Mon 15 Sep 2008
Lehman…
Merrill…
Is there anything more to say?
(Update: 24 hours later and 650+ comments, I guess there was more to say.)
Mon 15 Sep 2008
Lehman…
Merrill…
Is there anything more to say?
(Update: 24 hours later and 650+ comments, I guess there was more to say.)
first
From Bloomberg:
Lehman Files for Biggest Bankruptcy as Suitors Balk
Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank, succumbed to the subprime mortgage crisis it helped create in the biggest bankruptcy filing in history.
The 158-year-old firm, which survived railroad bankruptcies of the 1800s, the Great Depression in the 1930s and the collapse of Long-Term Capital Management a decade ago, filed a Chapter 11 petition with U.S. Bankruptcy Court in Manhattan today. The collapse of Lehman, which listed more than $613 billion of debt, dwarfs WorldCom Inc.’s insolvency in 2002 and Drexel Burnham Lambert’s failure in 1990.
Lehman was forced into bankruptcy after Barclays Plc and Bank of America Corp. abandoned takeover talks yesterday and the company lost 94 percent of its market value this year. Chief Executive Officer Richard Fuld, who turned the New York-based firm into the biggest underwriter of mortgage-backed securities at the top of the U.S. real estate market, joins his counterparts at Bear Stearns Cos., Merrill Lynch & Co. and more than 10 banks that couldn’t survive this year’s credit crunch.
“There is likely to be a domino effect as other firms and individuals who relied on Lehman for financing feel the effects of its meltdown,” said Charles “Chuck” Tatelbaum, a bankruptcy lawyer with Lauderdale, Florida-based Adorno & Yoss and former editor of the American Bankruptcy Institute Journal. “The whole thing is frankly frightening for the U.S. economy.”
From Bloomberg:
Bank of America to Acquire Merrill as Crisis Deepens
Bank of America Corp., the biggest U.S. consumer bank, agreed to acquire Merrill Lynch & Co. for about $50 billion as the credit crisis claimed another of America’s oldest financial companies.
Bank of America will pay $29 a share for New York-based Merrill in stock, 70 percent more than the Sept. 12 closing price, the company said in a statement today. Merrill, battered by $52.2 billion in losses and writedowns from subprime-mortgage- contaminated securities, has plunged more than 80 percent from its peak of $97.53 at the start of last year.
The takeover ends 94 years of independence for Merrill and gives Charlotte, North Carolina-based Bank of America a sales force with 16,690 brokers who manage $1.6 trillion for customers. Merrill, led by Chief Executive Officer John Thain, was in danger of becoming the next subprime casualty after Lehman Brothers Holdings Inc. filed for bankruptcy court protection earlier today.
From the WSJ:
Crisis on Wall Street as Lehman Totters,
Merrill Is Sold, AIG Seeks to Raise Cash
Fed Will Expand Its Lending Arsenal in a Bid to Calm Markets;
Moves Cap a Momentous Weekend for American Finance
By CARRICK MOLLENKAMP, SUSANNE CRAIG, SERENA NG and AARON LUCCHETTI
September 15, 2008 4:24 a.m.
NEW YORK — The American financial system was shaken to its core on Sunday. Lehman Brothers Holdings Inc. said it would file for bankruptcy protection, and Merrill Lynch & Co. agreed to be sold to Bank of America Corp.
The U.S. government, which bailed out Fannie Mae and Freddie Mac a week ago and orchestrated the sale of Bear Stearns Cos. to J.P. Morgan Chase & Co. in March, played much tougher with Lehman. It refused to provide a financial backstop to potential buyers. Without such support, Barclays PLC and Bank of America, the two most interested buyers, walked away. Barclays said Monday it pulled out of the potential deal after deciding it wasn’t in the best interest of shareholders.
Late Sunday night, Lehman said it intends to file for protection under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court for the Southern District of New York. Lehman said none of the broker-dealer subsidiaries or other subsidiaries of LBHI will be included in the Chapter 11 filing and all of the broker-dealers will continue to operate. Customers of Lehman Brothers, including customers of its wholly owned subsidiary, Neuberger Berman Holdings LLC, may continue to trade or take other actions with respect to their accounts, Lehman said.
