what did WM have the loans marked at when it failed?

hey yahoo better be paying CR for using his charts!

OT- FWIW:
Beijing is caught in 'trap' over dollar

By Jamil Anderlini in Beijing

Published: May 25 2009 03:00 | Last updated: May 25 2009 03:00

China's official foreign exchange manager is still buying record amounts of US government bonds, despite Beijing's increasingly vocal fear of a dollar collapse, according to officials and analysts.

In recent months, senior Chinese officials, including Premier Wen Jiabao, have repeatedly signalled their concern that US policies could lead to a collapse in the dollar and global inflation.

But Chinese and western officials in Beijing say China is caught in a "dollar trap" and has little choice but to keep pouring the bulk of its growing reserves into the US Treasury, which remains the only market big enough and liquid enough to support its huge purchases.

In March alone, China's direct holdings of US Treasury securities rose by $23.7bn (£14.9bn) to reach a new record high of $768bn, according to preliminary US data, allowing China to retain its title as the biggest creditor of the US government.

"Because of the sheer size of its reserves Safe [China's State Administration of Foreign Exchange] will immediately disrupt any other market it tries to shift into in a big way and could also collapse the value of its existing reserves if it sold to.....

FT.com / UK - Beijing is caught in 'trap' over dollar

The unemployment projections were and are still laughable. Are HELOC's included here?

GM up over 10% on wrod that bankruptcy is all but inevitable...

Rob Dawg sez the drought isn't real, but why was there oh so little snow in the High Sierra this weekend? It seemed like the snow-line was around 10,000 feet, something you'd see in mid-July in a normal summer.

The only water the farmers have other than the Sierra, is the ever-deeper wells they keep digging, @ great expense, until the next ever-deeper wells need to be drilled...

"Because of the sheer size of its reserves Safe [China's State Administration of Foreign Exchange] will immediately disrupt any other market it tries to shift into in a big way and could also collapse the value of its existing reserves if it sold to....."

The dollar will collapse suddenly not over years like everyone hopes. Hold on to your guns and bibles. Within two years for sure we will have a dollar collapse. -30%+

The dollar is already down 1/3 since 2000....

I'm still confused. The headlines all suggest that JPM is going to recognize a large profit on the WM assets, but it appears that the portfolio is considerably worse than JPM had originally forecast. How can both happen at once?

"I'm still confused. "

1 + 1 = 3

Bouncing around 3.5 now ... those 5 and 7 year auctions could prove a bit exciting.

Gavshire - I too am confused

I'm also confused about what is so 'tricky' here

they worte the loans down by 25% at acquisition, then they are allowed to write them up if they perform and do better than they were written down to- of course, their projections were too optimistic, so I would think they need to write the loans down further actually...

or am i missing something?

CR: Great posts today
,,,
O/T: did a chart of case-shiller http://img40.imageshack.us/img40/6180/csehp.png

saw this posted at Jesse's blog
Jesse's Café Américain 

http://www.rttnews.com/Content/BreakingNews.aspx?Node=B1&Id=959650%20&Category=Breaking%20News

JPMorgan Chase & Co. (JPM: News ) stands to reap a $29 billion windfall due to an accounting rule that lets JPMorgan transform bad loans it purchased from Washington Mutual Inc. into income, the Bloomberg reported Tuesday.,

EHP: Love your Case-Shiller chart.

doesn't look promising for a bottom anytime soon

Did the UK pound collapse help their exports??

Assuming that in 3-4 years everyone on this board is labeled a heretic and a traitor would I receive extra points if I held gold eagles vs Canadian maples or Krugerrands?

Gold Eagles have the interesting clause on them that the government doesn't want to know if you sell them (no 1099). They're not saying to cheat on your taxes; but its structured in a way that gives a wink and a nod.

