Davos Aromas Deodorize Subprime Stench, Charm Dimon, Kissinger
2008-01-16 18:02 (New York)
By A. Craig Copetas
Jan. 17 (Bloomberg) -- Truth is, the global economy can sometimes stink. So the World Economic Forum is targeting the noses of the 2,400 global leaders at the group's 38th annual meeting next week in Davos, Switzerland. Perfume-pumping machines in the main conference halls will spray eight specially created fragrances such as Artemis and Lavender Fields to relieve any unpleasant aromas that settle on delegates, who include Chevron Corp. Chief Executive Officer David O'Reilly, JPMorgan Chase & Co. CEO Jamie Dimon and former U.S. Secretary of State Henry Kissinger.
The 38-year-old aroma engineer spent the next six months in his company's labs in Berlin and Manhattan, working with 2,200 vials of potions and secretly constructing ``chords and arpeggios'' of scents to make the WEF perfumes that he says can trigger imagination without words.
The Mission
Laudamiel's mission is to create and circulate aromatic moments that evoke the intimacy of the meeting, while helping delegates solve global calamities against a backdrop of crisis. Paramount among what the WEF's 2008 program portrays as a global ``contagion'' is the fallout from lenders marking down more than
$80 billion after a surge in U.S. subprime mortgage defaults.
The aroma of subprime is an interesting concept, and that's one of the reasons I'm fragrancing the rooms,'' Laudamiel says.I want my perfumes to overcome the gloom.''
``It's important we leave sufficient room for the young people involved in the forum to develop seminars like this,'' says Klaus Schwab, the WEF's 69-year-old founder and chairman.
Then, with a smile on his face, Schwab says he has no clue'' how the perfume project came together.Davos always evokes provocation,'' he says.
At last I find something to disagree with Conjure about. If a U.S. recession is probably beginning now, then a global recession is nearly as likely. I'd put the odds of "decoupling" at about 10%.
The rating agencies are so rude. These never ending downgrades are really intolerable. S&P et. al. are nothing more than a bunch of peeping toms, perpetually lurking at corporate America's bedroom window in hopes of espying some impropriety. A disgusting business, doncha think?
I think credit ratings should be more like academic tenure or federal judgeships -- once you're in, you're set for life. And if things don't work out as hoped -- well, better luck next time, chin up, etc. etc.
I love all this crap about reviews. MBIA just had one via a surplus bond sale. They failed the AAA test. Ambac ain't looking so hot either.
This is smoke and mirrors. It's politics. It's about silly regulations that say that certain entities can only hold so much yada yada that's rated less than AAA. So as long as MBIA et. al. hold AAA ratings, then the bonds they insure stay AAA, and P-funds etc. don't have to sell them. Crooked, wrong, and the fixed income retiree is going to eat it in the end.
Looks like MBIA's reinsurer, that MBIA has a 17% stake in ( isn't that a sort of only a 83% reinsurance then ? ) is bust:
RenaissanceRe Holdings and PartnerRe Ltd. said late Wednesday that their investments in Bermuda reinsurer ChannelRe are now worthless amid turmoil in the bond insurance industry.
RenaissanceRe owns 32.7% of ChannelRe, a financial guaranty reinsurer that provides back-up coverage exclusively to bond insurer MBIA Inc. ....
The company said late Wednesday that this will now be cut to zero. PartnerRe, which valued its stake in ChannelRe at $74 million at the end of September, said the same thing.
...
Because ChannelRe reinsures some of MBIA's risks, it will also take write-downs. Those charges will exceed its shareholder equity, or net worth, under generally accepted accounting principals (principles shurely. ed.)
We have reinsurance from a company we trust. We trust them because we own them. As a AAA rated insurer, we thought it best to assure our clients that only the best reinsurance be made available for their bonds.
How long can the AAA ratings really be kept until it fails the laugh test? I would think we are already past that point. I tried an exercise in futility by coming up with my own housing bust bailout plan. It was very instructive and I encourage all to try to make one up themselves. Who knows where Washington will get their next big idea!
Maybe we can get Dr. Phil to do a sit down mediation between the ratings agencies, bond insurers, and wall street and see if some kind of resolution can be reached. It is quite possible that the insurance situation is more of a train wreck than the Spears family at this point, but it is only Wednesday!
And the HSBC is bundling this stuff as a CDO to sell it as a AAA invetment.
Can't get any wierder, but good ol' S&P needs more time to review this.
I imagine the reviewers have been coming to work and logging into their WOW accounts, and told the bosses that because of a huge PvP ladder coming up they needed a little more time to practice. I mean after all we know what the review should be and will be.
