Shopping at Amazon?
Wait! If you click on the Amazon banner link at the top of the page first, HCN will get a percentage of anything you purchase for 24 hours!
Open predictions
Our local book authors
User login
Who's online
There are currently 16 members and 151 guests online.
First
Eighth
Born and bread dopes!! Third!! Going long tents and beans!! The PPT burning your dog!
Sorry I was calculating my number according to a post-inflationary metric which will be publicly released once the helecopters have returned for refueling.
I'm hearing a rumor that a CDS auction tomorrow is going to put us in a tailspin. Can anyone elaborate on that?
fartin thru silk, baby!
shades of the old Citiwide Change Bank bit from SNL like 20 years ago - "we just make change". good times.
Gee, maximum economic recovery- I think that would make me rich!
I think we should be going with survival of the economic system, along with the bankruptcy of numerous hedge funds that sold credit insurance.
Who invested in those, I wonder/
Bring out your dead!!!
I suspect a lot of today's capitulation trade was raising capital to deal with Lehman. 3 day settlement, remember!
Gotta make the payouts on Monday.
A huge reshuffle of the chips is currently underway.
Did anybody insure against Icelandic sovereign default? You are the next contestants in you bet your portfolio!!!
Ya' know, Buffett was right on derivatives.
Someday this war's gonna end...
Helicopters with syringes?
Hey, a really sick trade would be to buy up nearly all the Lehman debt if you did the credit default swaps and then squeeze it to 100- viola! No losses!!!!
It might be cheaper than making the payouts!
Someday this war's gonna end...
Nanook writes:
I'm hearing a rumor that a CDS auction tomorrow is going to put us in a tailspin. Can anyone elaborate on that?
Yes, Ben's helicopter is going into a tailspin. Hmmm, needs more Yaw control...like the Ranchero:)
sounds like "they do the lendin', we do the bendin'" and I ain't down wit dat!
OT:
half of the stuff on my watch list was green today and in a big way.
i will concede that they were oversold to the teeth, but dammit why cant they just go straight down?
makes my trigger finger itchy.
Nanook writes:
I'm hearing a rumor that a CDS auction tomorrow is going to put us in a tailspin. Can anyone elaborate on that?
I think we are already in a tailspin.
Nanook writes:
I'm hearing a rumor that a CDS auction tomorrow is going to put us in a tailspin. Can anyone elaborate on that?
Nanook | 10.08.08 - 7:32 pm | #
Hearing (reading) the same thing...
That seems to imply that the institutions will be better able to raise capital after the TARP buys the dodgy assets - as opposed to suggesting the TARP will inject capital into the institutions.
I guess that depends on whether $700 billion is enough. If it is not enough, they still will not be able to raise capital.
like the Ranchero:)
serious moo goo
unexplained fires are a matter for the courts, Canyonero!
crispy& cole writes:
Nanook writes:
I'm hearing a rumor that a CDS auction tomorrow is going to put us in a tailspin. Can anyone elaborate on that?
Nanook | 10.08.08 - 7:32 pm | #
Hearing (reading) the same thing...
Anyone have a link?
10-09-08 D-Day (Detonation?) Lehman's CDS Auction.. [General] - MarketTicker Forums
here is one
oooppps! thanks dingo.
That Simpson's bit still makes me laugh.
and to think,,, a few weeks ago, we thought all these events wouldnt happen...
I only read the comments on CR... so someone in the last thread was mentioning something about an auction on Friday... so are we manufacturing our own rumors here?
Crispy & Cole,
Did you follow it to this link
Financial Sense Online Market WrapUp with Frank Barbera 10.07.2008
Ummmm....
Yahoo! 404 - Page Not Found
DENVER - House Speaker Nancy Pelosi said Wednesday that a $150 billion economic stimulus plan is needed now because of the faltering economy and she may call the House into session after the election to pass it.
Pelosi told reporters that the stock market meltdown, which has caused an estimated $2 trillion loss from pension funds, was a factor in her recommendation for a second stimulus bill. The first relief plan sent out $600-$1,200 tax rebate checks to most individuals and couples this year.
AIG's toes writes:
More plasma televisions, that'll solve it.
TRANSLATION OF PAULSON/FRANK REMARKS:
"Jesus, did we ever screw up. We should have done what the Brits did. So, here's what we're going to do.
"We'll call capital stock an asset, that'll be our intent. We just didn't WRITE IT DOWN, that's all."
"I learned at Dartmouth that, if you can't dazzle them with your brilliance, baffle them with your bullshit."
Last Friday $700 billion would have bought 100% of JPMorgan/Chase, Citi, BAC, WFC, WB, SunTrust and a few other large banks.
That's what has puzzled me about the TARP. $700 billion in fresh capital is a lot more potent as capital than buying up distressed assets.
Would you rather buy GM and Ford if resurrecting the US auto industry was your goal or buy up car loans?
Re: "Where the legislation speaks of ``assets'', that term is intended to include capital instruments of an institution such as common and preferred stock, subordinated and senior debt, and equity rights."
Star Trek - Amok Time fight scene
YouTube - Star Trek - Amok Time fight scene
There are no parents in the house.
Pun intended.
As the age of the dollar draws to a close, Russia will have to consider selling her oil and gas not in the devalued American currency, but instead in the euro used by most of her customers. It is surely unnatural for two geographical neighbours to do such large volumes of business using the currency of a distant and now ailing nation.
Time for a gold rouble? | Top Russian news and analysis online | 'RIA Novosti' newswire
The simple fact is if these guys were really smart enough to solve this problem, we wouldn't have the problem to begin with.
Re: f you can't dazzle them with your brilliance, baffle them with your bullshit."
I'm sorry, I read that first as "capitulation".... I think my reading was more accurate, though
... to fund capital infusion and asset purchase approaches alone or in conjunction with each other to enable financial institutions to begin providing credit again ...
There's no reason to think they won't simply hoard this capital instead of lending it out. Or am I missing something?
Maybe the solution to this problem isn't to deliberately and systematically concentrate the nation's wealth in a small number of hands via inflation and taxation.
so how much did hankie pants paulson waste before coming to this conclusion???
That's what has puzzled me about the TARP. $700 billion in fresh capital is a lot more potent as capital than buying up distressed assets.
Would you rather buy GM and Ford if resurrecting the US auto industry was your goal or buy up car loans?
You own the companies, you own the liabilities.
If we are serious about getting our economy out of the ditch we need to recapitalise banks. Quickly.
We didn't have the stomach to let banks just fail and allow existing bondholders to become the new equity holders.
A forced recapitalisation via government dilution of existing shareholders is better than over-paying for dodgy assets.
Paulson and Bernanke sure are indecisive. No leadership whatsoever.
Fish or cut bait.
I am curious about Metlife. Aparently they have a broker network and a bank.
