in free fall and the only places catching a bid are the dollar and treasuries. SocGen just put out a market warning that an all out crash is imminent. This on the heals of Gross basically begging for monetization of debt (printing). Something's gotta give and soon. Going from bad to worse at light speed. Too much debt, not enough money to pay it off.
FHFA NOTICE OF ESTABLISHMENT SENT TO THE FEDERAL REGISTER
Washington, DC The Federal Housing Finance Agency (FHFA) has transmitted to the Federal Register a Notice of Establishment of a New Independent Agency. This provides formal public notice of the existence of the Agency, its purpose and the chapter of the Code of Federal Regulations (CFR) that it will employ for public dissemination of regulations, guidances and other publications. The new chapter of the Code is Title 12 CFR Chapter XII.
FHFA was established July 30, 2008 and is making good progress in integrating the Office of Federal Housing Enterprise Oversight (OFHEO), the Federal Housing Finance Board and HUD mission and affordable housing programs. Additional announcements will be forthcoming on issues relating to the joining of the agencies as well as regulations from the new Agency. New regulations will be necessary to address routine merger matters, but as well to implement, where necessary, the many new authorities, powers and directions given to FHFA that modernize and strengthen supervision of Fannie Mae, Freddie Mac and the Federal Home Loan Banks. All existing regulations, orders and decisions of OFHEO and the Finance Board remain in effect until modified or superseded.
FHFA was established to ensure that Fannie Mae, Freddie Mac and the Federal Home Loan Banks operate in a safe and sound manner, said FHFA Director James B Lockhart. We are working quickly to set up the regulatory framework needed to make certain that their operations and activities foster liquid, efficient, competitive, and resilient national housing finance markets.
Not enough dip buyers to pull it out of the stall. Perhaps it's dawning on them that the effect of diving into the dips will be the same as in "Roger Rabbit".
I've never believed in the Plunge Protection Team buying stocks to keep the market up. When the dip buyers have all been dissolved by the "Roger Rabbit" dips, the applicable cartoon series will become "RoadRunner" (Wile E. Coyote).
As I've recommended so many times, read Richard Koo's "Balance Sheet Recession" about the Japanese implosion. It can happen here.
Let's get this crash over with (kinda like a shotgun marriage) before the baby is born. His daddy, GWB, is about to head out of the country to places without extradiction treaties.
Black Thursday, Black Monday, and Black Tuesdayare used to describe this collapse of stock values. All three are appropriate, for the crash was not a one-day affair. The initial crash occurred on Black Thursday (October 24, 1929), but it was the catastrophic downturn of Black Monday and Tuesday (October 28 and October 29, 1929) that precipitated widespread panic and the onset of unprecedented and long-lasting consequences for the United States. The collapse continued for a month.
I'd suggest we get an earlier start to avoid media conflict with the election: Thurs, Sept 25 is open on my calendar. That allows for a full month of reality before the elections, and perhaps the peeling away of most of the scab of the last four years of manipulated statistics and financial mayhem.
"The honeymoon period of the next president should be interesting."
By next April, the "winner" will wondering just why in hell he got the damn fool idea to run for President in the first place. By contrast, the "loser" will get up each morning and let out a big sigh of relief as he enjoys his morning coffee and reads about the economic shitstorm enveloping the new occupant of the Oval Office.
CR to his shame used negative feedback loop. Hey 'death spiral' has a nice ring to it.
DOW down 300 points today and no one knows why. Speculation in the NY Times:
"Speculation focused on fears about the direction of the economy, though it remained unclear why anxieties that have been around for months would suddenly take hold."
DOW down 300 points today and no one knows why. Speculation in the NY Times:
"Speculation focused on fears about the direction of the economy, though it remained unclear why anxieties that have been around for months would suddenly take hold."
How does the FED follow a "tight" money policy and still advance economic growth.?
Well presumably the point of "tight monetary policy" would be to constrain growth that poses a threat to long-term stability.
I thinking there's growing evidence to support the argument that using monetary policy to promote economic growth is a bad idea. Again, what do green pieces of paper have to do with real economic growth? They're ultimately just a method of communicating (the possession of wealth), not the wealth itself. So all the Fed can really do to actively promote growth is to tell the messenger between economic agents (i.e. the currency) to lie about what's really going on.
I'd argue that the Fed should be focused on promoting an environment conducive to economic growth, not on promoting growth itself. In other words, their goal should be maintaining a stable financial system and a credible currency so that impediments to economic growth are minimized. That doesn't necessarily guarantee growth will occur, but I think that's the best you can expect from a central bank -- money and finance are about the representation of wealth. The actual creation of wealth is not their specialty. And it shows.
Steep drop due to big-boy players boycotting directives from on high. Real time market manipulation to force a political resolution to the insolvency. Blackmail the public purse, force the FED to take more impaired collateral, pressure a big bank nationalization...take your pick. Will come out in next few days...maybe a HUGE FDIC friday moment.
since krudlow & co blamed last weeks market declines on obama/biden speecheser if he'll blame gun totin' sarah for today's drop......nah...never happen....gotta be something the clintons did.........
Maybe yes, but probably a hedge fund melted on the commodity crash and the yield crash, and the housing crash and then Palin looks too good to be true in her starring role as Monica Lewinsky!!
When you have movements of two sigma or more, or two standard deviations or more, in oil or energy markets, there's always going to be some hedge fund that's going to be on the wrong side of the market," said Charles Gradante, principal at the Hennessee Group, which monitors hedge fund performances.
Foreign central banks reduced their U.S. agency security holdings at the Federal Reserve by $9.75 billion in the latest week to a total of $958.57 billion, according to data from the central bank released on Thursday.
The data may add to recent evidence that overseas investors are worried about the troubled mortgage giants.
The drop marked a seventh straight week of declines in offshore central bank holdings of bonds issued or guaranteed by government-sponsored enterprises
GLG Partners, Inc. Q2 2008 Earnings Call Transcript August 19, 2008 GLG Partners, Inc. Q2 2008 Earnings Call Transcript -- Seeking Alpha
To-date we have received redemption request for $2.2 billion, the bulk of which will be reflected in the fourth quarter. However, we can still receive additional redemption request. Separately, I want to note that Asia is an area of growing focus for us. Were set to open a GLG office in Beijing during the fourth quarter of 2008 and have hired a terrific person to promote and grow our business and footprint there.