On Sunday night, Bank of America struck an all-stock deal to buy Merrill Lynch for $29 a share, or $50 billion.
Is there anything else to say? How about AIG?
I smell $hit hitting the fan. Bad news that the press can’t avoid = lower consumer confidence = faster price drops. Probably a good thing overall, but it seems like we’re still at the tip of the iceberg. Lots more pain to be felt in 2008 (and 9, and 10).
My LEH shares are now worthless and that’s ok because I will survive. The investment was a small enough portion of my overall portfolio that it stings but isn’t crushing. That being said, with the entire market down, my target price range is now 100k lower than it was 6 months ago and with this news, I expect even bigger drops in price for those homeowners really looking to sell. As we know, it takes the avg homeowner months to digest and accept what is going on in the market. Is it too late to buy gold? I am still sitting on a pile of cash (meant as a DP on a house) and am running out of FDIC insured banks to park it in.
Watched William Poole on Bloomberg this AM - “The problem with these companies is capital - underlying solvency - The market will have to solve that.”
Finally. Now if the FED will just let it happen…
He also said “There are more shoes to drop.”
(bankrutcy or merges) “But it is a big closet with lots of shoes.”
I have capitulated.
I was looking for entry points and kept getting my azz handed to me. Good thing I stayed mostly on the shoreline. Only lost a couple of toes instead of a leg. Still, it stings.
I have to tape up those knife wounds and will invest like Odrama—mostly in munis—for the foreseeable future.
I am so tired of reading “according to sources familiar with the matter.”
Who are you? Fess up…
i was going to post my notes from Robert Shiller’s lecture today but i fear if i post data like home appreciation grew just 2/10 of 1% from 1890 to 2000; bi and reinvestor will finally leap from the ledge. i don’t want to be responsible for that.
From Lawrence Britt. The 14 characteristics of fascist countries:
1. Powerful and Continuing Nationalism — Fascist regimes tend to make constant use of patriotic mottos, slogans, symbols, songs, and other paraphernalia. Flags are seen everywhere, as are flag symbols on clothing and in public displays.
2. Disdain for the Recognition of Human Rights — Because of fear of enemies and the need for security, the people in fascist regimes are persuaded that human rights can be ignored in certain cases because of “need.” The people tend to ‘look the other way’ or even approve of torture, summary executions, assassinations, long incarcerations of prisoners, etc.
3. Identification of Enemies/Scapegoats as a Unifying Cause — The people are rallied into a unifying patriotic frenzy over the need to eliminate a perceived common threat or foe: racial, ethnic or religious minorities; liberals; communists; socialists, terrorists, etc.
4. Supremacy of the Military — Even when there are widespread domestic problems, the military is given a disproportionate amount of government funding, and the domestic agenda is neglected. Soldiers and military service are glamorized.
5. Rampant Sexism — The governments of fascist nations tend to be almost exclusively male-dominated. Under fascist regimes, traditional gender roles are made more rigid. Opposition to abortion is high, as is homophobia and antigay legislation and national policy.
6. Controlled Mass Media — Sometimes the media is directly controlled by the government, but in other cases, the media is indirectly controlled by government regulation, or through sympathetic media spokespeople and executives. Censorship, especially in wartime, is very common.
7. Obsession with National Security — Fear is used as a motivational tool by the government over the masses.
8. Religion and Government are Intertwined — Governments in fascist nations tend to use the most common religion in the nation as a tool to manipulate public opinion. Religious rhetoric and terminology is common from government leaders, even when the major tenets of the religion are diametrically opposed to the government’s policies or actions.
9. Corporate Power is Protected — The industrial and business aristocracy of a fascist nation often are the ones who put the government leaders into power, creating a mutually beneficial business/government relationship and power elite.
10. Labor Power is Suppressed — Because the organizing power of labor is the only real threat to a fascist government, labor unions are either eliminated entirely or are severely suppressed.
11. Disdain for Intellectuals and the Arts — Fascist nations tend to promote and tolerate open hostility to higher education, and academia. It is not uncommon for professors and other academics to be censored or even arrested. Free expression in the arts is openly attacked, and governments often refuse to fund the arts.
