And while I'm on the subject, a question to the forum's many wise men (and women):
If the dollar finally gives in to inflationary pressure and starts losing value, will it lose significantly against the other major or are they in just as much s#it as the USD?
The Europeans are screwed much worse than us it will just take an extra year to see it. When it happens though they are gone for many decades if not permanently. Their birthrates are way lower than ours the last 40 years.
There is approximately $7 TRILLION of total corporate debt in the United States. An ever increasing trend of this debt is that more and more of it is rated below investment grade. As of today, over $1 TRILLION of all corporate debt is rated BB or lower.
Tell ya' something - the volatility has made it very interesting lately.
Something I did the last few days was, take a small trading position - no more than 2% of the account - put a buy limit on some DDM down 10%, put a sell limit on the same number of shares up 10%.
Some days, you do a round trip. Some days you come in net long near the lows; others, net short on the highs.
The Europeans are screwed much worse than us it will just take an extra year to see it. When it happens though they are gone for many decades if not permanently. Their birthrates are way lower than ours the last 40 years.
ZOFO | 10.20.08 - 9:02 am | #
Like the US - they've outsourced that dirty task. Not an issue.
So what about the massive, fresh financial losses to be incurred over the next year or two from Alt-A, CC, student loans, LBO and corporate debts, muni debts, and yes even soveriegn debt as the supply-demand inbalance in treasuries pushes long term rates north.
Are these losses now "covered" due to the myriad of bailouts and capital "injections" we have seen or were these multi-trillion dollar infusions just a downpayment on more to come?
And how do we pay for it all? Just print it up? Or do we actually have buyers for a couple of trillion of treasuries over the next year or two to fund our now exploding deficit.
I share your long view. The fundamentals (how passe)don't justify buying too many stocks or bonds these days, IMO. But if the question is will there be a short pop today, then I vote for a little trend upward, or even a huge 500+ point swing. Net is different. Net is down, down, down.
It does not surprise me to see some improvement in credit because the credit crisis has come in waves. Each wave abates as some solution is presented, like the temporary liquidity facilities, the bailout, etc. What we see now is a financial system with an unprecedented level of government support. At some point those supports will have to be removed and these programs will have to be unwound. The question is whether the banks' financials will be repaired by then. I am skeptical.
Following the Baltic Dry Index, demand destruction continues. Again, joblessness has not truly been introduced into the feedback loop. What people fail to realize is that the shear amount of "money" being thrown into the financial blackhole will not be available or productive when it is most needed--to get people working.
Bond Girl,
Spot on and I will go one further. As governments across the world race to issue more debt in order to finance such packages, they will themselves face less available credit and forcing either a higher price or a roll back of promises
Beyond Bernanke's speech today, the big mover I think is after the close at 5PM when American Express has their conference call.
We should get some comments on how bad the consumer and business card spend has been over Q3 as well as outlook for Q4 - not only in the US, but through pretty much the entire developing world.
And on the topic of credit cards, the NY Fed put up some new chart porn ove the weekend, with an interactive map showing bank card deliquency rates by US county, including year over year deterioration. Well worth a look, and along side the Mortgage maps that are also incredible if you haven't looked at them yet:
EvilHenryPaulson writes:
Bond Girl,
Spot on and I will go one further. As governments across the world race to issue more debt in order to finance such packages, they will themselves face less available credit and forcing either a higher price or a roll back of promises
EvilHenryPaulson | 10.20.08 - 9:28 am | #
At a certain stage, all statse will face the choice between let banks go or get bankrupt and lose their power. What do you think they'll choose?
This is the reason why I'm investing my cash in treasuries. Better being on the stronger's side.
Buick Invatational Purse $5,200,000
Northern Trust $6,200,000
Wachovia $6,400,000
Morgan Stanley $6,000,000
Buick Open $5,000,000
US Bank $4,000,000
RBC $5,000,000
Barclay's $7,000,000
Deutsche Bank $7,000,000
Merrill Lynch $2,900,000
Will Generous Ben be sponsoring the PGA tournements this year under TARP.