This is what I found interesting:
Source:http://www.bizjournals.com/stlouis/stories/2006/09/18/daily34.html
NASD said Tuesday that it imposed a $5 million fine against three MetLife Inc. units, including Walnut Street Securities Inc. of St. Louis, for conduct violating NASD rules.
NASD said it imposed the fine against Walnut Street Securities, New England Securities Inc. of Boston and MetLife Securities Inc. of New York -- all owned by MetLife Inc. and referred to by the NASD as the MetLife Securities Firms -- for providing inaccurate and misleading information to NASD, allowing late trading of mutual funds, failing to produce e-mails in a timely fashion, and other conduct that violates NASD's rules.
NASD's actions relate to a series of events that began with an NASD inquiry in September 2003 concerning late trading of mutual funds.
Metlife Bank did auto and home loans.
Basically they sound like the perfect machine for eating your money. They have a menu with everything on it.
Dental insurance, IRA, retirement planing, life insurance, home loans, banking.
So where is the problem? The bank?
The simple fact is if these guys were really smart enough to solve this problem, we wouldn't have the problem to begin with.
Is there an economic modeling branch of the FED or Treasury? What is their budget compared, say, to the US Weather Service?
is that how it works?
we pass legislation then magically change all definitions?
can we say that we meant 700 billion one hundred dollar bills?
voila 70 trillion is what we hope will be used
the willingness of our so called leaders to reconfigure their own words ex post is a farce.
why not just pass all bills with no words, then a few months later we can be told what they meant when they passed the blank sheet of paper legislation.
I still read the whole thing as a "we'll sweep the dirt under the carpet, and maybe throw out some trash, before we invite Mr and Mrs SWF over for dinner."
Bernanke and Paulson should read this blog. Main street has more common sense than wall street.
Hopefully the TARP really is flexible so it will be easy for the Obama administration to switch to a better policy on day 1. Of course, that's still 104 days away....
ac writes:
The simple fact is if these guys were really smart enough to solve this problem, we wouldn't have the problem to begin with.
ac | 10.08.08 - 7:49 pm | #
Completely agree ac, and sideline money and global banks also agree. Equity continues to tank and and credit markets frozen until these bozo's are gone.
My theory anyway.
curious how multiple rate cuts and guaranteed interbank lending in UK and tons of money put up to recapitalize banks
and yet - TED no likey at all.
3.88
not encouraging (if you root for some modicum of credit stability, which you may not at this point)
Barney Frank:
"Hank, we can pull this off. I'll just tell everybody it was our legislative intent to allow the purchase of bank capital."
Hank Paulson:
"Barney, I can do this. I learned how to chuck turds at the Tuck School, and I can heave this one all the way to the goal line."
Barney Frank:
"Good, Hank, it's a deal. You sling it and I'll be there for you."
I only read the comments on CR... so someone in the last thread was mentioning something about an auction on Friday... so are we manufacturing our own rumors here?
YLSP | 10.08.08 - 7:44 pm | #
At least theirs something being manufactured in the USA. Can rumors be exported? How many jobs will manufacturing rumors create?
"It was clear that mere appeals from Washington for confidence and the mere lending of more money to shaky institutions could not stop this downward course." - FDR, May 7, 1933.
The wealthy in America are a disgrace. They don't want risk and reward. They want handouts and guarantees. WTF!
That is the main reason I was against ANY bailout.
I think tomorrow has as much a chance to be an up day as a down day.
The Slosh Report shows a huge boost in free capital.
And the Lehman CDS thing will probably not be worse than expectations; the one earlier this week (AIG?) didn't seem too bad.
STFU FDR! What, are you trying to do, scare us? Geez. What would a patriot do? Come on now, you sir, get under the TARP!
The Fannie/Freddie CDS auction already happened on Monday the 6th. The auction prices were around $0.91 on the dollar.
The Lehman auction I thought was on Friday the 10th, not Thursday the 9th. Guess I have to cancel my tee time and get to the AH, I hear the prices are bargain basement!
There are some rumors that the big draw down in the stock market on Monday was due to selling off of investments to cover the cost of closing out the CDS for Fannie and Freddie.
Fannie, Freddie CDS recovers 91.5-99.9 pct in auction
| Reuters
CDS auction monday: look out below • thepropertypin.com
I wish Ben would start throwing parachutes instead of dollars.
"How many jobs will manufacturing rumors create?"
Tens of thousands, if you work in the financial or military intelligence industries.
Completely agree ac, and sideline money and global banks also agree. Equity continues to tank and and credit markets frozen until these bozo's are gone.
My theory anyway.
I'm still convinced all our problems stem from the government trying to outsmart the markets and undo the decisions made by the markets via forcible government intervention.
Again, at least consider the possibility that the markets are actually smarter than the government.
If so, what good are we doing by replacing market decisions by government decisions?
Because the government is presumably more honorable?
Is that really true?
If so does that make up for the lack of judgment?
The current crisis taken in the context of all the intervention we've seen in the past 10 years suggests to me perhaps not.
Who owns Lehman CDO's?
Sources: CR - Tanta, and
Guess Who Owns the Crappy CDO Tranches? It Might Be You (Via Your Pension Fund) « naked capitalism
It seems more than a few pension funds do.
Quote from Naked Capitalism:
``I have trouble understanding public pension funds' delving into equity tranches, unless they know something the market doesn't know,'' says Edward Altman, director of the Fixed Income and Credit Markets program at New York University's Salomon Center for the Study of Financial Institutions.
That's obviously a very risky play,'' he says.If there's a meltdown, which I expect, it will hit those tranches first.''
Calpers is going to be in the news soon I think
If we are serious about getting our economy out of the ditch we need to recapitalise banks. Quickly.
But if that doesn't get them to lend then the net result will simply be richer banks and poorer taxpayers.
OT - More T.A., more charts, but it's good for ya. I say today was the bottom at least for the NASDAQ. Why? A key reversal candlestick formed - all that's needed for confirmation is a close above it tomorrow.
<a href="http://img48.imageshack.us/my.php?image=nazbottom100808yy0.png>Here's the NASDAQ composite candlestick formed today - this is called an inverted hammer.
<a href="http://img48.imageshack.us/my.php?image=nazbottom91101gw6.png>Here's the NASDAQ composite following the decline into September 2001. Notice the striking similarity - in both the angle/degree of descent and, as identified on the chart, the key reversal day.
It's very similar on all other indexes. Bottom line - they flushed out the straggling bottom callers today, short ban is nullified tomorrow, and we've got a reversal bar. This parabolic descent is over.
It's no accident that a gullible academic like Bernanke became head of the fed. The man considers all debt growth to be equal. No consideration given to whether or not the debts can be repaid or are backed by output.
Unfreakinbelievable. AS IF!