I long suspected that the entire liability for California earthquake coverage was pooled and redirected to a P.O. Box in Kansas. I was stupid. All the re-insurance is redirected to a P.O. Box in the Cayman Islands where Casey Serin is paid to open the mail.
I would love to be in the room with S&P guys when they do their "review" next week. It would be surreal to hear how they could cook up more excuses to keep them all AAA.
What a joke!!! Even my mom knows it's a total scam!!!
The company failed to pay a quarterly dividend on its $140 million series A preferred stock on Tuesday due to terms in its bonds that restrict dividend payments when its breaks certain ratios, in this case known as fixed-charge coverage.
Oh things are WAY past the laugh test. With MBIA the only question for a honest rater would be what level of junk it got. But nobody cares. It's like the Emperor's New Clothes. Everybody pretends to see something that's not there because they're afraid of what will happen if they tell the truth.
The CDO of MBIA junk bonds shows how hopelessly crooked the whole system is, and how CDOs produce moral hazard by spreading around responsibility. The whole deal is hilariously corrupt, and worthy of an extended vacation in federal prison. But it's hard to identify who should get marched. MBIA? Selling bonds on the open market. HSBC? well, the bonds are rated AAA. S&P? Well, MBIA officially has enough capital. And officially, the various entities are arms-length. The mushing and slicing and dicing of the bonds and loans mushes and slices and dices responsibility and ethics too.
I swear, the sheer number of things I know have happened on multiple fronts today, none of which are showing up on the NYT are quite the revelation. And I've even had a freaking productive day. so it's not like I've been exploring the outer fringes. I wanna crawl down the tuubz and laugh test their servers.
Here is a post from the Globe and Mail in Canada, stating:
"Some of Canada's big banks are contemplating holding their prime rates steady in the face of a rate cut by the Bank of Canada, a move that could destabilize the country's monetary policy."
Guys have a heart and dont go to hard on the ink stained wretches working at Moody's S&P and Fitch. These guys have families and want to have a life. They realize that if they downgrade MBIA or Ambac, that they are going to have to downgrade tens of thousands of muni bond issues. Thats a lot of work you know, and guys would probably have to come in on the weekends, and after all the playoffs and the super bowl are coming up, ergo, don't downgrade and be able to see the game.
Now every time I read a quote on this blog from a CEO, CFO, analyst, politician, economist or rich big mouth that they did not see this housing and economic mess coming all I am going to think about is that stupid gorilla, Bobo. LOL!!!!
"As trading volumes declined, many market participants were forced to use pricing models that relied on historical data. However, the recent performance of some of these subprime loans has been much worse than the record would have suggested. This has caused valuation models to break down."
Models work until they don't. But who coodanode that the massive uptick, the massive trend move away from loan payment vs. rent, massive subslime, option ARMs etc, could have signaled that models based on past performance were likely not to hold true.
However, the IMF has discovered a couple of other things:
"They realize that if they downgrade MBIA or Ambac, that they are going to have to downgrade tens of thousands of muni bond issues. Thats a lot of work you know,"
Naw, they just issue:
All of yourz bondz is now BBB. Then they get back to the PvP ladder.
Why don't WCI's creditors just walk into the bank vault, pour gasoline on all their money, throw a match and walk away? I mean, it would have the same effect. Actually, it would be more efficient from a thermodynamic perspective.
Seriously rc, thanks for the link, explains the bounce in their stock today.
"I have a plan - a moratorium on foreclosures for 90 days [and] freezing interest rates for five years, which I think we should do immediately," Clinton announced at what was the last Democratic debate before the Nevada Caucus.
Some of Canada's big banks are contemplating holding their prime rates steady in the face of a rate cut by the Bank of Canada, a move that could destabilize the country's monetary policy.
Good God, man... stop them, they're going to charge interest!
Foreclosing on millions of homes isn't going to help anything.
No sane foreigner is going to lend on US real estate assets in the near future.
Arguably the 90 day foreclosure moratorium and 5 year rate freeze get you to where you're going to end up anyway, only with less friction.
While the schmucks in the houses don't deserve to live in them at a low interest rate, the schmuck investors got themselves into this situation and will be lucky to get paid the teaser rate.
Misean: I didn't say it would work, necessarily. But if Scotty canna hold her and the Enterprise is going to blow, might as well spare everyone the exercise of moving their trinkets from one hellhole in Stockton to another.
Frankly, I think the Fed has done the best they could to start the schoolchildren down the fire escapes, holding hands and not running. But when the bolts start popping, who knows? Who coodanode?