12. Obsession with Crime and Punishment — Under fascist regimes, the police are given almost limitless power to enforce laws. The people are often willing to overlook police abuses, and even forego civil liberties, in the name of patriotism. There is often a national police force with virtually unlimited power in fascist nations.
13. Rampant Cronyism and Corruption — Fascist regimes almost always are governed by groups of friends and associates who appoint each other to government positions, and who use governmental power and authority to protect their friends from accountability. It is not uncommon in fascist regimes for national resources and even treasures to be appropriated or even outright stolen by government leaders.
14. Fraudulent Elections — Sometimes elections in fascist nations are a complete sham. Other times elections are manipulated by smear campaigns against (or even the assassination of) opposition candidates, the use of legislation to control voting numbers or political district boundaries, and the manipulation of the media. Fascist nations also typically use their judiciaries to manipulate or control elections.
[6] LEHLoser
I can commiserate. I picked up a little LEH, hoping for a bounce and got stung. Not nearly as bad as most of my losses thus far though. So no decent scotch or cigars for the rest of the year as that was my play money.
I suggest locking down in some of the internet channel CDs for 6-12 months. ING and HSBC should still be paying well. And remember, keep it under 100K per bank.
11 moderated.
[5] Noah,
How’s that ark coming? Any room for a family of four and a small dog?
From the shore I cant quite see things clearly. Is that BoA throwing Merrill a life ring? Or, is that circular ring a millstone, named Merrill, that is about to pull under the rescuer?
Ok, please remind me when the automatic circut breakers kick in. Also, does anyone think they come into play today, and, office pool question, if so,at what time?
The Ficticious Service Economy is finally unraveling, including ficticious financial instruments, which provided numerous ficticious jobs. Be interesting to see impact on Medical Community when people can no longer afford their ficticious Cholesterol Medication and those ficticious jobs go away.
Lehman wouldn’t even send me a reject letter last year when I was job hunting. This summer I never saw their name on a job posting.
Prudential has the nicest reject letters.
Metlife’s reject lettera are a bit cold.
AIG lists the job you applied for in the reject letter. Such detail.
Quick question, FASB postponed that mark to market FAS for one year. Roubini was saying last night that all of the major IB’s were going to need to find a commercial bank to take them over because of the shit on their books and the lack of capital to cover the stuff. My question is do these commercial banks have enough cash/assets to cover this stuff if it is marked to market next year? Do we see the same problems playing out at a Bank of America a year from now that killed the Lehman and was going to kill Merril?
Rule 48 is in effect.
http://exchanges.nyse.com/archives/2008/09/person.php
ok, someone in the finance world tell me why they futures are not reflecting this mess? the Plunge team have impact on that as well? I wonder how much money they have left.
Oil is down over $6 per gallon based on the expected demand destruction and minimal damage (10 platforms) from Ike. Without this bright spot, market futures would have been much worse. Should be an incredibly volatile session. VIX holders should benefit greatly.
From Reuters:
Wilbur Ross sees about 1,000 bank closures: report
Wilbur Ross, founder of private equity firm WL Ross & Co LLC, expects as many as a thousand U.S. bank closures in the coming months, CNBC said on its website on Monday.
The billionaire investor, who made his fortune making investments on distressed industries, said the closures will create opportunities for investors, CNBC said, adding that he is looking at picking up smaller distressed institutions.
“I do think a lot of the regional ones will (close), just as they did in the last savings and loan crisis in the 1990s,” the website quoted Ross saying.
Ross said there will be too many people willing to provide capital to the large financial companies, making them less of a bargain than smaller banks, according to the website.
From Bloomberg:
AIG Falls After Failing to Give Plan to Save Rating
American International Group Inc., the largest U.S. insurer by assets, fell by almost half in early trading as the company failed to present a plan to raise capital and stave off credit downgrades.
AIG executives spent yesterday in discussions with buyout firms including KKR & Co. and J.C. Flowers & Co. as the insurer sought to raise $20 billion in capital and sell $20 billion of assets, people familiar with the talks said. AIG later sought a $40 billion bridge loan from the Federal Reserve, the New York Times reported, citing an unnamed person.