Our financial system is a sham.
and poorer banks
realize that massive equity injections in banks would dilute the hell out of exisiting equity holders
maybe preferable to bankruptcy, but it would be much more than a flesh wound for the equity holders
bond boys would be doing cartwheels though
Comrade Bagholders,
"Maybe people are seeing what they want to see, but it'd be nice if the TARP was more oriented towards increasing capital."
The banks have capital. They have long term debt payable to them on the asset sheet. And have short term debt on the liability side. Levered 60:1 off of the capital. They can't roll the short term paper, because their assets are crap.
Since congang would have gotten creamed if the gov't just gifted cash to the banks etc, they're buying assets above market to reduce leverage and thus increase capital. All this means is the same as gifting money. And it means another attempt at a bubble by Wall Street.
It also means we absorb the losses.
The banks can't in any REAL sense be re-capitalized. What needs to happen is that the worlds economies need to stop running primarily on debt and leverage.
We've reached the max height of the inverted debt pyramid. It is crumbling. More debt taken on by a bankrupt US gov't is NOT going to prop this thing up anymore. And since it is in all truth a ponzi scheme, it has to do more than stay propped up. It needs to continue to grow. It can't.
So all this talk of Bankster bailout plans is nothing but desperate hot air. This inverted debt pyramid will fail.
Anonymouse, just make sure you're on the right end of that inverted hammer thingy do-dad.
i think i am going to start writing in all lower-case.
(get it? no capital. hahahahaha)
anonymouse
does that mean the s&p 1075 bottom call was a good one or a bad one
and how about the massive bounce we were going to get yesterday due to the TA?
as I said recently, I like your posts, you at least post falsifiable information (no vague generalities) but then come clean when you are wrong. you were, and you may or may not be going forward (IBMs numbers should help your cause though)
good luck, this is a six sigma event, careful about TA derived from 2-3 SD events here
Doesn't the Nikkei open at 4pm PST?
They need to cancel the CDS!!!! This is friggin ridiculous.
Here's my solution:
U.S. Gov't should unclassify and license some of the really kick-ass tech that they've had under wraps for a generation. Your imagination barely scratches the surface of what some of their toys can do.
[tinfoil hat on]
After all is said and done if Obama is appointed president he will just be a brother shooting blanks. After the unwinding he will be a political eunuch stuck with all the stinky shit on his lap. Mark these words.
declassify, oops
I had an interesting conversation with my 403(b) holder today.
I couldn't switch some allocations online, so I called the 800 number and made the switch for future inflows...
Then she asked if I wanted to "go to cash"...
"Like with the rest of my funds? I asked.
"Well, yeah," she said...
She must have had a busy day...
It still fascinates me that even the loyal readers and commenters on this blog seem to believe that a smart enough leader could solve this problem.
Our leaders are improvising because no one has ever, I repeat ever, found a solution to the bursting of a major asset bubble in an economy that did not involve major negative consequences to almost everyone in the society. They are going to be groping in the dark for quite some time to come.
The solution to asset bubbles, as Tanta once mentioned, is to never let them get started in the first place.
"U.S. Gov't should unclassify and license some of the really kick-ass tech that they've had under wraps for a generation."
You mean like open up a can of Conjure Woopass? I'm not sure you want to go there. That's pretty powerful stuff.
monta's ankle,
I identified 1075 on the SPX as the 1 to 1 A-B=C-D price projection and we reached it. I stated numerous times that we could get an extension: 1 to 1.382, 1 to 1.50, 1 to 1.618, and even possibly 1 to 2. The 1 to 1.618 projection is 963 to be exact and we got it on the futures.
Secondly, I called for no "massive bounce" today, but over the coming weeks/couple of months. However, I'm absolutely standing by my call that this weeks will have marked the low - and even more boldly I'm stating today was a reversal bar. So even if we go lower tomorrow, if we close higher than today we're done with this decline.
My analysis is rather nuanced but I think perfectly clear and I'm not backing away from current and previous forecasts, right or wrong.
AIG's toes writes:
"Is there an economic modeling branch of the FED or Treasury? What is their budget compared, say, to the US Weather Service?"
The Fed employs lots of economists throughout the Federal Reserve Board system. And they do pretty well as economists - they consistently out-forecast the private sector economists.
Of course, the modelling they do has limited predictive power for "shocks": things like wars, hurricanes, etc.
Most standard economic models have no real chance of modelling the impact of the wacky products hitting the financial system right now. Most economic models largely abstract the financial system out of existence - only the "real economy" matters. Finance only shows up in things like savings flows and interest rates, but no examination of mechanisms.
Comrade Why@ ZIRP,
"They are going to be groping in the dark for quite some time to come."
They're not groping. They're opening up with a 50 cal machine gun and not giving a shite who or what they hit.
Nostrovia,
P C Anonymouse-
Seriously, not busting chops, what happens if we close lower tomorrow than today?
Brian in New Orleans writes:
Here's my solution:
U.S. Gov't should unclassify and license some of the really kick-ass tech that they've had under wraps for a generation. Your imagination barely scratches the surface of what some of their toys can do.
[tinfoil hat on]
Oh that would be f*cking swell. I hate to break it to you dude but they're not researching the next generation of MDMA or building space age amusement parks.
The stuff they'd release would be nasty sci-fi torture devices for cops and corrections. I don't really want to see spontaneous human combustion or have a cop light my skin on fire from afar just to grow the GDP.
Thanks, but the governments black ops can stay in the closet.
i like your willingness to stand up for your theory
but if i could find the post i would - 2 dyas ago you posited, after the close from monday's rout, that the next day we were headed for a major upside move
you probably missed it but there were more than a few posts that looked like this.
must. kill. anonymouse.
bottom line, you are now changing your story by degrees, and thats ok, but you made different claims ex ante than you are remembering ex post.
you recently posted long and strong at SPY 100. but you also were long and strong at SPY 104.5 if i remember correctly.
we got into this mess with a lack of transparency. don't join that debacle.
and for the record, i thought your were right aboutt he sp 1075 call, and i was wrong.
as for government getting us out of the asset bubble. besides never getting in it in the first place - you can go and create a new bubble. that's the otther way out and that is what they are looking for now.
The Fed employs lots of economists throughout the Federal Reserve Board system. And they do pretty well as economists - they consistently out-forecast the private sector economists.
Serious question: Did these guys accurately predit the current problems we're facing?
If so why didn't we hear something about it?
A whole lot of bloggers and commmenters were able to predict the current crisis it seems.
Maybe bloggers should run the Federal Reserve.
It could be called the Feral Reserve.
Comrade Bond Guy,
"And they do pretty well as economists - they consistently out-forecast the private sector economists."
GIGO. They have privy to info others don't.
Nostrovia,
"It could be called the Feral Reserve."
I LIKE IT. SOUNDS GOOD.
When do we start?
The Nikkei is down 10%?
Whats going on?
Isn't the Nikkei down 10% every day?
ades - Nikkei is down 60 points after 12 minutes of trading.