I think some private jets are going to go up for sale! So sad!
That is why I can't see how we avoid a Depression like era ahead. As you said, we are going to need every ounce of wealth and credit to pull ourselves of this which means that we need to spend our remaining capital wisely.
These bailouts are the exact opposite of that. And I still don't see how we pay for it all. And when it becomes apparent how deep this downturn will be, then we'll really see the bond market freeze. This is just the practice round.
I expect a lot of inflation going forward. Not just in goods, but equities also. It may take a while to take hold, but in a few years it will be hard to control.
The stock market will do well, but not in relation to inflation.
Since everyone is printing money to solve their problems, currencies will retain their value relative to each other, but the price of everything will go up in all currencies.
I dunno, everyone is running from risk and what we are doing creating a greater supply of risk free assets by new treasury issues and by insuring bank debt. If you want to take a flyer you can go for the nearly risk free GSE paper (which also has increasing supply). It seems like this could crowd out other lending.
ANother way of looking at it, our financiers are beginning to make all debt sovereign debt.
Six hundred billion explosions of orange, red, yellow and pink not bad! No wonder people come from all over the world to see it.
608 billion leaves falling in NH this season, when compared to the 700B bailout: Every leaf falling represents less than $1 of bailout. I have had a hard time looking at the forests of leaves and not seeing dollar bills now.
Why doesn't the world's individual govts let businesses fail and then immediately buy them for pennies on the dollar and nationalize them.
Since there is not enough money to buy up the stockholders and debt holders, let them fail and the the US govt. just bid on their value in bk court. This way, we purge the system and the govt can keep the public employed.
Once things stabilize, turn around and auction these businesses off to the highest bidder?
Every leaf falling represents less than $1 of bailout. I have had a hard time looking at the forests of leaves and not seeing dollar bills now.
I did some mental math when the bailout was announced on the number $1.8 trillion - the difference between the national debt at the time and the new debt ceiling ($700B only referred to the limit on holdings at any one time).
Basically, if you consider a thimbleful of sand as equal to $1, $1.8T gets you pretty much all the shoreline on the entire East Coast of the United States.
Anyone who spends time at the beach can easily appreciate what a ridiculously large number that is.
Besides listing narrowing debt spreads, Across the Curve blog has a link to "The Economic Blue Screen of Death", a piece by John Mauldin. Good summary of consumer.
"Commercial property prices remained virtually flat for a second month, with the Moodys/REAL CPPI measuring a 0.1% decrease in August. The CPPI now stands 11.5% below the peak in October 2007.
Transaction volume fell in August to a low point not seen since the end of 2004, although it remains well above the threshold required to calculate the index.
We believe the flattening of prices is largely the result of loss avoidance on the part of sellers and that prices will continue on a downward trend as pressure increases on sellers and more distressed assets come to market."
We have been chatting on myinvestorsplace.com about purchasing munis... wanted to hear your thougts... buy the muni bonds themselves or closed end funds??
But, as TED recovers, bond risk reaches new records This is sensible on fundamentals. Large government injections into the banks reduces the chance they'll go under, so TED drops. But that money has to come from elsewhere, so failure risks in the rest of the economy increase.
People read too much into near-term changes. They will take any decrease in the cost of credit as a positive indicating that this mess is finally over. I think government intervention to date is just slowing down the destruction and it is obviously unsustainable for us to continue to borrow at this rate.
To believe that anything has changed, you basically have to believe that the financial crisis has been exaggerated.
I still think the more interesting part of the story is that despite the government guarantees on interbank lending that the LIBOR rate is still so high and falling so slowly. It is the equivalent of putting somebody on a ventilator and being pleased with minor amount of air going in.
screw the stockholders and bondholders, we need the people in the real economy employed. We need time for the adults to come in to the room and correct this problem...
let companies file bk and the govt. buy them up and if zero net value, take over.
You may call it socialism, however, the public doesn't care. They want to remain employed to support their family. There only concern is success not ideology...