Chief Executive Officer Robert Willumstad is under pressure to raise capital and sell units after three quarterly losses totaling $18.5 billion. Investors are concerned the New York- based insurer can’t raise enough cash to withstand further writedowns from credit-default swaps, contracts AIG sold to protect fixed-income investors.
“AIG could be a much bigger problem than, say, Lehman” Brothers Holdings Inc., the securities firm that filed for bankruptcy protection today, said Marc Faber, managing director of Marc Faber Ltd., in a Bloomberg Television interview.
It is like feeding stray cats. The US GOVT baile Bear Stearns out and Mer, Leh, Wamu, NCC, Wachovia, AIG, GM, Ford and Chrysler all put their hanks out for cash. You feed one stray cat you have a dozen in your yard the next morning. Well it is the next morning and Leh must die we can’t bail them out. It is one thing to throw a loan or two to build hybrid cars and keep middle class workers on the payroll but to bail out Leh with $50 billion to keep a relatively small amount of wealthy people employed is too much for the american people to bear.
Obama blasts GOP on economy
WASHINGTON (AP) — Democrat Barack Obama laid into the Republican opposition Monday as Americans awoke to fearsome news from Wall Street — the disappearance of two investment banking stalwarts — as the U.S. economy faced what he called “the most serious financial crisis since the Great Depression” of the 1930s.
Obama is battling to overcome a significant boost in the polls for his opponent, Republican John McCain, who stunned Americans and solidified wavering support among his party’s Christian conservative base with the choice of Alaska Gov. Sarah Palin as running mate. After trailing Obama throughout the run-up to both party conventions, McCain has pulled even or edged slightly ahead in national polling — primarily riding the wave of Palin’s initial popularity.
#2 grim: The whole thing is frankly frightening for the U.S. economy.”
Last night on CNBC’s special, one of Kudlow’s Cheerleaders was on, and he said this is really just a financial crisis,and not an economic crisis.
Even one of the CNBC host’s (and they of course prior to last night were always big cheer leaders for all is well.), said to the guy just what has to happen before a financial event, becomes and economic event. The discussion ended there.
Fed Watch: End Game:
http://economistsview.typepad.com/economistsview/2008/09/fed-watch-end-g.html#more
“Endgame?, by Tim Duy: News is flowing in faster than the ability to process the implications. When I went to bed Saturday night, the only sure thing looked like the liquidation of Lehman Monday morning. A scant 24 hours later, to that liquidation is added the sale of Merrill Lynch to Bank of America and, later the possibility of a collapse of AIG by midweek. The Fed and Treasury suddenly play hardball, and the floodgates break open.”
I have searched the news and have not seen anything about Rule 48 being put into play. Is there a link to an announcement?
For decent background on Rule 48:
http://inbrief.pli.edu/2008/01/nyse-rule-48.html
anyone nervous that certain family members may be calling them to ask The Question?
Think I’ll screen this week
PPT making the rounds. should be fun open.
Pakistan soldiers ‘confront US’
Seems like next military operation is gearing up.
Futures suggest a 74% of a 25 basis point cut to 1.75%, and a 26% chance of no change. At the previous close, futures suggested only a 12% chance of a 25 basis point cut, with the rest of the odds placed on no change.
If it didn’t help at all dropping it from 5.25 to 2.25, then what the heck will dropping it to 2 do? All it is doing is lowering the treasury rates. Mortgage rates have done nothing if not gone up.
Craziness!
The BAC MER merger is just going to make things worse.
The banks will need to be broken up if we ever hope to get out of this “too big to fail” mess.
Do we really want to be left with 6 or so large banks?
Reinstate Glass-Steagall.
GS reports before the market opens tomorrow. My investment club bought a tiny bit against my vote about 10% higher ago. I think I own about $20 worth so I’m not panicking, but if they drop a bombshell, more hell will break loose.
CAC 40 (CAC40) 4138.31 194.35 -4.49% Open
FTSE100 (UKX100) 5188.90 227.80 -4.21% Open
BEL 20 (BEL20) 2970.80 109.80 -3.56% Open
This would put the DJIA around 10650 by market close today if results are similar.