As for JPM
I remember during the acquisition press conference. JPM's "adverse scenario" was very much a good estimate of what we would go through, and it made sense for them to sell the break-even scenario to shareholders. I think where they screwed up was assuming they would pay for the acquisition by selling more products to WaMu clients (eg Credit Cards). As I expected, Credit Cards are not paying their own way. It all works out though, they can get all the money they want under any terms they want. That's the benefit of being the most solvent among the insolvent. You don't have to outrun the bear, just the fat kid

Citizen Scotto
don't read to much into the forward looking continuation of the polynominal fit. Depending on the degree chosen, it goes to the moon or to hell. I put it in there mainly for the residuals to date which show deviation from trend

Does anyone have an update on Memorial Day weekend traffic?

I can't find anything but AAA was calling for a 1.5% increase in the number of travelers going more than 50 miles from home. A better proxy for consumer confidence than the 5000 households in this morning's survey?

Assuming that in 3-4 years everyone on this board is labeled a heretic and a traitor would I receive extra points if I held gold eagles vs Canadian maples or Krugerrands?

No you would be one smart man indeed...holdem.

I'd drove 40 miles and didn't spend a dime. Fill up when prices come off the weekend high not saying much. Better to look at Hotel bookings

black dog
Crude inventory report on may 28 will be what matters. If oil is sold off, it gains momentum fast (that's the nature of swinging forcefully in either direction in recent history) and then suddenly there is a chunk of cash looking to hunt for high returns. Obviously you won't get those by going long financials at this point.

Did the UK pound collapse help their exports??

it raised world demand for pasty looking drunks able to riot at soccer games.

Ghostfaceinvestah, others -- probably not news to any of the pros but wouldn't it suck to be the last guy to know.

Zero Hedge: S&P To Downgrade Most Of 2005-2008 CMBS Classes, Derails TALF For CMBS

Tuesday, May 26, 2009
S&P To Downgrade Most Of 2005-2008 CMBS Classes, Derails TALF For CMBS
Posted by Tyler Durden at 3:28 PM

Water from Mammoth winds up in LA....

Dirk van Dijk (profile) wrote on Tue, 5/26/2009 - 12:06 pm This fits more with previous threads, but why post anything on a dead thread:

Come on Dirk. The only way I know a thread is really dead and gone is when I see one of your posts at the end of it.

@Tim waiting for 2012,

You get no points for holding a barbarous, worthless metal . Turn all of in immediately at your local Federal Reserve Bank for a wad of crisp Ameros.

@iceman,

Dealers have to report purchases (if the dealer buys from you) over a certain amount. I can't remember the exact amount right now, but I think it is around 20 oz of gold or 1000 oz of silver.

O/T: one of the top stories in Canada today. Our head of state Michaelle Jean is so much cooler than Obama, at least for today.
RANKIN INLET, Nunavut - On the first day of her trip to the Arctic Michaelle Jean gutted a freshly slaughtered seal, pulled out its raw heart, and ate it.

"Dealers have to report purchases (if the dealer buys from you) over a certain amount. I can't remember the exact amount right now, but I think it is around 20 oz of gold or 1000 oz of silver."

There's an IRS thing at $10k, sounds pretty close to what you're describing.

Is TLT an ETF or direct proxy?

"RANKIN INLET, Nunavut - On the first day of her trip to the Arctic Michaelle Jean gutted a freshly slaughtered seal, pulled out its raw heart, and ate it."

Now we know what threat was made by Paulson and Bernanke to the bankers.

Juvenal Delinquent (profile) wrote on Tue, 5/26/2009 - 12:36 pm
Dawg,
That's all well and good, but how do you propose to deliver eastern Sierra water to the western slopes and into the farms and orchards?
It's time for you to back way from the computer and have a look at what's happening, not what you think is happening...

Time for you to consider that maybe, just maybe there are people who have been looking at the raw data for decades and have a different opinion.

Did we have an average year? No. Got that? We had a below average year. That's what you'll hear shouted again and again.

Do we need an average year? No! That's the part you'll never hear. We had "enough."

Besides, we "unbuy" the cotton or rice crop on the cheap in this economy and have a water surplus.

Basel

Thanks. so are they pushing earnings to the current quarter only to disappoint later?