To hark back to an earlier thread, the Republican Randista radicals have screwed the pooch (and the middle class) big time. My sympathies are with the 2 latter (pooch and middle class).
All who concur with Dryfly, say aye. Let me frame the issue in term of business models. The US economy for the past 20 years has been built on a false foundation. There are entire industries built on the Feds easy money paradigm. Here is a list of business models where the numbers simply dont work anymore:
Auto manufacturers, auto parts, recreational vehicles, appliances, home furnishings & fixtures, housewares & accessories, recreational goods, consumer services, rental & leasing services, credit services, gaming activities, resort & casinos, restaurants, specialty eateries, lumber & wood production, Residential & Retail REITs, Auto parts stores, catalog & mail order houses, department stores, discount variety stores, electronics stores, home furnishing stores, home improvement, apparel, auto dealerships, jewelry stores, specialty retail
We are not just going to have a recession, we are having a we have gone bankrupt, we are going out of business sale nationwide. All dead business models.
http://www.fakepaycheckstubs.com IS THIS LEGAL? No wonder why we have the subprime mess we have when lenders USE FAKE DOCUMENTATION to help PUSH the loan through Quickly SO THAT EVERYONE DOWN THE FOOD CHAIN (from loan processor to the loan officer to the actual lender) can make the commissions they "WERE" making during the booming 90's!!! Now we are BAILING OUT THESE CROOKS....SOUNDS LIKE the good ol' 1980's Savings and Loan BAILOUT DAYS to me! http://www.fakepaycheckstubs.com see it with YOUR OWN EYES!
OT- The money vanishes. Poor people will get screwed by their local dealers.
Know any poor people who bought money orders and saved them or thought they were safe?
Payment Processor MoneyGram Downgraded Again on Lee Transaction
MoneyGram International Inc., the money-transfer and payment-processing provider that lost investment-grade status in November, was downgraded another two notches yesterday by Moody's Investors Service.
The new Ba3 corporate grade results in part from ``continued deterioration in its investment portfolio due to exposure to subprime securities, including collateralized debt obligations.''
Standard & Poor's also downgraded yesterday, taking away investment-grade status with a demotion to BB, or one level higher than Moody's.
Moody's also has concern for the ``additional financial leverage'' resulting from a pending transaction where Thomas H. Lee Partners LP will invest as much as $850 million in equity while MoneyGram arranges up to $750 million in new debt financing from third parties.
In November Minneapolis-based MoneyGram took a $230 million writedown on its holdings of subprime mortgages and collateralized debt obligations. S&P noted that the realized loss on the $1.3 billion investment portfolio sold this month was twice the unrealized loss on the November balance sheet.
You forgot higher education. Which has morphed, over the last 20 years, into something that's been rather parasitic both on the "booming" economy and on young people:
--forcing them to jump through hoops even in middle school to beef up their "resumes"
--hiring them out as unpaid gofers in the racket called "internship"
--saddling them with outrageous debt that they cannot pay off in reasonable time frames; a college degree no longer even ensures a living wage
The last time we saw this sort of parasitic scammery on a society-wide level was the kind perpetrated by the Church on the populace before ye olde French Revolution, I'm afraid...
In my city, there is a private university of some regional renown... they are erecting new buildings and seeming to spend money like drunken sailors. Alumni money, federal money, state money, corporate money is being spent in an ambitious and idealistic effort to solify its reputation as some sort of "baby Ivy." No evidence that any of it is being saved for the inevitable rainy day, and enrollment drops that must come for a school of its caliber.
Dale - can you give us a hint which city (don't need to be too specific about the school)... but I'm curious since what you describe (the building & claims to be a 'baby ivy') could be just about ANY college.
BTW - the #1 thing making a school like an ivy is a large enough endowment that money hardly matters. #2 is an enrollment system that almost exclusively caters to 'legacy applicants'.
A lot of meritocracy is based on the merits of family money. Shocking revelation I know.
I live in a small PA town home to a state university. They've cleaned the place up nicely from when I partied here with college friends - it was a real rathole - but the answer to most things now is to buy more housing in town and renovate or tear down. They now own about a quarter of the property in the town and the tax base is shot to hell.
Want to make it nice? Buy an old place and tear down or renovate - build out and not up.
"You forgot higher education. Which has morphed, over the last 20 years, into something that's been rather parasitic both on the "booming" economy and on young people:"
Simply put: at many colleges today, the quality of education -does not justify- the cost. Biggest scam on the planet.
There is an oft held notion that student loan debt is not dischargeable in bankruptcy, or some such idea. Its true, but the trick is to keep current long enough on the monthly SL payment (or go into forebearance) to build up the high credit card limits needed to transfer the student loan debt over and then, voila! I had an acquaintence do this after his 40K or so in student loan debt he earned at the same time as his eastern philosophy degree. Then he left for Belize!