On the redemption side I think that we are going to see redemptions in this industry as a whole the distress in other financial institutions, there is a weak performance in the space. And I think there is going to be a common theme in the alternative market and the Fund of Funds. The challenge for us and the opportunity to be able to run fast and hard win mandates at the same time to offset the redemptions.
...we had people delay and cancelled and as I said I had expected to see 4 billion of redemption so far its only been 2.2 now. They could meet with the new team and decide they not to their liking or want to take away this attitude and continue the redemption
Can Lehman move it's toxic waste to a spin-off, (Spinco), and release itself from the liabilities that the moved assets incur? I am confused. How can a company relieve itself from liabilities by moving assets? Does this seem a bit looney to anybody other than me?
Many other hedge funds besides Legends are now closing their doors. Atticus Capital took a $5 billion pasting in July, Ospraie Management is shuttering its commodities fund, which has lost 40% in 2008 alone. In the interconnected working oligopoly that is modern finance, Ospraie's trials are casting a long shadow; with 20% of the firm owned by Lehman Brothers. It is the small domino of Ospraie leaning onto the big one of Lehman that has the market's focus fixing on Lehman to see if it is the next great house of money to place a phone call to the office furnishings auctioneer.
In the Frank Herbert science fiction series Dune, a class of humans called "Mentat" were specifically bred to be able to serve rulers with awesome and breathtaking feats of mental agility. Reading the financial press up to about a year ago, you might have thought that a spaceship full of Mentats had landed in hedge-fund central in Greenwich, Connecticut, to rule that business as a first step towards the conquest of the world.
We now know that nothing of the sort was happening. What we saw in the rise and current fall of the hedge-fund empires was just another example of Gresham's Law, that bad money drives out good. By allowing paper money to be debased through unregulated structured finance, the world's central bankers drove out the good money, stock certificates, and the actual physical goods represented by such, driving up their prices. Asia Times Online :: Asian news and current affairs
Reality has found a place to dwell.....get the raincoats on boys and girls because there is no avoiding the spray that is coming when the $hit finally hits the fan blades. Oh, and by he way....wear your goggles and keep your mouths closed.
"Natixis SA, France's fourth-largest bank, will sell shares for 61 percent less than its market value to raise 3.7 billion euros ($5.4 billion) after writedowns related to the U.S. subprime contagion depleted capital."
Yah, I'm feeling it now, deep inside, uhhhgghusghhh
New York-based Ambac on Dec. 13 took out insurance on $29 billion in securities it guarantees, transferring the risk to Assured Guaranty. MBIA said this week it will receive a $1 billion investment from private equity firm Warburg Pincus LLC and Groupe Banque Populaire and Groupe Caisse d'Epargne agreed to take control of CIFG from their Natixis SA banking subsidiary and double its capital....
Screw Bill Gross. I just can't stand to hear billionaires beg for money printing.
Here's the gig Mr. Gross. All that paper wealth you and your financier buddies acquired does not have a guaranteed value. Put it to productive use, or someone else will. The days of making money from money are long gone.
We never should have turned our economy over to the financiers. Industry did a much better job of creating AND distributing wealth.
Financiers don't know what to do with money. They just know how to be middle men. Unfortunately, the financiers now control too much of the actual money. Fish or cut bait.
CIFG, which is based in Bermuda, an offshore insurance market, said it has tentative agreements that would let it cancel about $12 billion in guarantees on collateralized debt obligations in exchange for an undisclosed amount of cash and equity.
Banque Populaire and Caisse d'Epargne, which together own French bank Natixis SA, took over control of CIFG from Natixis last year, in a bid to boost capital.
Re:
"Natixis SA, France's fourth-largest bank, will sell shares for 61 percent less than its market value to raise 3.7 billion euros ($5.4 billion) after writedowns related to the U.S. subprime contagion depleted capital."
check this out:
"Lehman May Shift $32 Billion of Mortgage Assets to `Bad Bank'
By Yalman Onaran
Sept. 4 (Bloomberg) -- Lehman Brothers Holdings Inc. may shift about $32 billion of commercial mortgages and real estate to a new company that will be spun off in a move similar to the good-bank-bad-bank model used in the 1980s banking crisis, two people briefed on the discussions said.
The bad bank, nicknamed Spinco for now, would have about $8 billion of equity coming from Lehman, the people said, speaking on condition of anonymity because the plan is one of several under consideration. Spinco would borrow the remaining $24 billion from Lehman or outside investors. The New York-based bank would replace capital put into Spinco, whose shares would be owned by current Lehman shareholders."
How do you make a contribution to reduce the debt?
Make your check payable to the Bureau of the Public Debt, and in the memo section, notate that it is a Gift to reduce the Debt Held by the Public. Mail your check to:
Attn Dept G
Bureau Of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188
Any time something good happens for Obama, the stock market gets jittery. I don't pretend to know why. But it seems the business community isn't sure about Sarah Palin and hence, the fortunes of the McCain ticket. This is more than just an oolie-oo coincidence.
Now personally I think Palin isn't such a bad pick, but apparently the pigs who have laid waste to our financial system do think she's a bad sign.
They will be getting their redemption notices on the fax machine- anybody else owe Lehman callable debt?
Your notice is on the machine.
As for market assets- that was what today was all about- I imagine Lehman is going to do whatever it takes to raise cash- call the Fed next!
I think the subtext of Yellen's speech is here:
"Doing the math leaves us with a slightly negative real federal funds rate. Does this mean that policy is highly accommodative? Normally, a negative real funds rate would imply that the answer is "yes" because it is typically associated with low borrowing costs and easy credit termsthat is, easy overall financial conditions. But, as I discussed, overall financial conditions are probably more restrictive now than when the financial crisis struck a year ago, so the slightly negative real funds rate does not imply a highly accommodative policy stance. In other words, policy must be calibrated to push through the substantial headwinds the economy faces. While the economy did well in the second quarter, that strength, as I indicated, is likely to prove ephemeral. My forecast is for sluggish growth in the second half of this year, with substantial downside risksespecially emanating from the financial system."
Pushing on a string. All the Fed can do is let inflation rip and keep patching up the financial system until it begins to breathe credit into the general economy, until then, stagflation.
Not what anybody seems to want or expect but little old me.
Stagflation. The speech drips with acceptance of it as the muddle through method of choice.