PPT tinfoilers: the feds are investigating the end-of-day price spices. However, they blame crooked market-makers, not a concerted effort. The accusation is that end-of-day manipulation allows traders to dodge margin calls and to sell at elevated prices.
Agreed. We need 1) Another Manhattan project, and 2) the ability to pay for it, 3) and the leadership to see that we need it.
~~~~~~~~~~~~~~~~~~
Yes Yes Yes. The cost of the illegal war against Iraq is roughly equal to the cost for installing a solar hot water heater in every private house. China (Toyota/China)has produced a prototype solar powered mini car (seats 2 people). It's time to reduce our cost of living and improve our quality of life.
LIBOR is old news. Let's talk about how Central Banks are going to wean financial institutions off of easy credit. Or what's going to be the engine of growth going forward.
The financial crisis is over; let's try to stay one step ahead.
Commercial paper is giving the same prediction it has since Wednesday of last week: credit crunch is over or at least on hold (normal volumes) but we're headed for a depression (A2/P2 436 basis points) Down from 449 the day before but still astronomical.
--
CNBC had a guy who claimed that JP Morgan Chase did transactions specifically to bring down LIBOR!
He said that they are trying to manipulate LIBOR lower. Further confirmation of...
A system of the Crooks...
A govt of the People... my ass. There is absolutely nothing that born-and-bred American dopes can do to stop the Crooks. That is the sad reality of America of recent years and today. Denial is not going to help Americans.
As much as $20 billion of the federal bailout plan for the financial industry should be put aside for bond insurers, New York State Insurance Superintendent Eric Dinallo said.
The money is needed because of a logjam in the credit default swaps market, which has sustained significant damage as the credit crisis has unwound. Credit default swaps set the price to insure corporate debt, and have been under pressure as companies have defaulted on bonds.
Correspondingly, leading bond insurers Ambac [ABK 3.75 0.26 (+7.45%) ] and MBIA [MBI 9.71 0.31 (+3.3%) ] have taken a beating, a situation Dinallo, speaking on CNBC, said needs to be addressed. He estimated $10 billion to $20 billion of the total $700 billion bailout should be dedicated to bond insurers.
He said federal money to help backstop the two companies should they sustain further pressure from defaults is one of the "cheapest, quick ways to help unlock the municipal bond market."
"Were looking for banks to step up and put some kind of backstop in place," Dinallo said. "We also asked Congress for some kind of backstop."
Dinallo's comments come as Lehman Brothers is unwinding its CDS load, an event not expected to be as damaging to the credit markets as initially feared. There initially were fears that the cost to companies holding Lehman debt could reach as high as $400 billion, but the actual payouts are expected to be much less.
We have been chatting on myinvestorsplace.com about purchasing munis... wanted to hear your thougts... buy the muni bonds themselves or closed end funds??
Shorter Bernanke: To the extent my crystal ball works, it's predicting rain. Congress should build a shelter of some sort, but I'm punting on what it might look like.
According to Denninger, if the Lehman CDS payouts are only about 6bil it will prove what a scam the entire CDS market is. Think it was Friday's Market Ticker
"Were looking for banks to step up and put some kind of backstop in place," Dinallo said. "We also asked Congress for some kind of backstop."
Why would any banker in their right mind step up and put their capital into making this a reality when more than a few times now the Fed/Treas has picked up the ball? My bank doesn't have an exposure here, but if we did I wouldn't put my funds at risk to build a backstop. Let Congress and the taxpayers foot the bill like they have before. Of course, that is a very purely capitalist approach with no regard for my personal finances or political motives, but still...
As Libor rates thaw the U.S. Dollar should start to lose value. These frozen Libor rates have created an artificial type of deflation. We should see hyperinflation develop within the next few months.
You can't print money like mad and not expect to see a hyperinflationary economy.
Where's Nemo?
Secondo!
Welcome back from the hiking.
US Futures in full green.
A rally I expect.
So, does that mean the dollar will stop rallying?