Its shocking for a while, but I know many people in their 20's or 30's with 60-80K in student loan debt, and lots of times its for art degrees and maybe a HR masters. not to belittle any bachelors degree, wait the bachelors is the new HS diploma.
stinky - nothing new there, money is and always has been fungible. I met a chiropractor who did a similar thing - except used home equity loans to pay off his student loans then sent in the keys.
One nit pick on your thesis. Auto parts stores will do ok cause people will have more time than money and will perform their own repairs. Last two cars I sold were to Latinos who then prepped them for sale to others in their community. The first one, 15 yrs old, 2nd engine, not working, sold for $300 while the second one, 10 yrs old, was working well and sold for $1800. It always amazes me to see how far the local immigrants can stretch a dollar.
OT (no link yet):
Davos Aromas Deodorize Subprime Stench, Charm Dimon, Kissinger
2008-01-16 18:02 (New York)
By A. Craig Copetas
Jan. 17 (Bloomberg) -- Truth is, the global economy can sometimes stink. So the World Economic Forum is targeting the noses of the 2,400 global leaders at the group's 38th annual meeting next week in Davos, Switzerland. Perfume-pumping machines in the main conference halls will spray eight specially created fragrances such as Artemis and Lavender Fields to relieve any unpleasant aromas that settle on delegates, who include Chevron Corp. Chief Executive Officer David O'Reilly, JPMorgan Chase & Co. CEO Jamie Dimon and former U.S. Secretary of State Henry Kissinger.
The 38-year-old aroma engineer spent the next six months in his company's labs in Berlin and Manhattan, working with 2,200 vials of potions and secretly constructing ``chords and arpeggios'' of scents to make the WEF perfumes that he says can trigger imagination without words.
The Mission
Laudamiel's mission is to create and circulate aromatic moments that evoke the intimacy of the meeting, while helping delegates solve global calamities against a backdrop of crisis. Paramount among what the WEF's 2008 program portrays as a global ``contagion'' is the fallout from lenders marking down more than
$80 billion after a surge in U.S. subprime mortgage defaults.
The aroma of subprime is an interesting concept, and that's one of the reasons I'm fragrancing the rooms,'' Laudamiel says.I want my perfumes to overcome the gloom.''
``It's important we leave sufficient room for the young people involved in the forum to develop seminars like this,'' says Klaus Schwab, the WEF's 69-year-old founder and chairman.
Then, with a smile on his face, Schwab says he has no clue'' how the perfume project came together.Davos always evokes provocation,'' he says.
The perfuming of Davos is raising some noses.
Is there such a thing as a "Triple BK" rating?
Conjure says, "The U.S. recession is probably beginning now and a global recession is becoming increasingly possible, if not probable."
"Have a nice day."
Conjure Clock
11:59:02
Hoocoodanode?
Wookin' Pa Nub in all da wong paces.
mp,
event for the tick (besides the bear fangs, that is)?
$, Baltic Dry, Oil
At last I find something to disagree with Conjure about. If a U.S. recession is probably beginning now, then a global recession is nearly as likely. I'd put the odds of "decoupling" at about 10%.
MLM, it may interest you to know that Conjure estimates the probability of decoupling to be zero, and always has.
It's simply a matter of timing, that's all.
The rating agencies are so rude. These never ending downgrades are really intolerable. S&P et. al. are nothing more than a bunch of peeping toms, perpetually lurking at corporate America's bedroom window in hopes of espying some impropriety. A disgusting business, doncha think?
I think credit ratings should be more like academic tenure or federal judgeships -- once you're in, you're set for life. And if things don't work out as hoped -- well, better luck next time, chin up, etc. etc.
I think credit ratings should be more like academic tenure or federal judgeships -- once you're in, you're set for life.
Like Enron was?
You're once, twice, three times a loser
"probably be reviewed again in a couple of months"
Give 'emm more time. After all there are less brains at work.
I love all this crap about reviews. MBIA just had one via a surplus bond sale. They failed the AAA test. Ambac ain't looking so hot either.
This is smoke and mirrors. It's politics. It's about silly regulations that say that certain entities can only hold so much yada yada that's rated less than AAA. So as long as MBIA et. al. hold AAA ratings, then the bonds they insure stay AAA, and P-funds etc. don't have to sell them. Crooked, wrong, and the fixed income retiree is going to eat it in the end.
Cheers,
CR-
did you catch this update?