Nades
That was the previous close price.
nades writes:
The Nikkei is down 10%?
Whats going on?
nades | Homepage | 10.08.08 - 8:18 pm | #
Bukkake?
ikkei down 59 points (0.5%)
yawn
10% is delayed quote (yesterday close)
here is your real time link:
Nikkei.com - Market Live
outta here, enjoy the ticker watching
Comrade ac,
"The Fed employs lots of economists throughout the Federal Reserve Board system. And they do pretty well as economists - they consistently out-forecast the private sector economists.
Serious question: Did these guys accurately predit the current problems we're facing?
If so why didn't we hear something about it?
A whole lot of bloggers and commmenters were able to predict the current crisis it seems."
I must be becoming complacent. Why didn't I make that argument?
Nostrovia,
Opps!
(thanks all, (embarased!))
Anonymouse --
"I will eat crow if SPX, INDU, NDX, RUT aren't up 5-10% tomorrow; leverage at the open, use a tight stop, sell at the close, ka-ching!"
HaloScan.com - Comments
That was two days ago.
Now, eventually, one of your "bottom!!!!" calls will be correct. That is what happens when you make the same call every day.
I believe TA is one of those things that works great until it doesn't, in a way that makes it useless for actually making money.
Be honest. How much have you lost in the last three trading days?
thx for finding that gem nemo
i really gotta split now
Doesn't buying these assets and getting them off the balance sheets ... and more importantly that establishing new realistic market prices which allows the remaining assets to be written up on teh balance sheets ... in effect recapitalize these banks?
And isn't there a strong secondary benefit from taking these assets - where the uncertainty about the value and risk exposure was casuing major problems with attracting new capital - off the books ? Doesn't this help recapitalize in effect as well by bringing solvency back to these entities.
And with solvency and increased trust about teh safety of the entity thus bringing back liquidity?
The Fed is walking a fine line though. Supposing BB knew/thought this was coming (personally I doubt it), he would not have said as much. BB is not going to say anything that creates panic or anything remotely close to it. Note aversion to word "recession."
Comrade Bond Guy,
Oh yeah, and Roubini, Reicherbacker (RIP), and Shostack...hell ALL Austrians called this thing years ago.
Bad Model = DIGO (Data in Garbage Outr).
Nostrovia,
Anonymouse, you really need to find a warm beach somewhere and lie down until the feeling goes away.
You really shouldn't be in this market unless you have to be.
Please don't take offense.
OT - Links and discussion of Iceland banks closing.
Icesave closes its doors | MetaFilter
The discussion too mean-spirited, unfortunately. Americans loves to 'crack wise' about another country going broke . . . I guess they can pretend It Can't Happen Here.
Currently Smoking Cannabis -
I was kinda joking with my post, but you are wrong about it all being 'bad' stuff. Think of the advances the 60's space program gave us that we all take for granted today. From the early 80's on (70's arguably) all of the velcro-like side-channel inventions have been kept classified. Ask yourself when the last significant classified tech was unveiled? 25 years ago with stealth? The $$$ spent on devel since then dwarfs what it took to get us there.
From materials to miniaturization of design developments, etc.
Comrade Misean,
Sometimes you know but can't say because it will cause panic. I have a feeling that many of these guys sold their house, liquidated their stocks and bought gold while publicly espousing the "all is contained" line.
They're not groping. They're opening up with a 50 cal machine gun and not giving a shite who or what they hit.
Nostrovia,
Comrade Misean is Dope | 10.08.08 - 8:15 pm | #
And I suspect they will wound everyone eventually. Just like every other government that had to deal with this crap.
As to why they didn't predict this crisis, maybe they did and that's why we got the Great Depression expert. It can't be that hard to see a bubble forming. They don't dismiss the Austrian view entirely IMO.
Possible good story here:
The Credit Default Swap Mess: Did U.S. GAAP Play a Role?
The Accounting Onion: The Credit Default Swap Mess: Did U.S. GAAP Play a Role?
For example, ordering pizza for delivery has all the economic earmarks of a forward contract. I realize that I'm being a little bit silly here, but I hope you get my point: one of the FASB's objectives in promulgating FAS 133 was to curb abuses from reporting really important zero-value-at-inception financial contracts, like interest rate swaps with notional amounts in the billions of dollars, the same as a pizza delivery order. If the price of pizza changes before delivery takes place, that's not such a big deal unless you're a poor college student (not bad grades, no money get it?). But if LIBOR declines by 10 basis points, you went from neutral to a big transfer of wealth on a $10 billion swap contract.
CDS's and FAS 133
Among other things, a derivative within the scope of FAS 133 has to have an "underlying" (para. 5a), which is defined in the glossary of the standard as:
"A specified interest rate, security price, commodity price, foreign exchange rate, index of prices or rates, or other variable (including the occurrence or nonoccurrence of a specified event such as a scheduled payment under a contract). An underlying may be a price or rate of an asset or liability but is not the asset or liability itself." [bolded italics supplied]
This is a great article on the RGE website:
Several Auctions in October: How Does A CDS Settlement Work?
RGE - Several Auctions in October: How Does A CDS Settlement Work?
You will have to create a user name, but they have opened the site and are not charging for premium access.
Why@Zirp, you are so right. Harry Reid's 'No one knows what to do' was probably the only honest comment to come from that man's mouth in his entire political career.
What makes this so fascinating to watch is you never know what is going to come next. Even worse no one knows the consequence of the actions we have taken in response, such as Central Bankers conjuring up vast sums of alleged money, will be though consequence there must be.
Anyone who thinks a man or a political
party has a solution to this is a fool. This is like a disease. We cannot innoculate ourselves only apply palliatives to treat symptoms.
monta's ankle writes:
you recently posted long and strong at SPY 100. but you also were long and strong at SPY 104.5 if i remember correctly.
I really appreciate that you think highly enough of my posts to recall my entry from Monday. However, you may have missed my posts after the market close Tuesday that I stopped myself out intraday and bought the close. I also bought more on the gap down this a.m. - so I'm at SPY 100.05 and QQQQ 33.06. I don't plan on buying any more, so those prices won't change.
Yes, I was forecasting Tuesday to be a "trend day" and to lever up in the morning and sell at the close - too bad I got the direction wrong! Tuesday was a trend day to the downside - so I was completely wrong on the call, but it's funny how it was 180 degrees wrong.
My key points are about this week being an Intermediate Term bottom and today a very likely reversal bar.
not a banker,
I'll post an update whether my call was accurate or not. If we close lower, perhaps the market's shooting for a 1 to 2 extension of the A-B=C-D move down - an absolutely parabolic move that either crashes or rockets.
I think we're seeing a very perverse phenomenon right now.
I think FDR was able to reflate precisely because the economy was in a state where the banks knew it was safe to start making loans again, so long as all the other banks began making loans. So it just took a kick in the pants to get things going again. I.E. to break the deadlock between banks just waiting for other banks to start loaning.