Well, I am looking forward to a night of hot steak on salad with a cold refreshing beverage, then ignoring the football game my wife wants to watch while playing a game of checkers with my son.
I might list some junk on craigslist to liquify before all of the money disappears from phoenix.
Old Man
Threescore and ten I can remember well:
Within the volume of which time I have seen
Hours dreadful and things strange; but this sore night
Hath trifled former knowings.
ROSS
Ah, good father,
Thou seest, the heavens, as troubled with man's act,
Threaten his bloody stage: by the clock, 'tis day,
And yet dark night strangles the travelling lamp:
Is't night's predominance, or the day's shame,
That darkness does the face of earth entomb,
When living light should kiss it?
Old Man
'Tis unnatural,
Even like the deed that's done. On Tuesday last,
A falcon, towering in her pride of place,
Was by a mousing owl hawk'd at and kill'd.
ROSS
And Duncan's horses--a thing most strange and certain--
Beauteous and swift, the minions of their race,
Turn'd wild in nature, broke their stalls, flung out,
Contending 'gainst obedience, as they would make
War with mankind.
Old Man
'Tis said they eat each other.
ROSS
They did so, to the amazement of mine eyes
That look'd upon't. Here comes the good Macduff.
rich,
I think Ike is much more likely to hit Florida and head up the East Coast or drift across the Gulf into Mexico area than head for the New Orleans area. It would be almost without precedent for a storm coming from this direction to end up in the New Orleans area.
energyecon writes:
I like it - "adverse feedback loop" - that is the phenomenon of positive feedback with negative consequences...
energyecon | 09.04.08 - 3:17 pm | #
Why not just use the term vicious cycle, as opposed to virtuious cycle
Haha. Feedback loops. Don't you need differential equations to solve those things? I wonder how often the solution is a simple linear equation? Could somebody explain how non-linear solutions can result in Brownian motion? Oh, nevermind. I don't care as long as I can collect enough fees on the derivatives I underwrite to be the top dog down at the strip club. America, f*ck yeah!
Ok, guys. Stop looking at the black line in the middle of the hurricane cone of destruction. It means NOTHING.
My personal weatherman sez that as of a few hours ago there were 2 sets of models, one taking it north along the Florida coast, one south. Both have models they find good and not so good.
The black line is kind of an informed eye-balling of 2 extremely divergent sets of models. If they picked one or the other, and got it wrong they would be WAY off. Those cones are just educated guesses, and will be for 2 more days
Dr. Yellen is the only Fed president who seems to occupy the same planet as the rest of us. Plus she doesn't use "FedSpeak", she just says what she needs to in plain english. Yes, many of her speeches reiterate the obvious, but at least she is not oblivous to the obvious like the rest of the Fed.
I talked to an electrical engineer I know who migrated into finance about the terminology conundrum - negative versus positive feedback.
He explained that "positive" or "negative" feedback is purely a convention.
In the classic textbook examples of circuits that are used to teach first year electrical engineering students, the gains on all components is assumed to be positive, and a negative feedback term helps stabilize the system.
But in the real world, you can systems which invert signals, or you can have 3 inputs and 5 outputs which are used to generate the feedback signal - you end up with a matrix of feedback terms, some which may be positive, others negative.
In order to avoid confusion, he preferred using "stabilizing" and "destabilizing".
Without commenting on the merit of Yellen's argument regarding the (sick) state of the economy, she has a long sorry record of ignoring or denying the inflation risks accruing from aggressive rate cuts. We're in the current pickle due to Alan (I never a met a bubble I didn't love) Greenspan's 1% trough.
Doing the math leaves us with a slightly negative real federal funds rate.
Slightly? With a (grossly understated) CPI currently running above 6% annually, the real funds rate is -4%. Yellen needs a math lesson.
Yellen- "With regard to core inflation, I wouldn't be surprised if it runs modestly higher for a while, too, as businesses pass on some of their higher energy, transportation, and other costs to customers. However, for several reasons, I expect both headline and core inflation to move down to a much more moderate rate of just over 2 percent next year."
Conjure Bag re-affirms his August 20 forecast for peak core inflation.
First - default.
The honeymoon period of the next president should be interesting.
The next president is likely to have about as much of a honeymoon as Lincoln did.
Fat bottomed girls are always behing the curve.
Well here is the message to Wall Street. Bailouts only on bk's for critical industries.
Equity is not dead, just mostly dead.
In other words, all of the fools who have geared up, well, you just might lose as we go Japanese and start printing mucho dinero to bail out things we must not allow to fail.
Your 2 and 20 is not on the list.
Have a nice day.
Someday this war's gonna end...
interplanet janet she's a galaxy girl...
YouTube - Schoolhouse Rock - Interplanet Janet
Ciao
MS
"Fat bottomed girls are always behing the curve."
Ross | 09.04.08 - 3:04 pm | #
Here I thought they made the rockin world go round...
Chris
Do they get paid to spout the obvious?
PPT right on time...
Is Yellen a voting member?
If so then she is talking out of both sides of her mouth...If not then, I wish she was voting
Distressed mortgage-related assets are attractive, the manager of the world's biggest bond fund said on Thursday.
Pimco's Gross says distressed mortgages attractive: report
| Reuters
This bastard has no shame at all. Someone need to put a bullet in this meat head.
"we can no longer count on exports as an important source of strength"
Tell that to the perma-bulls who visit here!!
"Decidedly subpar"
For a second there I thought they were speaking to the Fed's performance starting in 1981....
Ciao
MS
stop yelling!
My eye started to tick the other day. I shorted the Earth, it worked!!!
I like it - "adverse feedback loop" - that is the phenomenon of positive feedback with negative consequences...
Yes, I see the PPT choppers are flying!!!
I'll believe a Fed monetizer when they change the mantra from "too big to fail," to "too big to bail." It won't be too much longer...
OT,
A-mouse, you see the yen test the 100 DMA (from the 50 DMA in a single day, woot!)?
LEH is now going to spion off their assets and put $8 billion of equity into it per headline...so basically we now know that the equity losses embedded are lareger than $8B as they feel like they can sacrifice the $8 for getting $32B of MBS off the books...
Of interest:
"HW reported yesterday that GMAC/ResCap had decided to shutdown its wholesale and retail mortgage origination channels, a move that will cost 5,000 employees their jobs; but GMAC officials told National Mortgage News Thursday that the move wouldnt likely impact production. Much.