Reinsurers say ChannelRe investments are worthless - MarketWatch
Looks like MBIA's reinsurer, that MBIA has a 17% stake in ( isn't that a sort of only a 83% reinsurance then ?
) is bust:
RenaissanceRe Holdings and PartnerRe Ltd. said late Wednesday that their investments in Bermuda reinsurer ChannelRe are now worthless amid turmoil in the bond insurance industry.
RenaissanceRe owns 32.7% of ChannelRe, a financial guaranty reinsurer that provides back-up coverage exclusively to bond insurer MBIA Inc. ....
The company said late Wednesday that this will now be cut to zero. PartnerRe, which valued its stake in ChannelRe at $74 million at the end of September, said the same thing.
...
Because ChannelRe reinsures some of MBIA's risks, it will also take write-downs. Those charges will exceed its shareholder equity, or net worth, under generally accepted accounting principals (principles shurely. ed.)
Reinsurers say ChannelRe investments are worthless - MarketWatch
-K
mp --
Are you sure you heard right? I did not expect Conjure ever to use words like "probably".
We have reinsurance from a company we trust. We trust them because we own them. As a AAA rated insurer, we thought it best to assure our clients that only the best reinsurance be made available for their bonds.
Someone's teeth need to get kicked in.
Cheers,
How long can the AAA ratings really be kept until it fails the laugh test? I would think we are already past that point. I tried an exercise in futility by coming up with my own housing bust bailout plan. It was very instructive and I encourage all to try to make one up themselves. Who knows where Washington will get their next big idea!
Would sure hate to come in to work tomorrow at MBIA, nothing short of a Margarita machine or Prozac could get me thru that day
Nemo, go easy on Conjure. He's still teething his new bear fangs and is chewing up a lot of cigars.
JJL,
We're passed the laugh test. We're now into the "I want to bop someone on the had with a Louisville Slugger" test.
Cheers,
Misean:
Well, they threw the curve ball, and it's strike 3. I think they're out!
ChannelRe = Beginning of systemic risk explosion!
Sheesh, talk about feet dragging! S&P maybe, might get around to a ratings review sometime in the future IF...
Come on people! 14% rate for AAA?!?
Maybe we can get Dr. Phil to do a sit down mediation between the ratings agencies, bond insurers, and wall street and see if some kind of resolution can be reached. It is quite possible that the insurance situation is more of a train wreck than the Spears family at this point, but it is only Wednesday!
If MBIA's surplus notes fail, it will have to be the fastest in US history. If they were 89.50 today, tomorrow below 50
Darth Toll,
14% + a sale of 10.5%.
No really it's AAA.
And the HSBC is bundling this stuff as a CDO to sell it as a AAA invetment.
Can't get any wierder, but good ol' S&P needs more time to review this.
I imagine the reviewers have been coming to work and logging into their WOW accounts, and told the bosses that because of a huge PvP ladder coming up they needed a little more time to practice. I mean after all we know what the review should be and will be.
Cheers,
Blonde Vigilante,
Well they should be, but someone called the ump after he called strike, and he changed his call and said the batter checked his swing...baaall.
Cheers,
I long suspected that the entire liability for California earthquake coverage was pooled and redirected to a P.O. Box in Kansas. I was stupid. All the re-insurance is redirected to a P.O. Box in the Cayman Islands where Casey Serin is paid to open the mail.
I would love to be in the room with S&P guys when they do their "review" next week. It would be surreal to hear how they could cook up more excuses to keep them all AAA.
What a joke!!! Even my mom knows it's a total scam!!!
Rob Dawg,
So that's where that little sh%t is.
Tom Servo...You should know, you were known for running some scams on the SOL.
Cheers,
Fitch affirms tonight-
Expired
HOV downgraded for not paying dividend - the end is near:
UPDATE 1-S&P cuts Hovnanian preferred stock to default
| Reuters
The company failed to pay a quarterly dividend on its $140 million series A preferred stock on Tuesday due to terms in its bonds that restrict dividend payments when its breaks certain ratios, in this case known as fixed-charge coverage.
Oh things are WAY past the laugh test. With MBIA the only question for a honest rater would be what level of junk it got. But nobody cares. It's like the Emperor's New Clothes. Everybody pretends to see something that's not there because they're afraid of what will happen if they tell the truth.
The CDO of MBIA junk bonds shows how hopelessly crooked the whole system is, and how CDOs produce moral hazard by spreading around responsibility. The whole deal is hilariously corrupt, and worthy of an extended vacation in federal prison. But it's hard to identify who should get marched. MBIA? Selling bonds on the open market. HSBC? well, the bonds are rated AAA. S&P? Well, MBIA officially has enough capital. And officially, the various entities are arms-length. The mushing and slicing and dicing of the bonds and loans mushes and slices and dices responsibility and ethics too.