Time and time again Roubini proves to be correct. They ought to make him FED or treasury chief. Oh, could you imagine :P
What I can’t believe is that the Sensex broke 21,000 when I was in Chennai in January. It is currently at 13,500. That’s a 36% drop in 8 months. Oh lordy lord.
Stu (34)-
The entire shadow banking system is done. MS and GS are next to fall, unless they can somehow attach themselves to a bank with enough capital to cover them.
Somehow, I think the list of banks with capital to cover has shrunk to 0.
I was laid off by Bear 3 months ago and it was a tough market finding a job. I cant imagine how bad the market will be once they finish laying off Merill and Lehman employee. My heart goes out to them.
From the NYSE:
http://traderupdates.nyse.com/?sa_campaign=/internal_ads/callouts/traderupdates
Stu (35)-
Roubini wouldn’t survive a day in DC. He’s not a lying wh@re sc*mbag.
Clot: Or anybody else who has an opinion on this. So is this it? do the home sellers/realtors out there finally get the message that we are in an incredibly bad/dangerous situation,and if they want to sell, their asking prices need to reflect that reality? My advice to home sellers:
1. Those that have owned long term, and have not sucked out your equity, but do want to sell, price your houses aggressively, and get on with your lives.
2. Those that have purchased in the last few years, and or sucked out all of your equity and now find you cannot afford it, and as such are asking ridiculous prices in the hopses of being bailed out, forget about it is all over. Take your house off the market wait for the foreclosure.
3. Those who do not meet the above 2 criteria, but would still like to sell at a fantasty 2005 price, forget it. Take your house off the market come back in 10 years.
SA:
Quinn: The U.S. on the Precipice
http://seekingalpha.com/article/95436-the-u-s-on-the-precipice
“The continued bailout of the reckless financial firms by the taxpayers, while their top management received titanic pay packages borders on immorality. The average American has the right to ask for a similar response. If you are in danger of losing your house to foreclosure, can’t meet your monthly obligations, or make the minimum payment on your credit card, just call Hank Paulson at 1-800-BAILOUT. “
#37 - Clot - I saw Roubini saying basically the same thing last night on CNBC.
3b, About your point 3. It strikes me that some folks who pull out and wait years ans years and DO get a 2005 price will (ignore the time value of money) and feel vindicated.
ShoreGuy:
I hope GS is making some decent money babysitting everyone else these days. Their fee to help diagnose FNM/FRE was tiny, but that was due to the obvious conflict of interest. Will they be the only one left standing (albeit temporarily).
Anyone want to start an IB? I’m sure we could get some experienced brokers at the minimum wage pretty soon.
Sniff, sniff, what’s that burning smell? AIG.
3b (41)-
Your application of common sense to irrational people in an irrational situation is admirable.
I don’t know how this will play out with sellers in general, but judging from the response to the written warnings I’ve issued to my company’s hardest-headed clients in the past few weeks (which I’ve posted here), things will not go well. The reactions I’ve gotten range from sellers simply asking me to shut up to demands for withdrawals of listings.
My best guess is that we need to create lots more losers before RE markets can clear. That means sellers will largely ignore the recent financial bloodletting.
#41 I was in the MLS in montclair last night. Despite many listings, not one property was priced realistically. At some point those listing fees are going to cut into the home heating budget.
This will be a fun opening.
FTSE 100 5165.40down -251.30 -4.64%
Dax 5999.98down -234.91 -3.77%
Cac 40 4123.79down -208.87 -4.82%
“Anyone want to start an IB? Im sure we could get some experienced brokers at the minimum wage pretty soon.”
Sounds like a plan. The kids have some things set aside for a yard sale; we can bring those, my old Coleman stove, and my 8-track collection and use that to bring to the Fed window. If anyone has any tire chains, the Fed may be interested in them, or even some kitty litter, anything to get some traction.
(48)-
Listing fees? It costs about $25 to list a home for sale.
And marketing? Ha! I tell clients up front that if the home isn’t listed at my suggested price, I will not pay one dollar of marketing.