Now we may be trying to prematurely force an FDR style reflation.
Quite simply, the economy may be currently so rife with bad debt and malinvestment that it simply makes no sense to loan out money, no matter how much capital the banks have.
In attempting to prematurely reflate, we may simply be artifically relocating capital to where it shouldn't be (creating more destructive economic distortions), while ultimately discrediting the idea of reflation, even though it may be entirely viable down the road.
Maybe, unlike 1933, we're simply not yet in an environment where reflation can work.
And maybe we're taking that option away from ourselves further down the road when it actually could work.
Brian: I don't view the space program as an entirely good development. The aim of the US is to militarize and dominate space, not benefit mankind. They spend their money developing things like "God's Rods" instead of here on Earth where we actually live. Until we can properly take care of our own environment, I'm not a big fan of spending our loot on space lasers.
Most of our big tech money goes into weapons and surveillance. Sometimes they can be adapted to personal, nonviolent use (like microwaves and internet porn), but mostly they start as ways to hurt or control people.
When they are new and most unknown, that's when technology is most attractive as a weapon. I hope we don't see much of that.
Comrade 220mph,
Ahem...
HaloScan.com - Comments
Comrade Brian in New Orleans:
"Think of the advances the 60's space program gave us that we all take for granted today. From the early 80's on (70's arguably) all of the velcro-like side-channel inventions have been kept classified. Ask yourself when the last significant classified tech was unveiled? 25 years ago with stealth? The $$$ spent on devel since then dwarfs what it took to get us there."
It always cracks me up when people post Apollo program stuff. The Apollo program was cool, entertainment wise, but a huge waste. YAY! We got velcro and Tang out of it! For 100 gazillion dollars! YAY!
I'm with CSC. Most of the stuff gov't classified is developing is to KILL, not to help. Just google kill bot, for an example. The Fockers are TRYING to build Skynet.
Nostrovia,
Looks like they found a buyer.
McCain's Plan Calls for Government to Buy Mortgages (Update4) - Bloomberg.com
Re: Iceland, saw this
Prime Minister Geir Haarde rushed emergency measures through the Nordic nation's parliament to nationalise Landsbanki and give the country's largest bank, Kaupthing, a £400m loan to bolster its balance sheet.
Landsbanki has been put into the control of the Icelandic financial regulator to prevent the meltdown of the country's financial system, triggering the collapse of its popular internet savings arm Icesave.
Mr Haarde confirmed that he was sending a delegation to Iceland's "new friend" Russia to negotiate a £3bn capital injection into the country's finances, after the country's traditional Western allies refused to help the collapsing banking system.
Russia and other SWFs don't have to buy America, all they have to do is just buy all of our friends. We couldn't have thrown a pittance from the TARP at Iceland?
I have no idea whether the TARP will work or not, but there was no way for it to work without the banks ending up with more capital. Either Paulson overpays for the bad paper or he buys preferred or whatever the hell else they come up with. Frankly, I don't think it makes much difference. The taxpayer gets the tab either way.
G13. I rest my case.
Oh, and I thought most here were in favor of a thinning of the herd.
Financial Guarantors A Review of Recent Mark-to-Market Losses October 11, 2007
http://www.assuredguaranty.com/App_Assets/Public/2eca92b0-6bc2-4090-b2ab-976a1a3f7e95/10-11-07_Fitch_FG_MTM.pdf
As already announced by Ambac Financial Group, Inc., Fitch expects significant mark-to-market losses to be recorded against all financial guarantors CDS portfolios during the third quarter of 2007. These large mark-to-market accounting losses are not expected to have any ratings implications for the financial guarantors rated by Fitch.
Generally, Fitch excludes the unrealized gains and losses from derivatives in its analysis of the financial guarantors insured portfolios since these CDS contracts are effectively structured to mirror traditional financial guaranty insurance policies. Unlike a more typical CDS, financial guarantors specifically structure their CDS contracts sothat they are not subject to liquidity risk.
Forward-looking as ever, Moody's Investors Service said today it lowered Iceland's government bond rating to A1 from Aa1. Bloomberg Still acceptable for a Fed auction window! It's good debt - would Moody's (Buffett's rating company) ever lead you wrong?
As far as the comment about pension funds buying CDO Equity tranches - nakedcapitalism (and apparently Taanta) assume ALL CDO equity tranches are made up from toxis waste - from repackaged junk tranches of subprime loans etc
But if I understand correctly those would be the CDOx2 products - were DO tranches were packaged and resold
Which is a LOT different than the equity tranche of a straight CDO ...
While a straight CDO equity tranche is still high risk it is also realtively easy to understand that risk because its based directly on teh performance of the underlying assets - residential mortgages
If you know the performance of the loans or pool that make up the CDO seems you can calculate the risk ...
As a large REIT managing doirector explained to me tehre are buyers for the risky equity tier because they are great deals
They are buying these assets at substantial discounts - 25 to 50 cents on the dollar - they also pay high returns because of the risk - and even after a high default rate they still provide strong returns
There IS a risk they can go to zero ... but if the udnerlying pool is not all subprime in CA - rather balanced pools spread across US - the default rates can very well be manageable ... and after discounts 20% return is not unlikely it seems
Bond Girl writes:
Looks like they found a buyer.
http://www.bloomberg.com/apps/ne...0roc& refer=home
I betcha' he got that one from Carly!
emo writes:
Be honest. How much have you lost in the last three trading days?
Tuesday, I lost less than half a percent (maybe 0.3 percent) of my trading account when I stopped myself out of the positions I took Monday. If you look at the current prices of SPY and QQQQ and compare to 100.05 and 33.06 respectively, you'd notice I'm down about 2-2.5%, depending on where they're trading. I'm 80% loaded up on SPY and QQQQ in my account so you can do the math as to how much my account has drawn down (about 1.5%). So those are my losses thus far. We'll see how it goes from here.
One thing that surprises me is that none of you (that I have read) have talked at all about what effect the internet has had on dealing with this crisis.
I would love to hear thoughts about this.
Paulson's comments are painfully clear: the $700b can be used to recap the banks. This is very good news and goes a long ways to making the bill a very good one. Of course, we still have to see how Paulson uses the dough but that would always be the case anyway.
As far as the swaps auctions - I have no clue if this is related but if it is its worth note:
Ten-Year Swap Spread Collapses After Fed Rate Cut (Update1) - Bloomberg.com
Oct. 8 (Bloomberg) -- A decline in the premium charged to exchange floating for fixed-rate payments to below the level when credit markets began to seize last year may be a sign that interest-rate cuts by the world's central banks will bolster financial markets.
The spread between the rate on interest-rate swaps and 10- year Treasury note yields narrowed to 54 basis points from 61.75 basis points yesterday, the least since May 2007. A basis point is 0.01 percentage point.