Which either means the company was carrying dead weight to the tune of 60 percent of its existing staff base, evidence of surprisingly inept management or it means that the company is planning on growing its other origination channels. Via NMN:
A company spokeswoman said Residential Capital will aggressively market its Ditech direct-to-consumer brand and maintain a presence as a correspondent buyer of mortgages. Asked about origination volume, she cautioned, I dont want to make any predictions, but volumes may not drop much. The company is maintaining direct originations via its DiTech brand."
I'll buy the deadweight and inept management angle...
wait a minute... since when is subpar a bad thing?
Fred, do you have a link??? Is that what's causing the mini rally?
JMoody's May Downgrade CPDOs After Error in New Model (Update2)
By Neil Unmack and John Glover
Sept. 4 (Bloomberg) -- Moody's Investors Service said it may cut the ratings of 854 million euros ($1.2 billion) of constant proportion debt obligations after disclosing a second error in the way it assesses the securities.
Moody's review was ``prompted by the identification of a coding error in a model used for monitoring CPDOs,'' the New York-based firm said in a statement today. Moody's will probably downgrade the affected CPDOs by one or two levels, it said. The securities were sold by banks including ABN Amro Holding NV, JPMorgan Chase & Co. and Lehman Brothers Holdings Inc.
Moody's ousted the head of its structured finance unit two months ago, saying employees broke rules by failing to change the way CPDOs were assessed after discovering a fault in its rating model. Moody's awarded the top Aaa ratings to at least $4 billion of the securities, funds backed by credit-default swaps, before they lost as much as 90 percent of their value.
This highlights the problems that Moody's and the other ratings firms had in modeling structured credit,'' said Jeroen van den Broek, head of investment-grade credit strategy at ING Bank NV in Amsterdam. <b>That's why they wound up giving Aaa ratings to deals that should never, ever have received them.''
[snip]
Also of interest:
"Ex-Refco Chief Bennett Begins 16-Year Term for Fraud
By David Glovin and Thom Weidlich
Sept. 4 (Bloomberg) -- Former Refco Inc. Chief Executive Officer Phillip Bennett entered a federal prison to begin a 16-year sentence for cheating investors out of $2.4 billion in what prosecutors said was one of the worst white-collar frauds.
Bennett, 60, surrendered to the Federal Correctional Institution at Fort Dix, New Jersey, at 12:15 p.m. today, according to Bureau of Prisons spokeswoman Felicia Ponce. In February, he pleaded guilty to bank fraud and money laundering stemming from an eight-year scheme to deceive banks, auditors and investors, including Boston-based buyout firm Thomas H. Lee Partners LP.
``He has reported and he's at Fort Dix,'' Ponce said.
Once the biggest independent U.S. futures trader, New York- based Refco collapsed in October 2005, two months after raising $670 million in an initial public offering. The company, which provided clearing and prime-brokerage services, filed for bankruptcy after disclosing that a Bennett-controlled firm owed hundreds of millions of dollars to Refco.
Bennett becomes the latest CEO to land behind bars for fraud. Former WorldCom Inc. CEO Bernard Ebbers is serving 25 years for accounting fraud, and Enron Corp. ex-CEO Jeffrey Skilling got a 24-year term for the same crime. Bayou Group LLC's Samuel Israel was sentenced in April to 20 years."
There's more at the original article...apparently whether you go to prison or not depends on who you steal from.
Fed's Yellen Crisis
hooocudanode
I smell a rate cut coming. Everything is in place to allow it, except for another "crisis" in the markets that can't be solved by new lending facilities. Maybe LEH falling apart and a re-test of the previous lows would suffice?
FDIC chair to speak at dinner today
"Sheila Bair, chairman of the FDIC, will address a sold-out dinner tonight at the Sarasota Hyatt. The dinner is being sponsored by the Florida Bankers Association and about 520 bankers are expected to attend, said Tramm Hudson, a local banking consultant who will participate in the event."
BradentonHerald.com 404
Her focus on unemployment (and exports) and the potential negative feedback loops is very important.
I've joked about "feedback loop nazis" in the past, but I feel the need to jump in too.
The term "negative feedback loop" has a very well established meaning which typically implies a process of attenuation and stabilization.
I think you're using a term that means the opposite of what you're intending to say.
We're dealing with a positive feedback loop involving negative events.
The technical term for this is a "death spiral".
gn-
have to agree......they did not do any repo yesterday....a first for a very long time. Possibly in anticipation of that.
Wouldn't surprise me at all.
Ciao
MS
FDIC chair to speak at dinner today
"Sheila Bair, chairman of the FDIC, will address a sold-out dinner tonight at the Sarasota Hyatt."
Anyone want to bet that toast will be served?
MS, I now have Interplanet Janet stuck on endless loop in my head. I always hated that song. Thanks a lot.
-Jaso
Jesus we're coming up on it fast. Inflection point and decision time for the Treasury and the Fed. Default or Print.
here's the LEH story....
ehman May Shift About $32B In Assets To New Entity-Bloomberg
Last update: 9/4/2008 3:31:36 PM
DOW JONES NEWSWIRES
Lehman Brothers Holdings Inc. (LEH) may shift about $32 billion in commercial mortgages and real estate into a new company that will be spun off, Bloomberg reported Thursday, citing sources. The new company would receive $8 billion in equity from Lehman and would borrow the remaining $24 billion from Lehman or outside investors. Lehman would replace capital put into the bank. The new entity would be owned by current Lehman shareholders.
Got it from A-trade streamer
Ciao
MS
The answer is the same as the economic prescription in 1966. Get the commercial (money creating) depository institutions out of the savings business. Impose interest rate ceilings on these banks, lower them gradually, until interest payments are eliminated on depositor's balances. But extend any restraints on the non-banks. (this is way over the head of all economists).
In almost every instance in which Keynes wrote the term bank in the General Theory, it is necessary to substitute the term financial intermediary in order to make the statement correct. Perhaps this is the source of the pervasive error that characterizes the Keynesian economics, the Gurley-Shaw thesis, Reg Q, the DIDMCA of March 31st, 1980, the Garn-St. Germain Depository Institutions Act of 1982, etc.
Recession? Impossible. We are just a nation of whiners who imagine that things are bad. What we need is Palin as President. She would castrate any recession before it got even close and then machinegun it to death. If only she were in the White House now.