And while I'm on the subject, a question to the forum's many wise men (and women):
If the dollar finally gives in to inflationary pressure and starts losing value, will it lose significantly against the other major or are they in just as much s#it as the USD?
Goldman Sex,
I have seen to many green days end red. I would like one last rally to buy more PUTS into but I don't think we will go very high this time.
ZOFO writes:
Goldman Sex,
I have seen to many green days end red. I would like one last rally to buy more PUTS into but I don't think we will go very high this time.
ZOFO | 10.20.08 - 8:59 am |
ZOFO, my purpose was actually to provoke CR's readers forecasts on DOW today.
What d'ya tihnk?
Ian,
The Europeans are screwed much worse than us it will just take an extra year to see it. When it happens though they are gone for many decades if not permanently. Their birthrates are way lower than ours the last 40 years.
p.s. all euros in full green until now BTW
Moin from Germany,
here is a good number to start the new week....
Levered Loans and Corporate Defaults
There is approximately $7 TRILLION of total corporate debt in the United States. An ever increasing trend of this debt is that more and more of it is rated below investment grade. As of today, over $1 TRILLION of all corporate debt is rated BB or lower.
Moin again,
here the very long but excellent link via FT Alphaville
FT Alphaville » Blog Archive » Time for the Darwinian flush
Tell ya' something - the volatility has made it very interesting lately.
Something I did the last few days was, take a small trading position - no more than 2% of the account - put a buy limit on some DDM down 10%, put a sell limit on the same number of shares up 10%.
Some days, you do a round trip. Some days you come in net long near the lows; others, net short on the highs.
Nice way to make lunch money lately.
A rally is at hand.
The Europeans are screwed much worse than us it will just take an extra year to see it. When it happens though they are gone for many decades if not permanently. Their birthrates are way lower than ours the last 40 years.
ZOFO | 10.20.08 - 9:02 am | #
Like the US - they've outsourced that dirty task. Not an issue.
So what about the massive, fresh financial losses to be incurred over the next year or two from Alt-A, CC, student loans, LBO and corporate debts, muni debts, and yes even soveriegn debt as the supply-demand inbalance in treasuries pushes long term rates north.
Are these losses now "covered" due to the myriad of bailouts and capital "injections" we have seen or were these multi-trillion dollar infusions just a downpayment on more to come?
And how do we pay for it all? Just print it up? Or do we actually have buyers for a couple of trillion of treasuries over the next year or two to fund our now exploding deficit.
Smooth patch until we see a State default or a huge corporation (not a bank) go bust.
When is that biggie coming?
When is that biggie coming?
DANM | 10.20.08 - 9:19 am | #
GM-Chrysler merger?
Mr. T,
I share your long view. The fundamentals (how passe)don't justify buying too many stocks or bonds these days, IMO. But if the question is will there be a short pop today, then I vote for a little trend upward, or even a huge 500+ point swing. Net is different. Net is down, down, down.
Merrill Lynch: major EU banks need capital increase for at least 73 BN (plus 36 BN in dividends that shall not be distributed)
(Reuters)
It does not surprise me to see some improvement in credit because the credit crisis has come in waves. Each wave abates as some solution is presented, like the temporary liquidity facilities, the bailout, etc. What we see now is a financial system with an unprecedented level of government support. At some point those supports will have to be removed and these programs will have to be unwound. The question is whether the banks' financials will be repaired by then. I am skeptical.
Well, all the money honey's on Bloom TV are excited, so we'll have a pop up at open.
Has the over indebted market place evaporated? No, then this is all a nothingburger.
Nostrovia,
Following the Baltic Dry Index, demand destruction continues. Again, joblessness has not truly been introduced into the feedback loop. What people fail to realize is that the shear amount of "money" being thrown into the financial blackhole will not be available or productive when it is most needed--to get people working.
Fine. Prepare for the credit ice-age.
Bond Girl,
Spot on and I will go one further. As governments across the world race to issue more debt in order to finance such packages, they will themselves face less available credit and forcing either a higher price or a roll back of promises
Beyond Bernanke's speech today, the big mover I think is after the close at 5PM when American Express has their conference call.