ShadowInventory (profile) wrote on Tue, 5/26/2009 - 12:37 pm
Water from Mammoth winds up in LA....

Shhhh. Let Juvenal dig his own grave (well?). [Thanks though for making my point.]

I had to make up for screwing up the election results the other day...

Very nice detective work, CR!

LEH synthetic 20yr Treasury bond index ETF. No ultra this or that or anything funky.

Comrade Elmer Fudd
You never want to eat the brains of an animal because of prions. Known for 'mad cow disease' and disorders amongst tribes that practised cannibalism

ShadowInventory (profile) wrote on Tue, 5/26/2009 - 12:49 pm
I had to make up for screwing up the election results the other day...

Screwing up an election is a badge of honor. Can I hire you to screw up the next election?

Scuse me while I kiss the sky

10 year 3.53 You can almost hear the NAR crying.

Which leaves me wondering--if folks don't expect any increase in income or job prospects or business activity, what exactly is it they think is going to improve?

I've got this suspicion that there are still a lot of people out there that think the price of their house is about to skyrocket again.

JPM stock up 5.7%. There you go hyping JPM stock again CR.

Precious metals purchases are not reportable. Only some sales are reportable:

Customer sales to dealers of certain precious metals exceeding specific quantities call for reporting to the IRS on 1099B forms. The 1099B forms are similar to other 1099 forms taxpayers commonly receive; the "B" means they have been issued by a business other than a financial entity.

Sales of American Silver Eagles, privately-minted Silver Eagle 1-oz silver rounds, and 100-oz silver bars are not reportable, no matter the quantity. Other precious metals products are reportable, but they are not covered here because the average investor does not trade them.

This of course has nothing to do with reporting cash transactions of $10,000 or more, which are reportable for that reason alone.

I am back to wondering about the Consumer Confidence readings. Seems a little premature to get a moon shot on that index, what, with unemployment strapped to a launch vehicle. I expect a revision or some other form of retraction...

what, with unemployment strapped to a launch vehicle.

I'm envisioning buzz lightyear strapped to a bottle rocket by Sid

thanks TBT

Looks like the bbads are winning the battle of the long bond today. Treasury is going to need to issue something like $150 billion a month as far as the eye can see. Wake me up when the 10 year breaks 5%.

Oil quantitatively eased its way over $62/bbl today for a new high for the year.

TNX up to 3.53% last I looked.

EDIT: TNX up to 3.55%

".. One of my old buddies owns a bar and he continually says that most people will spend everything they can get their hands on no matter what.."

Right, but easy credit pulls that purchasing power forward. Now we're getting the credit hangover.

This entire debacle has continued far longer then I thought possible. The only "good news" is the bond market starting to send a message that down the QE path lies madness. Unfortunately reason and logic has been overtaken by fantasy and deception and will require a dose of harsh reality.

A message from the bond market.
YouTube - Which Side Are You On? (Keep This In Mind)

Credit defaults - gives the consumer a little temporary cash - that can cause a short uptick like the one in April... Of course if they dont pay their CC bill they probably are not going to get any more credit now... So unless they get some more cash somewhere, the crunch will continue...

Case-Shiller declines from peak
S&P500 Volume

sportsfan

Thanks.

EHP,

You promised a "perfect storm" and I want one!

nova
May 28, May 29

BTW, in case you couldn't tell, I'm a big believer in commodity led booms. Nothing like a strong (expensive) foundation upon which to build your house (of cards).

If Ben can get the commodity bubble reflated ASAP, it should really restore all that lost wealth.

This is the 3rd year of a ongoing drought, but you know more than anybody else, because, well, because Rob Dawg can't be wrong, ever.

EHP, NOVA, Robdawg and anyone else especially in the VA/MD burbs,

question. In light of the credit suisse recast chart and the number of Alt A and options that wont really start hitting until june of 10 and that we have declined so much, would you consider buying if house is around 2003-2004 price and that the price seems fair in 1998 established neighborhood?