How does the FED follow a "tight" money policy and still advance economic growth.? What should be done? The commercial banks should get out of the savings business (REG Q in reverse-but leave the non-banks unrestricted-compensated for transition). What would this do? The commercial banks would be more profitable - if that is desirable. Why? Because the source of all time deposits within the commercial banking system, is demand/transaction deposits - directly or indirectly through currency or their undivided profits accounts. Money flowing "to" the intermediaries (non-banks) actually never leaves the com. banking system as anybody who has applied double-entry bookkeeping on a national scale should know. The growth of the intermediaries/non-banks cannot be at the expense of the com. banks. And why should the banks pay for something they already have? I.e., interest on time deposits.
to heck with the commercial banks - get rid of Reg T
CNN reporting several black helicopters crashed into the Hudson river...
crispy&cole writes:
CNN reporting several black helicopters crashed into the Hudson river...transformed into missle launching submarines and continued firing.
ac, notice that Yellen used "adverse feedback loop" to avoid the confusion.
That is a better description.
Best Wishes.
FPILF?
PPT performance today: FAIL
DJI now only $211 from going below $11.000.
Maybe they can save the S&P tomorrow with an earlier helo takeoff.
file under paybacks are a bitch:
Merrill Lynch Employee Killed At Light Rail Station -Report
Last update: 9/4/2008 3:52:46 PM
DOW JONES NEWSWIRES
A Merrill Lynch & Co. employee was stabbed to death near a light rail station in Jersey City Thursday morning, according to a Jersey Journal report on the nj.com Web site. Metuchen, N.J., resident Michael J. Fuccile, 36, was on his way to work in Jersey City, officials said. A Jersey City man was charged with the stabbing, which had no apparent motive, authorities said. Police said the suspect has a history of mental illness.
Full story at Metuchen commuter stabbed to death at Liberty State rail station | New Jersey Real-Time News - - NJ.com
Ciao
MS
"Blah, blah, blah...the economy sucks, moral hazard is bad..."...
"Here's a pony for you Bear Sterns....and one for you GM....and one for you Freddie AND YOU Fannie.."
"Blah, blah, blah..."
Grow a pair or GTFO.
anybody care to bet on the size of the birth/death adjustment ?
I'll bet you can't wait to buy this stock, especially after the analysts rate it a strong buy.
DOW 7000 is my name and I'm glad to meet you!
ac, notice that Yellen used "adverse feedback loop" to avoid the confusion.
If by adverse, she means death and by feedback loop, she means spiral, we're in a total agreement.
That was fun Daddy! Can we do it again?
wow, it's nice to breathe - agai
The Euro is basically in free fall and the only places catching a bid are the dollar and treasuries. SocGen just put out a market warning that an all out crash is imminent. This on the heals of Gross basically begging for monetization of debt (printing). Something's gotta give and soon. Going from bad to worse at light speed. Too much debt, not enough money to pay it off.
For Immediate Release
September 4, 2008
FHFA NOTICE OF ESTABLISHMENT SENT TO THE FEDERAL REGISTER
Washington, DC The Federal Housing Finance Agency (FHFA) has transmitted to the Federal Register a Notice of Establishment of a New Independent Agency. This provides formal public notice of the existence of the Agency, its purpose and the chapter of the Code of Federal Regulations (CFR) that it will employ for public dissemination of regulations, guidances and other publications. The new chapter of the Code is Title 12 CFR Chapter XII.
FHFA was established July 30, 2008 and is making good progress in integrating the Office of Federal Housing Enterprise Oversight (OFHEO), the Federal Housing Finance Board and HUD mission and affordable housing programs. Additional announcements will be forthcoming on issues relating to the joining of the agencies as well as regulations from the new Agency. New regulations will be necessary to address routine merger matters, but as well to implement, where necessary, the many new authorities, powers and directions given to FHFA that modernize and strengthen supervision of Fannie Mae, Freddie Mac and the Federal Home Loan Banks. All existing regulations, orders and decisions of OFHEO and the Finance Board remain in effect until modified or superseded.
FHFA was established to ensure that Fannie Mae, Freddie Mac and the Federal Home Loan Banks operate in a safe and sound manner, said FHFA Director James B Lockhart. We are working quickly to set up the regulatory framework needed to make certain that their operations and activities foster liquid, efficient, competitive, and resilient national housing finance markets.
Yeah, sure.
Howls of derisive laughter.
G'day Bruce.
Someday this war's gonna end...
Stock market fall down, go boom.
Not enough dip buyers to pull it out of the stall. Perhaps it's dawning on them that the effect of diving into the dips will be the same as in "Roger Rabbit".
I've never believed in the Plunge Protection Team buying stocks to keep the market up. When the dip buyers have all been dissolved by the "Roger Rabbit" dips, the applicable cartoon series will become "RoadRunner" (Wile E. Coyote).
As I've recommended so many times, read Richard Koo's "Balance Sheet Recession" about the Japanese implosion. It can happen here.
Euro is now down 2 cents since Jan 2008, 26 cents for its all time high in April.
Let's get this crash over with (kinda like a shotgun marriage) before the baby is born. His daddy, GWB, is about to head out of the country to places without extradiction treaties.
Black Thursday, Black Monday, and Black Tuesdayare used to describe this collapse of stock values. All three are appropriate, for the crash was not a one-day affair. The initial crash occurred on Black Thursday (October 24, 1929), but it was the catastrophic downturn of Black Monday and Tuesday (October 28 and October 29, 1929) that precipitated widespread panic and the onset of unprecedented and long-lasting consequences for the United States. The collapse continued for a month.
I'd suggest we get an earlier start to avoid media conflict with the election: Thurs, Sept 25 is open on my calendar. That allows for a full month of reality before the elections, and perhaps the peeling away of most of the scab of the last four years of manipulated statistics and financial mayhem.
"The honeymoon period of the next president should be interesting."
By next April, the "winner" will wondering just why in hell he got the damn fool idea to run for President in the first place. By contrast, the "loser" will get up each morning and let out a big sigh of relief as he enjoys his morning coffee and reads about the economic shitstorm enveloping the new occupant of the Oval Office.
CR to his shame used negative feedback loop. Hey 'death spiral' has a nice ring to it.