We should get some comments on how bad the consumer and business card spend has been over Q3 as well as outlook for Q4 - not only in the US, but through pretty much the entire developing world.
And on the topic of credit cards, the NY Fed put up some new chart porn ove the weekend, with an interactive map showing bank card deliquency rates by US county, including year over year deterioration. Well worth a look, and along side the Mortgage maps that are also incredible if you haven't looked at them yet:
http://data.newyorkfed.org/creditconditionsmap/
EvilHenryPaulson writes:
Bond Girl,
Spot on and I will go one further. As governments across the world race to issue more debt in order to finance such packages, they will themselves face less available credit and forcing either a higher price or a roll back of promises
EvilHenryPaulson | 10.20.08 - 9:28 am | #
At a certain stage, all statse will face the choice between let banks go or get bankrupt and lose their power. What do you think they'll choose?
This is the reason why I'm investing my cash in treasuries. Better being on the stronger's side.
EvilHenryPaulson,
I vote for a higher price and a roll back of promises.
Not exactly a presidential slogan, but realistic.
statse=states
CRY FOR THE GOLFERS
Buick Invatational Purse $5,200,000
Northern Trust $6,200,000
Wachovia $6,400,000
Morgan Stanley $6,000,000
Buick Open $5,000,000
US Bank $4,000,000
RBC $5,000,000
Barclay's $7,000,000
Deutsche Bank $7,000,000
Merrill Lynch $2,900,000
Will Generous Ben be sponsoring the PGA tournements this year under TARP.
I think some private jets are going to go up for sale! So sad!
@ blackhat
That is why I can't see how we avoid a Depression like era ahead. As you said, we are going to need every ounce of wealth and credit to pull ourselves of this which means that we need to spend our remaining capital wisely.
These bailouts are the exact opposite of that. And I still don't see how we pay for it all. And when it becomes apparent how deep this downturn will be, then we'll really see the bond market freeze. This is just the practice round.
AND THEY'RE OFF.....
Mr. T,
Agreed. We need 1) Another Manhattan project, and 2) the ability to pay for it, 3) and the leadership to see that we need it.
No. No. and No on all three points.
I expect a lot of inflation going forward. Not just in goods, but equities also. It may take a while to take hold, but in a few years it will be hard to control.
The stock market will do well, but not in relation to inflation.
Since everyone is printing money to solve their problems, currencies will retain their value relative to each other, but the price of everything will go up in all currencies.
Spx resistance 960.
I dunno, everyone is running from risk and what we are doing creating a greater supply of risk free assets by new treasury issues and by insuring bank debt. If you want to take a flyer you can go for the nearly risk free GSE paper (which also has increasing supply). It seems like this could crowd out other lending.
ANother way of looking at it, our financiers are beginning to make all debt sovereign debt.
Ian, buy some gold as insurance. Just in case our deflation call is wrong.
For some perspective:
NH's true colors come in all shapes, numbers
- NashuaTelegraph.com
608 billion leaves in New Hampshire.
Six hundred billion explosions of orange, red, yellow and pink not bad! No wonder people come from all over the world to see it.
608 billion leaves falling in NH this season, when compared to the 700B bailout: Every leaf falling represents less than $1 of bailout. I have had a hard time looking at the forests of leaves and not seeing dollar bills now.
Spx resistance 960.
A question/possible solution?
Why doesn't the world's individual govts let businesses fail and then immediately buy them for pennies on the dollar and nationalize them.
Since there is not enough money to buy up the stockholders and debt holders, let them fail and the the US govt. just bid on their value in bk court. This way, we purge the system and the govt can keep the public employed.
Once things stabilize, turn around and auction these businesses off to the highest bidder?
just a thought.
Ben is set to speak. The ULTIMATE sell signal.
Every leaf falling represents less than $1 of bailout. I have had a hard time looking at the forests of leaves and not seeing dollar bills now.
I did some mental math when the bailout was announced on the number $1.8 trillion - the difference between the national debt at the time and the new debt ceiling ($700B only referred to the limit on holdings at any one time).