Swap spreads narrowed after the Federal Reserve, European Central Bank and four other central banks lowered interest rates by half a percentage point in an unprecedented coordinated effort to ease the economic effects of the worst financial crisis since the Great Depression. A rise in yields after the Treasury sold $20 billion in 10-year notes through emergency auctions also helped spreads narrow by increasing the amount of securities available to investors.
The movement in the 10-year swap spread is signaling a break in the upward trend in credit spreads,'' said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co. in New York. The movementis probably hinting at a drop in the two-year swap spread, which if it occurs would strongly signal an easing of pressures in the inter-bank market.''
All credit to the dems if they were responsible for sneaking this little loophole into the language of the TARP. Repubs are 100% against "socializing" banks as they see it. But obviously several key people realized they may need the TARP to morph into a swiss (or UK) style solution of partial preferred stock public ownership of troubled institutions so they snuck the few critical lines in at the last minute. It wasn't debated or mentioned, and the republican house clearly didn't see it or if they did, they pretended not to as it would make their yest vote even less popular with the base back home.
LOL.
Brother the only people in favor of thinning the herd misunderstand their place in it. They're stampeding us to the slaughterhouse. Some dudes are so busy laughing at the poor bastard iver there that they dont see themselves moving the same direction.
We're all screwed. Many of us will be killed in all of this. Some people reading this will die by the time this is over and the DOW parties at 10k again.
I'm putting my hands in the air and screaming.
fuck the banking system, lets nationalize it. Then we can play all sorts of corrupt social experiments. However, the corruption will take a while to get to this magnitude again, maybe 80 or so years.
Re: Government/Defense Resources
Kind've a rant at the direction CSC was going in discussion. I don't get why our government doesn't research effect of "illegal narcotics" and synthesize a safe drug that gives all the plusses without the negatives. I bet that only costs like $2B to do.
But sorry, all of our money is being thrown after the financial crises... flushed down the toilet so to speak...
Nikkei-anyone?
I suppose why I posted the 2 comments about CDO's and pension funds. The other about Metlife is because I smell smoke but I am to blind (dumb) to figure out where the fire is.
I once scratched my toes really good with the heel of my foot. Felt so good! Then I got blood poisoning. My leg had this red streak following the vein going up almost to my knee when I went into the doc.
That is what all this stuff reminds me of. Meat that is infected and it is spreading.
CSC.
more bonghits, less tinfoil dragon chasing.
"You really shouldn't be in this market unless you have to be."
Fundamentals are like a hibernating grisly bear. When it wakes up, it wonders were ever it wants. Stay out of its way.
Myr writes:
Paulson's comments are painfully clear: the $700b can be used to recap the banks. This is very good news and goes a long ways to making the bill a very good one. Of course, we still have to see how Paulson uses the dough but that would always be the case anyway.
Myr | 10.08.08 - 8:37 pm | #
I agree, although it would be much more satisfying to bankrupt them first I don't think that can happen in this system without crashing the whole thing. Too bad, they deserve it.
"As to why they didn't predict this crisis, maybe they did and that's why we got the Great Depression expert. It can't be that hard to see a bubble forming. They don't dismiss the Austrian view entirely IMO."
As to the Austrian point...Oh yes they do...Vehemently. I read those damned Journals of various schools of economics still.
Comrade ac,
"Now we may be trying to prematurely force an FDR style reflation.
Quite simply, the economy may be currently so rife with bad debt and malinvestment that it simply makes no sense to loan out money, no matter how much capital the banks have.
In attempting to prematurely reflate, we may simply be artifically relocating capital to where it shouldn't be (creating more destructive economic distortions), while ultimately discrediting the idea of reflation, even though it may be entirely viable down the road.
Maybe, unlike 1933, we're simply not yet in an environment where reflation can work."
They didn't reflate till WWII, which is why they had wage, price controls and resource stamps.
Comrade CSC,
"Sometimes they can be adapted to personal, nonviolent use (like microwaves and internet porn),"
DARPA was run by geeks for geeks. The spooks and Pentagram didn't understand it. Thus it got away from them. Firepower and spying they get...so, we have Internet spying now. The pr0n is cool though.
Nostrovia,
Paulson's comments are painfully clear: the $700b can be used to recap the banks. This is very good news and goes a long ways to making the bill a very good one.
Paulsen could always do this. He can do whatever he wants! Did you read the bill? Paulsen can do whatever he thinks is necessary to "unclog the system" or whatever. Except he'll be curtailed by oversight provided from his self-appointed ex-GS buddies.
fuck the banking system, lets nationalize it. Then we can play all sorts of corrupt social experiments. However, the corruption will take a while to get to this magnitude again, maybe 80 or so years.
I disagree, simply because of the close relationship between the US government and Wall Street.
No reason to think the exact same people won't go back to doing exactly what they were doing before.
I think one of the most serious problems we have now is that government and finance have already become so intertwined that nationalization merely serves to preserve the status quo as opposed to changing anything.
ac-
BAM! You read my mind and communicated my thoughts on an accelerated reflation schedule perfectly.
It can't be done.
TARP and a Switch...
Sounds like a TARP Sandwich...
Two pieces of TARP and you wish you had some money between them...
220 mph (obviously doesn't own the best of the current sports cars) said:
Doesn't buying these assets and getting them off the balance sheets ... and more importantly that establishing new realistic market prices which allows the remaining assets to be written up on teh balance sheets ... in effect recapitalize these banks?
Yeah it does.
But it would be a gift, from us to the banks.
However it is clear that feds now want us to get (and we should get) something in return for a gift: preferred stock. Just a shame they are so cowed by the finance lobby that they can't openly discuss it.
If you don't think this is right then you should feel it is even less right to buy assets nobody else wants and get nothing for this generosity.
Nikkei-anyone?
sue | 10.08.08 - 8:39 pm | #
Ahhh. It looks like a pretty mountain. How cute.
emo,
Obviously I didn't follow my histrionic forecasts Monday night to buy the open Tuesday and lever up all day because it'd be a "trend day". Again, I was completely wrong - except for the trend day part.
I promise - solemnly - to never make such ludicrous trading advice like that. I'm not ashamed I was wrong - it's a stupid risk/reward ration any day.
Sorry. But it should be obvious now that it's not paranoia. It is happening right now. Our civilization is breaking down. It is highly probable that some person who reads this will starve to death. And, now, when they do, it will be the most surreal thing in the world to remember this post as you die. Oh my God. Why?
I'm gobsmacked that after falling 9% yesterday, the Nikkei could not bounce longer than 30 minutes.
I would love to hear thoughts about this.
Anonymous | 10.08.08 - 8:36 pm |
The Internet is what is screwing Paulson and his band of pirates.
Why? Speed. Speed to move money. Also speed of information. Even better the ability to link different pieces and make whole a coherent analysis.