DOW down 300 points today and no one knows why. Speculation in the NY Times:
"Speculation focused on fears about the direction of the economy, though it remained unclear why anxieties that have been around for months would suddenly take hold."
Now that would be new.
Here is the Soc GEn link on the coming crash:
Societe Generale says in a cross asset strategy research note, suggesting that an 'equity market meltdown' is 'imminent'.
STOCKS NEWS EUROPE-FTSE Small caps fall 0.5 percent by the close - Forbes.com
Frat house foreclosure...
Frat House Defaults on Lehman Loan, files bankruptcy [Bankruptcies] - MarketTicker Forums
DOW down 300 points today and no one knows why. Speculation in the NY Times:
"Speculation focused on fears about the direction of the economy, though it remained unclear why anxieties that have been around for months would suddenly take hold."
Maybe it was Sarah Palin's speech
How does the FED follow a "tight" money policy and still advance economic growth.?
Well presumably the point of "tight monetary policy" would be to constrain growth that poses a threat to long-term stability.
I thinking there's growing evidence to support the argument that using monetary policy to promote economic growth is a bad idea. Again, what do green pieces of paper have to do with real economic growth? They're ultimately just a method of communicating (the possession of wealth), not the wealth itself. So all the Fed can really do to actively promote growth is to tell the messenger between economic agents (i.e. the currency) to lie about what's really going on.
I'd argue that the Fed should be focused on promoting an environment conducive to economic growth, not on promoting growth itself. In other words, their goal should be maintaining a stable financial system and a credible currency so that impediments to economic growth are minimized. That doesn't necessarily guarantee growth will occur, but I think that's the best you can expect from a central bank -- money and finance are about the representation of wealth. The actual creation of wealth is not their specialty. And it shows.
"She would castrate any recession..."
With her teeth, too.
bluestatedon: and then eat them at a news conference (if she ever holds one).
crispy & cole,
Thanks for the frat house link...that made my day. The current frat leaders are blaming it on a previous administration. Not a surprise there...
Steep drop due to big-boy players boycotting directives from on high. Real time market manipulation to force a political resolution to the insolvency. Blackmail the public purse, force the FED to take more impaired collateral, pressure a big bank nationalization...take your pick. Will come out in next few days...maybe a HUGE FDIC friday moment.
reason for the dip: maybe tomorrow's employment numbers got leaked early?
Bingo, now someone go find the numbers. BTW- ADP showed a drop of 33k, so times that by 10 and you'd get a true reflection
... I truly hate reg T
What the heck is "hoocudanode"?
who could have knowed
since krudlow & co blamed last weeks market declines on obama/biden speecheser if he'll blame gun totin' sarah for today's drop......nah...never happen....gotta be something the clintons did.........
YouTube -
Maybe it was Sarah Palin's speech
LOL!
Maybe yes, but probably a hedge fund melted on the commodity crash and the yield crash, and the housing crash and then Palin looks too good to be true in her starring role as Monica Lewinsky!!
ADP runs about +75,000 to the BLS employment numbers on average.
When you have movements of two sigma or more, or two standard deviations or more, in oil or energy markets, there's always going to be some hedge fund that's going to be on the wrong side of the market," said Charles Gradante, principal at the Hennessee Group, which monitors hedge fund performances.
And Palin has massive sigma!
I think the commodity crash is now overdone, while the financial crash is about to enter a new and exciting phase.
Seriously,
Yellen's speech should have shook anyone right out of their Kudlowian happy spin and right into cash.
Cash is king, until there is too much of it. The Fed had better get busy fast- we will be needing about a trillion five soon of new bills.
Someday this war's gonna end...
Maybe they didn't like Palin in her starring role as Matilda the Hun.
Two hedgies were in the news recently.
Thnx, squeeze. I guess I'm not "with it" anymore
Foreign central banks reduced their U.S. agency security holdings at the Federal Reserve by $9.75 billion in the latest week to a total of $958.57 billion, according to data from the central bank released on Thursday.
The data may add to recent evidence that overseas investors are worried about the troubled mortgage giants.
The drop marked a seventh straight week of declines in offshore central bank holdings of bonds issued or guaranteed by government-sponsored enterprises
Foreign central banks cut U.S. agency holdings-Fed
| Reuters
Put that in you Pimpco pipe and smoke it.
GLG Partners, Inc. Q2 2008 Earnings Call Transcript August 19, 2008
GLG Partners, Inc. Q2 2008 Earnings Call Transcript -- Seeking Alpha
To-date we have received redemption request for $2.2 billion, the bulk of which will be reflected in the fourth quarter. However, we can still receive additional redemption request. Separately, I want to note that Asia is an area of growing focus for us. Were set to open a GLG office in Beijing during the fourth quarter of 2008 and have hired a terrific person to promote and grow our business and footprint there.
On the redemption side I think that we are going to see redemptions in this industry as a whole the distress in other financial institutions, there is a weak performance in the space. And I think there is going to be a common theme in the alternative market and the Fund of Funds. The challenge for us and the opportunity to be able to run fast and hard win mandates at the same time to offset the redemptions.
...we had people delay and cancelled and as I said I had expected to see 4 billion of redemption so far its only been 2.2 now. They could meet with the new team and decide they not to their liking or want to take away this attitude and continue the redemption
Can Lehman move it's toxic waste to a spin-off, (Spinco), and release itself from the liabilities that the moved assets incur? I am confused. How can a company relieve itself from liabilities by moving assets? Does this seem a bit looney to anybody other than me?
Hey Cobradriver and Lawyerliz-
looks like Ike comes to visit soon if the tracks hold up.
Tropical Storm GRACE
Bullseye on Miami!
That is one way to get rid of that excess housing supply! Seriously folks, buckle up- here comes another bad one.
Someday this war's gonna end...
Many other hedge funds besides Legends are now closing their doors. Atticus Capital took a $5 billion pasting in July, Ospraie Management is shuttering its commodities fund, which has lost 40% in 2008 alone. In the interconnected working oligopoly that is modern finance, Ospraie's trials are casting a long shadow; with 20% of the firm owned by Lehman Brothers. It is the small domino of Ospraie leaning onto the big one of Lehman that has the market's focus fixing on Lehman to see if it is the next great house of money to place a phone call to the office furnishings auctioneer.