Basically, if you consider a thimbleful of sand as equal to $1, $1.8T gets you pretty much all the shoreline on the entire East Coast of the United States.
Anyone who spends time at the beach can easily appreciate what a ridiculously large number that is.
Besides listing narrowing debt spreads, Across the Curve blog has a link to "The Economic Blue Screen of Death", a piece by John Mauldin. Good summary of consumer.
[hat tip]
Good thing Bernanke is speaking in the morning - the ADHD-afflicted markets will forget about him by mid-afternoon.
OT
Moody's/REAL CRE report for Oct.
"Commercial property prices remained virtually flat for a second month, with the Moodys/REAL CPPI measuring a 0.1% decrease in August. The CPPI now stands 11.5% below the peak in October 2007.
Transaction volume fell in August to a low point not seen since the end of 2004, although it remains well above the threshold required to calculate the index.
We believe the flattening of prices is largely the result of loss avoidance on the part of sellers and that prices will continue on a downward trend as pressure increases on sellers and more distressed assets come to market."
If you believe PPT exists, expect a significant uptick before Election Day.
We have been chatting on myinvestorsplace.com about purchasing munis... wanted to hear your thougts... buy the muni bonds themselves or closed end funds??
Thanks
Andy
Commodity Trading & Trend Following
But, as TED recovers, bond risk reaches new records This is sensible on fundamentals. Large government injections into the banks reduces the chance they'll go under, so TED drops. But that money has to come from elsewhere, so failure risks in the rest of the economy increase.
Fair Economist,
A meritorious point, well stated.
Mr. Market, meet Mr. Risk. Now squeal like a pig.
Markets just went vertical. Somebody made a huge buy.
People read too much into near-term changes. They will take any decrease in the cost of credit as a positive indicating that this mess is finally over. I think government intervention to date is just slowing down the destruction and it is obviously unsustainable for us to continue to borrow at this rate.
To believe that anything has changed, you basically have to believe that the financial crisis has been exaggerated.
Markets just went vertical. Somebody made a huge buy.
Sorry, I pushed the green button.
My bad.
I still think the more interesting part of the story is that despite the government guarantees on interbank lending that the LIBOR rate is still so high and falling so slowly. It is the equivalent of putting somebody on a ventilator and being pleased with minor amount of air going in.
screw the stockholders and bondholders, we need the people in the real economy employed. We need time for the adults to come in to the room and correct this problem...
let companies file bk and the govt. buy them up and if zero net value, take over.
You may call it socialism, however, the public doesn't care. They want to remain employed to support their family. There only concern is success not ideology...
PPT tinfoilers: the feds are investigating the end-of-day price spices. However, they blame crooked market-makers, not a concerted effort. The accusation is that end-of-day manipulation allows traders to dodge margin calls and to sell at elevated prices.
Vertical again.
Just loaded up on TWM ahead of Ben's inspirational message.
The Dow looks like it is in a positive feedback loop.
The question isn't whether PPT exists, it's whether it's public or private?
Agreed. We need 1) Another Manhattan project, and 2) the ability to pay for it, 3) and the leadership to see that we need it.
~~~~~~~~~~~~~~~~~~
Yes Yes Yes. The cost of the illegal war against Iraq is roughly equal to the cost for installing a solar hot water heater in every private house. China (Toyota/China)has produced a prototype solar powered mini car (seats 2 people). It's time to reduce our cost of living and improve our quality of life.
Fresh stimulus coming!!! I can already smell my pony
Fresh stimulus coming!!! I can already smell my pony
Ministry of Truth | Homepage | 10.20.08 - 10:13 am
Unfortunately the new pony smell doesn't have the same effect anymore. It gets worse when it's piled on on all the other ponies in the garage.
stimulata oblong gotta:
bullish on inflation on the critical must consume inputs?
LIBOR is old news. Let's talk about how Central Banks are going to wean financial institutions off of easy credit. Or what's going to be the engine of growth going forward.