Video. I watched a lot of this at work. Killing bandwidth but what the heck.
Fear and rumors. Great for that also.
OT:
Home builder Lennar Corp (LEN) has just announced that the company will be cutting its annual dividend payout by 75%.
Management believes the prudent thing to do at the moment is to preserve cash to fund its future operations and opportunities.
CSC. I don't know about dying. More like sitting in a room wishing they could afford Internet access.
I think one of the most serious problems we have now is that government and finance have already become so intertwined that nationalization merely serves to preserve the status quo as opposed to changing anything.
This is absolutely true. But nationalization is seeming increasingly inevitable to me. Just wondering how much money they are going to piss away on their various experiments before it happens.
said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co. in New York
Creszenzi is a joke. Google Ralph Acumpora to get a feel for so called "experts". He was a media darling during the tech boom and bust. They are all salesman with monthly bills to pay.
Look around. Too much bad debt. Rosey short term talk about swap spreads won't change the facts on the ground. More losses and blow ups are coming.
220mph wrote
While a straight CDO equity tranche is still high risk it is also realtively easy to understand that risk because its based directly on teh performance of the underlying assets - residential mortgages
you are confusing CDOs with MBS. CDOs were backed by anything which paid excess spread.
Ouch:
Bloomberg.com:
Personal Finance
Now we may be trying to prematurely force an FDR style reflation. Quite simply, the economy may be currently so rife with bad debt and malinvestment that it simply makes no sense to loan out money, no matter how much capital the banks have.
Fixing the banking system doesn't (shouldn't) mean stuffing banks full of money and letting them lend without underwriting standards - again. And even if the country has lots of mal/over-investment doesn't mean it is distributed evenly, or that reasons for new investments won't crop up.
I don't mean inevitable like it is desirable or the only way out of this either. It is just that letting the system clean itself out is not politically palatable.
Anon,
Keep drinking it will look better later.
When do the Russian military transports and fighter jets starting landing in Iceland?
Comrade Misean-
Well, for what it's worth I do not dismiss the Austrian school entirely. Some really great thinkers. It should be taught if it is not.
Currently Cannabis,
Iceland will be the test case, if they run out of food then we know crisis could really get out of hand.
ac-
BAM! You read my mind and communicated my thoughts on an accelerated reflation schedule perfectly.
It can't be done.
serious moo goo
Yeah, I think a simpler way of phrasing my earlier point is:
We're trying to fix the economy by fixing the financial system.
And that's totally backwards.
At best they have to be fixed simultaneously; at worst we may have to fix the economy first.
Nobody seems willing to consider this possibility.
It is just that letting the system clean itself out is not politically palatable.
Bond Girl | 10.08.08 - 8:49 pm
I don't think you can stop this machine long enough to clean it out without very bad things happening.
You can rebuild a server when you have 200 users on it. Crashing a database in use is usually a bad thing.
Hang Seng Index -8.165 @ 15,431.73
The benchmark Hang Seng Index has dropped more than 40 percent this year and traded below 16,000 points for the first time since July 2006 yesterday, amid concerns the deepening credit crisis will slow global economic growth and erode corporate earnings.
Iceland will be the test case, if they run out of food then we know crisis could really get out of hand.
sue |
Good point. I'll be praying for the cold canary.
Comrade Nova,
"The Internet is what is screwing Paulson and his band of pirates."
Well it is definately having an impact. Wall Street tried to turn the internet into a shopping mall in the late '90's. But the geeks turned it into a global information transmital system. Geeks 2...Wall Street gov't 1. They get a point for forcing telecoms to let them spy on us. Thing is...so much data...limited spying resources.
Nostrovia,
Nationalization in the USA isn't going to do anything. The majority of politicians are in the hands of the uppercrust and their hanger-ons. As long as the national media is in their grasp nationalization of anything won't mean shit. Like I said in another post trully soul searching is needed amongst the population and( in this Mexicans opinion) Obama just ain't going to cut it.
The media won't let him.
`Consumers are shell-shocked right now, and I don't think they've got the ability to spend,'' Stephanie Hoff, an analyst at Edward Jones in St. Louis, said today in an interview. ``Usually if sales are weak for this time of year, it doesn't bode well for holiday.''
Sixty-three percent of retailers who reported results today fell ``short of lowered expectations,'' Ken Perkins, president of Retail Metrics LLC, wrote in a report.
``Based on our September performance and the current economic environment, we expect customer demand will remain weak for an extended period of time,'' Neiman Marcus Chief Executive Officer Burton Tansky said in a statement.
ac: "In attempting to prematurely reflate, we may simply be artifically relocating capital to where it shouldn't be (creating more destructive economic distortions), while ultimately discrediting the idea of reflation, even though it may be entirely viable down the road.
Maybe, unlike 1933, we're simply not yet in an environment where reflation can work.
And maybe we're taking that option away from ourselves further down the road when it actually could work."
=====
And gov't reflation attempts, so discredited, and at such a cost, would this be called the beginning of liberation, or of.... what?
Sorry, not yet late night, but continuing that question, how grim are the political options at that point?
Limited republican government is a fragile thing. I remember the unease of my stateside compatriots coming to realize that the simple situation found in so many regions in the world: either tyranny or chaos.
Who's the poster that signs off with "Sorry, Ben"?
Lord help us if we come to that.
I do not think nationalization will "do" anything, but I think some attempt will be made at it once the market falls enough. It will be horrible.
Aliva,
Obama gives the middle class hope, without hope for the middle class the country falls apart. So Obama is the best candidate despite the fact he is as corrupt and full of shit as the next politician.
Do you know where all the intercepts of message traffic go? It is not Meade. It goes to a base in Utah. Then it is routed to the appropiate agency.
Bond Girl,
What about nakedalization ... I know, dumb!
Comrade Why@ ZIRP,
"It should be taught if it is not."
It is Verbotten to do such a thing. Luckily my University's Econ dept was staffed with several tenured stealth Austrians. Probably the only reason I graduated cum-lade.
Nostrovia,
New thread...
We're trying to fix the economy by fixing the financial system.
And that's totally backwards.
I disagree. Our economy (and the world's) produces in abundance. Yet more and more people are wards of the state. That doesn't sit well with me.
We have a distribution problem and an inflation problem (cpi & assets).
Creating money for the sake of spread sheet growth burdens producers and favors the money lenders. We need a new balance.
I was talking to a co-worker who told me about Bradley when he ran for office in CA. Apparently all the polls had him winning in a landslide. It didn't happen. The voters wanted to appear liberal but when the got behind the curtain they just couldnt do it.
Misean,
For us non-geeks could you explicate pr0n w/o violating any creed of geekdom?
I think one of the most serious problems we have now is that government and finance have already become so intertwined that nationalization merely serves to preserve the status quo as opposed to changing anything.
That's why this has to take it's course. The pain of status quo needs to be greater than the pain to change.
pr0n?