My concern is that some of the purchases in the hood we are looking in, that came after 2004 boom, more around 2006 might be fall out in the Credit Suisse chart, but not sure i want to hold off on onsey twosey possibility. However, knowing that in our county especially up in the northern part, most all 2005-2008 homes were purchased with Alt and options, however not sure how many in the hood we are wanting were...

however, those in the north could flood market bringing down "our" area 10% more.....in 2010-2011 time frame. I am wondering how much impact you guys give suisse chart as an indicator of when to buy...

and yes , i am going through the questioning myself phase that i do every summer for last 5 years....

All the signs are flashing inflation and commodity boom. I think it's almost natural for the market to rally in sympathy with commodities and PMs early in the trend. But there's no underlying strength for non-commodity/non-oil stocks going forward. They are tired and fragile at this point, and valuations are beyond irrational.

Nobody can predict the timing of a market this crazy. But I am now modestly net short for the first time in awhile and holding all shorts. I've been a contrarian here before, and even though I've held some shorts right through this bull run, I am up 8%+ so far in May.

Don't try to time gold. It will go to $1,200 at least and could get there fast. Get some silver. It will outperform gold and get to at least $20.

Don't believe inflation is good for stocks. As inflation takes hold, it's terrible for stocks, especially in this cycle and environment. Stocks will retest the March 9 low or come close, later this year.

Don't believe a steep yield curve is good for stocks. Not this time.

In our speculator-driven casinoconomy I think what might really get confidence up in a hurry is if Ben could just announce weekly lottery drawings where he awards $1mm newly printed dollars to anyone with a SSN ending in some 2 random digits. If that doesn't work, go to 1 digit. Odds are every 10 days every card carrying 'Merican gets a million dollahs to spend freely.

It is depressing not having the sky falling...

"Would be very nice to see a writeup about what exactly goes on when a bank buys another bank out of receivership from the FDIC"

funny you mention that, it looks like WM shareholders are asking for the same accounting:

Yahoo! 404 - Page Not Found

poor russian saps got fleeced.
Just like microsoft did

i'm just not seeing net price inflation taking hold long-term with increasing UE, decreasing wages, and decreasing access to credit.

price inflation in specific "needs" -> e.g. oil, food, yes, but across-the-board? no way

Chinese must be a little ticked right about now. They have been using Jas' playbook and getting their ass kicked. Can't be good long term. Might get nasty in fact.

*** is so last century...

Fiduciary re MD/VA 'burbs.

Lived in established Silver Spring neighborhood (Four Corners area) from '92 - '98.

Purchased our house (solid mid-60s brick two story) for $155K and had to sell at a loss during downturn in '98. Sold at about $154K.

Did curiosity check on zillow, etc in 2004 and found that the neighboring houses - same general style, lot size, etc. - were going in the vicinity of $425K.

FWIW.

[Re: price of oil

There are fixed and variable costs]

And the danger of destroying demand permanently, prematurely. Supply is pretty inelastic and you need to keep the fuel moving as gasoline has a shelf life. Pretty complicated system...

I should clarify my statement above regarding commodity booms.

I'm really only a believer in commodity led booms that are the result of excess liquidity and rampant speculation. The lack of end demand is a key distinction. That specific type of commodity boom is sure to lead to greater prosperity. I know it seems counter-intuitive, but think of it as a competitive devaluation on steroids.

Bernanke is going to put the CON back in our eCONomy. I can't wait.

Angry Saver wrote:

I'm really only a believer in commodity led booms that are the result of excess liquidity and rampant speculation. The lack of end demand is a key distinction. That specific type of commodity boom is sure to lead to greater prosperity. I know it seems counter-intuitive, but think of it as a competitive devaluation on steroids.

How does this lead to prosperity, or was that snark?

Potential S&P CMBS Downgrades

Comrade Coinz,

It's new (e)CONomy doublespeak. An integral part of our faith based money system

Also, I still believe this eCONomy has plenty of wealth unlocking potential. I'm just wondering though. Once wall street has extracted all the "value" out of the system, will the financial propaganda network (CNBC) still be necessary?