Rob Dawg--Omaha is in Nebraska
.
wci gets relaxed terms-
Expired
RenaissanceRe on exposure-
Expired
I swear, the sheer number of things I know have happened on multiple fronts today, none of which are showing up on the NYT are quite the revelation. And I've even had a freaking productive day. so it's not like I've been exploring the outer fringes. I wanna crawl down the tuubz and laugh test their servers.
Here's the head of the S&P Ratings Group. Her name is Pearl:
http://www.scifi.com/freezone/mst3000/10_pearl.jpg
And here's my college graduation picture:
http://mediarebellion.com/i/hosted/cobra/Servo%204.jpg
Rob Dawg--Omaha is in Nebraska
Dammit, "Rum&Coke" (Coke stock symbol K) all over the keyboard.
Post of the day. Good job.
Fair Economist,
forget the marches. I think we should just nuke 'em from orbit. It's the only way to be sure.
Cheers,
IMF-
""Most banks in the United States have not yet marked their assets to genuine transaction prices," the report said."
AFP: IMF warns subprime crisis losses 'may be higher'
IMF = "Stating the Obvious" award winner of the day!
Excellent "Aliens" reference Misean!
"Now witness the firepower of this fully ARMED and OPERATIONAL Battle Station! Fire at will commander!"
Tom Servo,
Is Pearl working with these guys:
http://img517.imageshack.us/img517/5813/brainguyhv4.jpg
and
http://img517.imageshack.us/img517/650/bobogv0.jpg
That ought to make for a SOLID review.
Cheers,
Bobo in the picture
is obviously saying; "Who coodanode?"
Misean:
Of course, the only other job they would be good at is being a mortgage broker.
Nice to talk to people with a sarcastic sense of humor...
We will need it in 6 months.....
Well it's nice to know that a stupid gorilla and a brainless alien can get work these days.
Cheers,
Here is a post from the Globe and Mail in Canada, stating:
"Some of Canada's big banks are contemplating holding their prime rates steady in the face of a rate cut by the Bank of Canada, a move that could destabilize the country's monetary policy."
Full story can be found here: This page is available to GlobePlus subscribers
Sorry if it is a repeat... been busy today and this is the first chance I have had to check in.
Rob Dawg...
I believe you are correct sir.
Cheers,
Here's the IMF article to which Risk Capital referred in the news item.
It talks about minefields. That's appropriate.
IMF Survey: Credit Market Turmoil Makes Valuation Key
Casey Serin has a job opening mail? Paging Ted Kaczinski!
Guys have a heart and dont go to hard on the ink stained wretches working at Moody's S&P and Fitch. These guys have families and want to have a life. They realize that if they downgrade MBIA or Ambac, that they are going to have to downgrade tens of thousands of muni bond issues. Thats a lot of work you know, and guys would probably have to come in on the weekends, and after all the playoffs and the super bowl are coming up, ergo, don't downgrade and be able to see the game.
"Its the paperwork...stupid"
Misean:
Now every time I read a quote on this blog from a CEO, CFO, analyst, politician, economist or rich big mouth that they did not see this housing and economic mess coming all I am going to think about is that stupid gorilla, Bobo. LOL!!!!
mp,
"As trading volumes declined, many market participants were forced to use pricing models that relied on historical data. However, the recent performance of some of these subprime loans has been much worse than the record would have suggested. This has caused valuation models to break down."
Models work until they don't. But who coodanode that the massive uptick, the massive trend move away from loan payment vs. rent, massive subslime, option ARMs etc, could have signaled that models based on past performance were likely not to hold true.
However, the IMF has discovered a couple of other things:
The Pope is still stubbornly Catholic.
Bears generally poop in the woods.
Britney Spears is likely insane.
Shrubboy is a monkey in disguise.
Rain is generally wet.
Cheers,
Gee, Misean, I get the impression you didn't like the IMF piece.
Fitch affirms tonight
How long can they possibly keep this AAA rating up???? I mean, as somebody said, it no longer passes the laugh test.
These rating agencies have no credibility at this point...
Dirk,
"They realize that if they downgrade MBIA or Ambac, that they are going to have to downgrade tens of thousands of muni bond issues. Thats a lot of work you know,"
Naw, they just issue:
All of yourz bondz is now BBB. Then they get back to the PvP ladder.
Cheers,
mp,
"Gee, Misean, I get the impression you didn't like the IMF piece."
No, I laughed my ass off. Poured another martooni and whistled passed the graveyard. I was whistling Highway to hell. 'Twas pleasant.