In the Frank Herbert science fiction series Dune, a class of humans called "Mentat" were specifically bred to be able to serve rulers with awesome and breathtaking feats of mental agility. Reading the financial press up to about a year ago, you might have thought that a spaceship full of Mentats had landed in hedge-fund central in Greenwich, Connecticut, to rule that business as a first step towards the conquest of the world.
We now know that nothing of the sort was happening. What we saw in the rise and current fall of the hedge-fund empires was just another example of Gresham's Law, that bad money drives out good. By allowing paper money to be debased through unregulated structured finance, the world's central bankers drove out the good money, stock certificates, and the actual physical goods represented by such, driving up their prices.
Asia Times Online :: Asian news and current affairs
Re: Can Lehman move it's toxic waste to a spin-off,..
Ask The FASM, SEC, FTC, DOJ, Bush Coup, Wall Street, Treasury, Bernanke, Dodd, Palin...
Reality has found a place to dwell.....get the raincoats on boys and girls because there is no avoiding the spray that is coming when the $hit finally hits the fan blades. Oh, and by he way....wear your goggles and keep your mouths closed.
Maybe here?
"Natixis SA, France's fourth-largest bank, will sell shares for 61 percent less than its market value to raise 3.7 billion euros ($5.4 billion) after writedowns related to the U.S. subprime contagion depleted capital."
Yah, I'm feeling it now, deep inside, uhhhgghusghhh
New York-based Ambac on Dec. 13 took out insurance on $29 billion in securities it guarantees, transferring the risk to Assured Guaranty. MBIA said this week it will receive a $1 billion investment from private equity firm Warburg Pincus LLC and Groupe Banque Populaire and Groupe Caisse d'Epargne agreed to take control of CIFG from their Natixis SA banking subsidiary and double its capital....
Screw Bill Gross. I just can't stand to hear billionaires beg for money printing.
Here's the gig Mr. Gross. All that paper wealth you and your financier buddies acquired does not have a guaranteed value. Put it to productive use, or someone else will. The days of making money from money are long gone.
We never should have turned our economy over to the financiers. Industry did a much better job of creating AND distributing wealth.
Financiers don't know what to do with money. They just know how to be middle men. Unfortunately, the financiers now control too much of the actual money. Fish or cut bait.
Debt to the Penny (Daily History Search Application)
As an old friend use to shout "Bond Market"!! you had to rusxh to look at this...
INO Futures and Commodities - Interest Rates - T-BONDS Mar 2010 (E) (CBOT:ZB.H10.E) Price Chart and Quote
Bond insurer CIFG close to deal on derivatives
404 Page not found
CIFG, which is based in Bermuda, an offshore insurance market, said it has tentative agreements that would let it cancel about $12 billion in guarantees on collateralized debt obligations in exchange for an undisclosed amount of cash and equity.
Banque Populaire and Caisse d'Epargne, which together own French bank Natixis SA, took over control of CIFG from Natixis last year, in a bid to boost capital.
Re:
"Natixis SA, France's fourth-largest bank, will sell shares for 61 percent less than its market value to raise 3.7 billion euros ($5.4 billion) after writedowns related to the U.S. subprime contagion depleted capital."
Are you feeling it yet?
check this out:
"Lehman May Shift $32 Billion of Mortgage Assets to `Bad Bank'
By Yalman Onaran
Sept. 4 (Bloomberg) -- Lehman Brothers Holdings Inc. may shift about $32 billion of commercial mortgages and real estate to a new company that will be spun off in a move similar to the good-bank-bad-bank model used in the 1980s banking crisis, two people briefed on the discussions said.
The bad bank, nicknamed Spinco for now, would have about $8 billion of equity coming from Lehman, the people said, speaking on condition of anonymity because the plan is one of several under consideration. Spinco would borrow the remaining $24 billion from Lehman or outside investors. The New York-based bank would replace capital put into Spinco, whose shares would be owned by current Lehman shareholders."
LoL, the name SPIN_CO, ~ROFL
RE Treasury direct
How do you make a contribution to reduce the debt?
Make your check payable to the Bureau of the Public Debt, and in the memo section, notate that it is a Gift to reduce the Debt Held by the Public. Mail your check to:
Attn Dept G
Bureau Of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188
First Bill Gross, now Rick Fuld, those confessions just keep coming today, feels like.. FRIDAY.
poor Sheila, must be busy, haven't heard her rolling the blame on, for a while.
Lehman is pulling a Bear Stearns(Everquest IPO).
Next step will be a Bear Stearns style bailout.
What's old is new again.
Meanwhile...Rome burns on.
Mother, Moose Hunter, Maverick?
YouTube - Sarah Palin RNC Convention Bio
A little more balanced view of the potential paths of Ike, most paths do eventually lead to Florida or the Gulf now:
Wunder Blog : Weather Underground
Any time something good happens for Obama, the stock market gets jittery. I don't pretend to know why. But it seems the business community isn't sure about Sarah Palin and hence, the fortunes of the McCain ticket. This is more than just an oolie-oo coincidence.
Now personally I think Palin isn't such a bad pick, but apparently the pigs who have laid waste to our financial system do think she's a bad sign.
Spinco?
Enronesque.
Done.
How many hedge funds does Lehman fund?
They will be getting their redemption notices on the fax machine- anybody else owe Lehman callable debt?
Your notice is on the machine.
As for market assets- that was what today was all about- I imagine Lehman is going to do whatever it takes to raise cash- call the Fed next!
I think the subtext of Yellen's speech is here:
"Doing the math leaves us with a slightly negative real federal funds rate. Does this mean that policy is highly accommodative? Normally, a negative real funds rate would imply that the answer is "yes" because it is typically associated with low borrowing costs and easy credit termsthat is, easy overall financial conditions. But, as I discussed, overall financial conditions are probably more restrictive now than when the financial crisis struck a year ago, so the slightly negative real funds rate does not imply a highly accommodative policy stance. In other words, policy must be calibrated to push through the substantial headwinds the economy faces. While the economy did well in the second quarter, that strength, as I indicated, is likely to prove ephemeral. My forecast is for sluggish growth in the second half of this year, with substantial downside risksespecially emanating from the financial system."
Pushing on a string. All the Fed can do is let inflation rip and keep patching up the financial system until it begins to breathe credit into the general economy, until then, stagflation.
Not what anybody seems to want or expect but little old me.
Stagflation. The speech drips with acceptance of it as the muddle through method of choice.
Someday this war's gonna end...