The financial crisis is over; let's try to stay one step ahead.
Commercial paper is giving the same prediction it has since Wednesday of last week: credit crunch is over or at least on hold (normal volumes) but we're headed for a depression (A2/P2 436 basis points
) Down from 449 the day before but still astronomical.
Party's over.... down elevator now.
"what's going to be the engine of growth going forward."
Inflation the same thing it's been for the last 30+ years.
Ben's upbeat tone and message is having its expected immediate grim effects on the markets.
Ben, Why so obtuse ? Just call it a depression and get it over with.
--
CNBC had a guy who claimed that JP Morgan Chase did transactions specifically to bring down LIBOR!
He said that they are trying to manipulate LIBOR lower. Further confirmation of...
A system of the Crooks...
A govt of the People... my ass. There is absolutely nothing that born-and-bred American dopes can do to stop the Crooks. That is the sad reality of America of recent years and today. Denial is not going to help Americans.
Jas
Sounds like Ben endorses another round of stimulus.
The only lending going on is from the CB's of the western world much like our dymanic mortgage market that would be nonexist w/o the federal gov't.
Jas I will pay you to put advertising on your pony.
From CNBC
As much as $20 billion of the federal bailout plan for the financial industry should be put aside for bond insurers, New York State Insurance Superintendent Eric Dinallo said.
The money is needed because of a logjam in the credit default swaps market, which has sustained significant damage as the credit crisis has unwound. Credit default swaps set the price to insure corporate debt, and have been under pressure as companies have defaulted on bonds.
Correspondingly, leading bond insurers Ambac [ABK 3.75 0.26 (+7.45%) ] and MBIA [MBI 9.71 0.31 (+3.3%) ] have taken a beating, a situation Dinallo, speaking on CNBC, said needs to be addressed. He estimated $10 billion to $20 billion of the total $700 billion bailout should be dedicated to bond insurers.
He said federal money to help backstop the two companies should they sustain further pressure from defaults is one of the "cheapest, quick ways to help unlock the municipal bond market."
"Were looking for banks to step up and put some kind of backstop in place," Dinallo said. "We also asked Congress for some kind of backstop."
Dinallo's comments come as Lehman Brothers is unwinding its CDS load, an event not expected to be as damaging to the credit markets as initially feared. There initially were fears that the cost to companies holding Lehman debt could reach as high as $400 billion, but the actual payouts are expected to be much less.
Stay away from munis. The next shoe to drop.
***NEW POST UP****
agree with rich.
survived orange county, ca going belly up. not fun.
Ben defers the question of the size of the next stimulus to the benevolence of congress. No suggestion about constraint. TBT should perform admirably.
Shorter Bernanke: To the extent my crystal ball works, it's predicting rain. Congress should build a shelter of some sort, but I'm punting on what it might look like.
According to Denninger, if the Lehman CDS payouts are only about 6bil it will prove what a scam the entire CDS market is. Think it was Friday's Market Ticker
"Were looking for banks to step up and put some kind of backstop in place," Dinallo said. "We also asked Congress for some kind of backstop."
Why would any banker in their right mind step up and put their capital into making this a reality when more than a few times now the Fed/Treas has picked up the ball? My bank doesn't have an exposure here, but if we did I wouldn't put my funds at risk to build a backstop. Let Congress and the taxpayers foot the bill like they have before. Of course, that is a very purely capitalist approach with no regard for my personal finances or political motives, but still...
Gainas: The Dow looks like it's in a positive feedback loop.
... yes, agreed. It's funny nobody ever comments on that.
You gotta love the 5 decimal point precision from Marketwatch. What genius thinks that's necessary?
As Libor rates thaw the U.S. Dollar should start to lose value. These frozen Libor rates have created an artificial type of deflation. We should see hyperinflation develop within the next few months.
You can't print money like mad and not expect to see a hyperinflationary economy.
This is a good article on JP Morgan and the sinister influence they've had over this economic disaster.... Wall Street Monsters & Meat (You) | Bear Market Investments