YouTube -
Cheers,
wci gets relaxed terms-
(banging head against wall ...)
Why don't WCI's creditors just walk into the bank vault, pour gasoline on all their money, throw a match and walk away? I mean, it would have the same effect. Actually, it would be more efficient from a thermodynamic perspective.
Seriously rc, thanks for the link, explains the bounce in their stock today.
"I have a plan - a moratorium on foreclosures for 90 days [and] freezing interest rates for five years, which I think we should do immediately," Clinton announced at what was the last Democratic debate before the Nevada Caucus.
Bounce antidote
.
"I'm with stupid" - Bill Clinto
"Bounce antidote"
I've on occasion used "bounce" as a euphamism for, well. you get it.
Bill's problem:
Hillary == Bounce antidote
I've come up with a brilliant new product.
Whocoodanoodel.
It's basically cheap Ramen, but on the bottom of the cup we could have quotes of wall street geniuses saying variations of they had no idea.
Cheers,
Some of Canada's big banks are contemplating holding their prime rates steady in the face of a rate cut by the Bank of Canada, a move that could destabilize the country's monetary policy.
Good God, man... stop them, they're going to charge interest!
You know, I wonder if Hillary has a point:
mbartv.
She has two points. On the horns on her head.
Seriously though, all of these proposals are desinged to keep the payments flowing. Nothing else.
Remember cascading cross defaults:
The Limits of Central Banking by Gary North
FRB: Testimony, Greenspan -- Private-sector refinancing of the large hedge fund, Long-Term Capital Management -- October 1, 1998
Cheers,
HSBC aint holding anything. They pooled the stuff and sliced it and re-sold it.
The game continues: Cant make a profit on interest spreads we need to generate fees..
Speaking of fees - I am truly shocked at how hosed Canadians are with the Bank fees...bloody hell
Misean: I didn't say it would work, necessarily. But if Scotty canna hold her and the Enterprise is going to blow, might as well spare everyone the exercise of moving their trinkets from one hellhole in Stockton to another.
Frankly, I think the Fed has done the best they could to start the schoolchildren down the fire escapes, holding hands and not running. But when the bolts start popping, who knows? Who coodanode?
To hark back to an earlier thread, the Republican Randista radicals have screwed the pooch (and the middle class) big time. My sympathies are with the 2 latter (pooch and middle class).
O/T
To me this is the one to watch because - inflation, internal attempts to reign spening, strong gambeling mentality.
INDEX VALUE CHANGE %CHANGE TIME
CSI 300 INDEX 5,441.68 -64.04 -1.16% 21:52
SHANGHAI SE A SHARE INDX 5,488.67 -63.79 -1.15% 21:52
markets mixed in asia. Waiting for the US to show the way.... DOWN THE STEPS IN THE DARK AFTER A FEW DRINKS.
All who concur with Dryfly, say aye. Let me frame the issue in term of business models. The US economy for the past 20 years has been built on a false foundation. There are entire industries built on the Feds easy money paradigm. Here is a list of business models where the numbers simply dont work anymore:
Auto manufacturers, auto parts, recreational vehicles, appliances, home furnishings & fixtures, housewares & accessories, recreational goods, consumer services, rental & leasing services, credit services, gaming activities, resort & casinos, restaurants, specialty eateries, lumber & wood production, Residential & Retail REITs, Auto parts stores, catalog & mail order houses, department stores, discount variety stores, electronics stores, home furnishing stores, home improvement, apparel, auto dealerships, jewelry stores, specialty retail
We are not just going to have a recession, we are having a we have gone bankrupt, we are going out of business sale nationwide. All dead business models.
http://www.fakepaycheckstubs.com IS THIS LEGAL? No wonder why we have the subprime mess we have when lenders USE FAKE DOCUMENTATION to help PUSH the loan through Quickly SO THAT EVERYONE DOWN THE FOOD CHAIN (from loan processor to the loan officer to the actual lender) can make the commissions they "WERE" making during the booming 90's!!! Now we are BAILING OUT THESE CROOKS....SOUNDS LIKE the good ol' 1980's Savings and Loan BAILOUT DAYS to me! http://www.fakepaycheckstubs.com see it with YOUR OWN EYES!
The US economy for the past 20 years has been built on a false foundation. There are entire industries built on the Feds easy money paradigm.
That and US fiscal & current account deficits funded by primarily other central banks... BOJ all through the 80s and 90s and now PBoC.
Our enemies couldn't have designed a better strategy to tear us apart and we did it (mostly) to ourselves. U
Its pretty unbelievable.