Someday this war's gonna end...
Jesus, think about it. If Ike makes a beeline for New Orleans and they order another mandatory evacuation, a lot of people will just laugh. Or cry.
Is Bill Gross pulling a Mark Foley and playing Lady MacBeth to Paulsons Tootsie?
I'm getting my snacks ready to watch Cramer tonight. Booya.
Well, I am looking forward to a night of hot steak on salad with a cold refreshing beverage, then ignoring the football game my wife wants to watch while playing a game of checkers with my son.
I might list some junk on craigslist to liquify before all of the money disappears from phoenix.
Someday this war's gonna end...
Old Man
Threescore and ten I can remember well:
Within the volume of which time I have seen
Hours dreadful and things strange; but this sore night
Hath trifled former knowings.
ROSS
Ah, good father,
Thou seest, the heavens, as troubled with man's act,
Threaten his bloody stage: by the clock, 'tis day,
And yet dark night strangles the travelling lamp:
Is't night's predominance, or the day's shame,
That darkness does the face of earth entomb,
When living light should kiss it?
Old Man
'Tis unnatural,
Even like the deed that's done. On Tuesday last,
A falcon, towering in her pride of place,
Was by a mousing owl hawk'd at and kill'd.
ROSS
And Duncan's horses--a thing most strange and certain--
Beauteous and swift, the minions of their race,
Turn'd wild in nature, broke their stalls, flung out,
Contending 'gainst obedience, as they would make
War with mankind.
Old Man
'Tis said they eat each other.
ROSS
They did so, to the amazement of mine eyes
That look'd upon't. Here comes the good Macduff.
SCENE IV. Outside Macbeth's castle.
rich,
I think Ike is much more likely to hit Florida and head up the East Coast or drift across the Gulf into Mexico area than head for the New Orleans area. It would be almost without precedent for a storm coming from this direction to end up in the New Orleans area.
Nice laugh
YouTube -
I swear I was Always McDuff's good bud.
Tis Sheila Bair, washing blood out of her hair that got there from the cow and wailing Wa Moo.
Two questions:
1. what happened to the Yen today?
2. who the hell is going to loan LEH $24B? not even good businesses can get a loan these days.
energyecon writes:
I like it - "adverse feedback loop" - that is the phenomenon of positive feedback with negative consequences...
energyecon | 09.04.08 - 3:17 pm | #
Why not just use the term vicious cycle, as opposed to virtuious cycle
If WFC can only borrow at 10%, what'e that say about the LEH's and WM's and the like?
Haha. Feedback loops. Don't you need differential equations to solve those things? I wonder how often the solution is a simple linear equation? Could somebody explain how non-linear solutions can result in Brownian motion? Oh, nevermind. I don't care as long as I can collect enough fees on the derivatives I underwrite to be the top dog down at the strip club. America, f*ck yeah!
Cramer "bottom in housing stocks June 2009" Click.
Asked about origination volume, she cautioned, I dont want to make any predictions, but volumes may not drop much.
If they are close enough to zero, thats going to be an easy mark to hit.
Motor cycle.
Feedme loop.
Damn you guys and gals are chatty today.
Cheers,
New thread...don't bother I already took the first slot.
Cheers,
Ok, guys. Stop looking at the black line in the middle of the hurricane cone of destruction. It means NOTHING.
My personal weatherman sez that as of a few hours ago there were 2 sets of models, one taking it north along the Florida coast, one south. Both have models they find good and not so good.
The black line is kind of an informed eye-balling of 2 extremely divergent sets of models. If they picked one or the other, and got it wrong they would be WAY off. Those cones are just educated guesses, and will be for 2 more days
Ok, guys. Stop looking at the black line in the middle of the hurricane cone of destruction. It means NOTHING.
OK, lets look at the SFWMD model runs...
click on Model Plots then Storm 09
Dr. Yellen is the only Fed president who seems to occupy the same planet as the rest of us. Plus she doesn't use "FedSpeak", she just says what she needs to in plain english. Yes, many of her speeches reiterate the obvious, but at least she is not oblivous to the obvious like the rest of the Fed.
oh brother,
You have to learn the terms used here:
FB = fucked borrower (or) buyer (no one on here like that)
J6P = Joe six pack - derogatory term for people that aren't in the know (unlike people on here)
Hoocoodanode = who could of known - derogatory term for people in authority position that should have know
PTP = plunge protection team - mythical group that buys stock to keep the market from going down (see also scape goat for bears)
PTP = PPT in previous post
I talked to an electrical engineer I know who migrated into finance about the terminology conundrum - negative versus positive feedback.
He explained that "positive" or "negative" feedback is purely a convention.
In the classic textbook examples of circuits that are used to teach first year electrical engineering students, the gains on all components is assumed to be positive, and a negative feedback term helps stabilize the system.
But in the real world, you can systems which invert signals, or you can have 3 inputs and 5 outputs which are used to generate the feedback signal - you end up with a matrix of feedback terms, some which may be positive, others negative.
In order to avoid confusion, he preferred using "stabilizing" and "destabilizing".
Check the TED SPREAD - A possible start to wave 4 of the credit crisis?
1.15\tChange0.000 \t% Change0.020 \tHigh1.15\tLow1.15\tOpen1.15
Without commenting on the merit of Yellen's argument regarding the (sick) state of the economy, she has a long sorry record of ignoring or denying the inflation risks accruing from aggressive rate cuts. We're in the current pickle due to Alan (I never a met a bubble I didn't love) Greenspan's 1% trough.
Doing the math leaves us with a slightly negative real federal funds rate.
Slightly? With a (grossly understated) CPI currently running above 6% annually, the real funds rate is -4%. Yellen needs a math lesson.
Yellen- "With regard to core inflation, I wouldn't be surprised if it runs modestly higher for a while, too, as businesses pass on some of their higher energy, transportation, and other costs to customers. However, for several reasons, I expect both headline and core inflation to move down to a much more moderate rate of just over 2 percent next year."
Conjure Bag re-affirms his August 20 forecast for peak core inflation.
adverse feedback is sooo lame...
From wikipedia:
negative feedback: which tends to reduce output (but in amplifiers, stabilizes and linearizes operation),
One could easily say we are in for a reduction of economic output, and a reduction of home construction, and a reduction in credit, and .,....
Things which are not electrical amplifiers, for $200, Alex?