I know what a newb is but I don't know the word for all these older-folks who don't understand the l33tspeak? A rewb?
you can go and create a new bubble. that's the otther way out and that is what they are looking for now.
The charts are telling us that the only asset bubble left is commodities (oil, metals, gold, grains). They jump even with the hint that the Fed is going to do any serious reflation.
The savers are going to make the debtors pay. One way or another.
I go here to unwind:
Across the Curve
[hat tip]
Is Doctor Heimlich in the Room.) The Treasury chose to announce the reopening of four issues and to sell the first of those issues within one hour of the announcement. The street was unable to effectively set up for the auctions and so the auctions were sloppy and as I recorded in the earlier piece the cost to the taxpayer was substantial.But wait, as there is an opposing view which springs from either a Machiavellian impulse or finds its antecedents in the belief that shots rang out from the grassy knoll on that Friday in Dallas. Everyone loves a conspiracy and this one holds that this was the Treasurys way of firing a shot across the bow of those who choose to hold expensive issues for the sole purpose of deriving positive carry in the repo market. The folks who derive profit from that strategy will think twice before they invest in expensive paper as they will not know when the Treasury will pounce again.
Collapsing "Emerging" Markets
Vectors
Russia, Indonesia, Ukraine and Romania shut their stock exchanges after shares plummeted in the worst week for emerging-markets in at least two decades.
YLSP writes:
Kind've a rant at the direction CSC was going in discussion. I don't get why our government doesn't research effect of "illegal narcotics" and synthesize a safe drug that gives all the plusses without the negatives. I bet that only costs like $2B to do.
Negro Cocaine Fiends - New Southern Menace - NYT February 8, 1914
This is in the NYTimes archives on a for-pay basis here:
NEGRO COCAINE "FIENDS" ARE A NEW SOUTHERN MENACE; Murder and Insanity ... - Article Preview - The New York Times
Duh, because they benefit from it. The justification for the police state, the politically convenient racial tension, the holier-than-thou puritan morality of the "just say no to asprin" crowd.
They made the "fight the evil drugs" monster so it could be sideshow; a diversion and a politically acceptable way to get at discriminated-against classes of individuals without being openly biased.
Then, like all such projects, it acquired a mind of its own. The people in charge now would tell you that, somehow, taking a non-addictive drug that made you feel high with no negative effects was wrong and bad for you. If they didn't, they'd be torn apart by political rivals who did.
If you take part in it, you just ride around in circles, ruining your life to ruin other people's lives; it's the perfect Babylon system, everyone from the top to the bottom is victimized.
Kicker,
Commodities had their bubble, and debtors are going to take away from savers... it's already happening. Notice the politicians are all about helping the little people- buy bad loans, bailouts, free health care, affordable college and the newest access to credit. The populist message in the campaign is getting me sick on both sides. Even McCain can't shoot straight. To fix the problem the US has to do the following things.
1) Get rid of tax deductions for health care and mortgages.
2) Eliminate 529 plans for college saving and student loans.
These things only drive prices higher because the deductions allow the receiving entities to charge more, akin to a subsidy- very similar to the housing bubble or pricing a bond, the lower cost of borrowing the higher the price of the asset.
CSC:
Some dudes are so busy laughing at the poor bastard iver there that they dont see themselves moving the same direction.
You speak in the east, he answers in the west, CSC.
"Good point. I'll be praying for the cold canary"
Canary in an aluminium mine.
Capitalizaton. Do we see it applying more to the big banks -- JPM, BAC, C -- or smaller ones....? Not sure who this is aimed at.
FT.com / Lex / Finance & governance - UK taxpayer value - "The British governments plan to recapitalise the UK banking system is silent on one important point. There is no mention of forced management change at institutions that come cap in hand to the taxpayer... Darling on Wednesday brushed off calls for bank bosses to be sacked, saying such matters were best left to shareholders. Indeed."
who bought those 455 million shares of BAC anyways?
@Guest. Do you have any idea how this will work in the US...see comment above. Wondering what affect on stock prices of these big banks, which have seemed to held up the last few days.
NYTimes is now reporting that Paulson will use the recapitalization plan.
- NY Times
Looping back to the 8:15 comments on the Feral Reserve, I support, but can I add the shell company - trading as Distressed Asshats, LLC. Incorp in Delaware, natch.
CC
Here's another link on the issue of Lehman's CDS auction, with the text of the FT article that is referenced in the contents of a prior link.
Sorry if someone has already put this up; too many comments to read them all.
Another Reason for Cash Hoarding: Big Credit Default Swaps Market Test Imminent « naked capitalism
What I see is the theft of the US banking system for the NY banks. The biggest problem in the system is Citicorp. Citicorp, before this problem started, reported $400 billion in fed funds liabilities on their books in the summer of 2007. This bank has been only marginally solvent for decades. JPM has a fog around it as well. Why Wachovia and not Citi? Citi acted wrecklessly in many areas, especially in the SIV's they held and the CDO's they created. There is no telling what the collateral damage was. JPM has been the king of derivatives and I have to believe they are hiding losses, yet they seem to be first in line for all the plums. Goldman Sachs and the other brokers could benefit massively out of this mess. When the Texas banking system went bad in the 1980's, all the shareholders were wiped out. The largest banks weren't capitalized, but taken over and given to out of state banks. Why should the NY banks be bailed out?
A bit more related to the upcoming CDS auctions. This post
MarketWarnings: CDS (credit-default-swaps) are wrong as an insurance: the business model is flawed
suggests that the cash-hoarding behavior in the credit markets is in preparation for the need to settle CDS on defaulted bonds, and not due to risk aversion toward borrowers.
- NY Times
U.S. May Take Ownership Stake in Banks
Lehman's `100% Principal Protection' Means Pennies for Notes - Bloomberg.com
Last Updated: September 28, 2008 19:01 EDT
... SEC spokesman Kevin Callahan said he couldn't comment on whether the agency had received complaints from investors or whether it is looking into how the securities were marketed.
"The banks and brokerage firms invent a product, and they push it until it breaks," said Roger Robson, founding principal of CapTrust Financial Advisors, a consulting firm in Tampa, Florida. ...
Structured notes were first sold in the U.S. in the 1980s ... They're sometimes marketed as "structured equities" or |"hybrid financial instruments" because they combine features of debt and equity.
... more firms may sell structured notes in the form of certificates of deposits -- a banking product that's guaranteed by the U.S. Federal Deposit Insurance Corp.
More back-room BS!
No PIMCO is poised to become the Federal Reserves PIMP-CO:
So it looks like the $1.7BB paid to shut up Bill Gross also bought his free services - Oh, arent we lucky! The incestuous relationships between business and Government have escalated to orgy-like proportions!
PIMCO poised to become the Federal Reserve’s PIMP-CO « Your Mortgage or Your Life…