Pain in Hinsdale:
Wealthy may be next in line in home crisis
| Reuters
OT- The money vanishes. Poor people will get screwed by their local dealers.
Know any poor people who bought money orders and saved them or thought they were safe?
Payment Processor MoneyGram Downgraded Again on Lee Transaction
MoneyGram International Inc., the money-transfer and payment-processing provider that lost investment-grade status in November, was downgraded another two notches yesterday by Moody's Investors Service.
The new Ba3 corporate grade results in part from ``continued deterioration in its investment portfolio due to exposure to subprime securities, including collateralized debt obligations.''
Standard & Poor's also downgraded yesterday, taking away investment-grade status with a demotion to BB, or one level higher than Moody's.
Moody's also has concern for the ``additional financial leverage'' resulting from a pending transaction where Thomas H. Lee Partners LP will invest as much as $850 million in equity while MoneyGram arranges up to $750 million in new debt financing from third parties.
In November Minneapolis-based MoneyGram took a $230 million writedown on its holdings of subprime mortgages and collateralized debt obligations. S&P noted that the realized loss on the $1.3 billion investment portfolio sold this month was twice the unrealized loss on the November balance sheet.
All dead business models.
You forgot higher education. Which has morphed, over the last 20 years, into something that's been rather parasitic both on the "booming" economy and on young people:
--forcing them to jump through hoops even in middle school to beef up their "resumes"
--hiring them out as unpaid gofers in the racket called "internship"
--saddling them with outrageous debt that they cannot pay off in reasonable time frames; a college degree no longer even ensures a living wage
The last time we saw this sort of parasitic scammery on a society-wide level was the kind perpetrated by the Church on the populace before ye olde French Revolution, I'm afraid...
In my city, there is a private university of some regional renown... they are erecting new buildings and seeming to spend money like drunken sailors. Alumni money, federal money, state money, corporate money is being spent in an ambitious and idealistic effort to solify its reputation as some sort of "baby Ivy." No evidence that any of it is being saved for the inevitable rainy day, and enrollment drops that must come for a school of its caliber.
Dale - can you give us a hint which city (don't need to be too specific about the school)... but I'm curious since what you describe (the building & claims to be a 'baby ivy') could be just about ANY college.
BTW - the #1 thing making a school like an ivy is a large enough endowment that money hardly matters. #2 is an enrollment system that almost exclusively caters to 'legacy applicants'.
A lot of meritocracy is based on the merits of family money. Shocking revelation I know.
I live in a small PA town home to a state university. They've cleaned the place up nicely from when I partied here with college friends - it was a real rathole - but the answer to most things now is to buy more housing in town and renovate or tear down. They now own about a quarter of the property in the town and the tax base is shot to hell.
Want to make it nice? Buy an old place and tear down or renovate - build out and not up.
These places are killing the locals...
"You forgot higher education. Which has morphed, over the last 20 years, into something that's been rather parasitic both on the "booming" economy and on young people:"
Simply put: at many colleges today, the quality of education -does not justify- the cost. Biggest scam on the planet.
There is an oft held notion that student loan debt is not dischargeable in bankruptcy, or some such idea. Its true, but the trick is to keep current long enough on the monthly SL payment (or go into forebearance) to build up the high credit card limits needed to transfer the student loan debt over and then, voila! I had an acquaintence do this after his 40K or so in student loan debt he earned at the same time as his eastern philosophy degree. Then he left for Belize!
Its shocking for a while, but I know many people in their 20's or 30's with 60-80K in student loan debt, and lots of times its for art degrees and maybe a HR masters. not to belittle any bachelors degree, wait the bachelors is the new HS diploma.
stinky - nothing new there, money is and always has been fungible. I met a chiropractor who did a similar thing - except used home equity loans to pay off his student loans then sent in the keys.
I wonder how much of that is going on today.
Clyde,
One nit pick on your thesis. Auto parts stores will do ok cause people will have more time than money and will perform their own repairs. Last two cars I sold were to Latinos who then prepped them for sale to others in their community. The first one, 15 yrs old, 2nd engine, not working, sold for $300 while the second one, 10 yrs old, was working well and sold for $1800. It always amazes me to see how far the local immigrants can stretch a dollar.
Best,
Hey guys,
It isn't Omaha, or even the Caymans... it's Madame Merriweather's Mudhut Malaysia, the ultimate guarantor!
The US economy for the past 20 years has been built on a false foundation.
And that's why a depression is inevitable.
Stinky is an imposter!
I can't believe it.
The real stinky
Here's the IMF article to which Risk Capital referred in the news item.
Tactical Flashlights
r c helicopter
video game