I suspect many agents are doing the same thing.
From MarketWatch:
U.S. Aug. industrial output plunges 1.1%
Led by a big drop in auto production, industrial output plunged 1.1% in August, the biggest drop since Hurricane Katrina three years ago, the Federal Reserve reported Monday. The decline was much worse than the 0.3% decline expected by economists. Industrial production has now fallen 1.5% in the past year and 2% since the peak in January. Falling motor vehicle production accounted for about half the drop in output in August, the Fed added. Manufacturing output declined 1% in August. Capacity utilization - a key gauge of inflationary pressures stemming from industrial bottlenecks - dropped by a full percentage point to 78.7%, the lowest in nearly four years.
[13] Nom Deplume
I rationalize my loss by saying that I bought in so long ago (in the 1990s) that my carryforward loss will be minimal. I am just kicking myself because when it dropped to $30 a few months ago, I meant to sell it and call it a day (and profit!) but had to run to the airport for a business trip and then forgot. Can you imagine? Like I said, not a major part of my portfolio but who likes to lose money?
I already maxed out with ING and heard HSBC is going to end up on the list of banks I would need to get money back from FDIC from.
Question for the group: What are the top three banks you would deposit with right now for a short term CD? Solvency of the bank long term is equally important to the rate of return.
I don’t think this weekends market news will have any great short-term impact on housing prices. I really doubt any seller is going to say, “Aww cr*p, Lehman’s bankrupt. Better lower the asking price.” In the medium term, like maybe a year from now, it most definitely will impact housing prices at credit gets tighter and buyers are nowhere to be found.
Clot,
Of course they ignore all negative information. Remember, all RE is local. This region is different; this state is different; this city is different; this block is different; and, THIS HOUSE is different.
#51 Clot
is that 25 a month? I had no idea. I thought it was like 200.
Well, now no wonder.
Tosh (33) “Reinstate Glass-Steagall”
I’m no Bush fan - once he went with part D - I was out.
But many forget it was Clinton who signed the Gramm-Leach-Bailey Act in 1999 that repealed Glass-Steagall enabling commercial lenders to underwrite and trade instruments such as CDOs and SIVs.
The conflict of interest and lack of transperancy in all of this is criminal.
Seneca,
Perhaps the Bank of Montreal, and others in Canada.
Bush to comment on financial markets at 11:10. We should all be comforted since the White house is closely monitoring this situation and is in constant contact with the fed/treasury.
Seneca:
“Question for the group: What are the top three banks you would deposit with right now for a short term CD? Solvency of the bank long term is equally important to the rate of return.”
Hudson City Savings.
As far as I know, they stayed completely away from the housing mess. Their stock has taken a small hit, but the CEO was recently screaming that it is completely unfair as they played it conservatively. It helps that their base is Bergen County where the sea of wealth is the deepest. No guarantees though. Do your research. I personally feel the only safe place for money is shorting the crock market.
No advice was meant in any way. Due your own homework. You have never met me and I could be the janitor at your local elementary school.
Barb (56)-
It’s $25…period. You can leave the listing on forever for that low, low price.
And there’s the starting bell!
#47 clot: Well if this does not do it, than I do not know what will.
During the last real estae bust I seem to remember that sellers became much more realistic quickly.
And as I have said in the past that may be reflective that in general people were in much better shape financially (even during a recession), than now.
All I can say is it will most certainly be reflected in my bids on houses in 2009.
There is absolutely no reason in my mind to pay anywhere near most current asking prices.
#57 - Cindy - I wasn’t attacking Bush in particular.
Here you go Clot;
http://www.telegraph.co.uk/sport/football/leagues/premierleague/manutd/2962280/Manchester-United-confident-AIG-sponsorship-deal-will-survive-Wall-Street-uncertainty—Premier-League-football.html
#54 Stu:I don’t think this weekends market news will have any great short-term impact on housing prices.
I find that truly amazing. We have true systemic risk, an almost melt down (which coudl still happen) of the financial system, thousands of layoffs of high paying Wall St jobs (all the blue ribbon train towns),and people will still belive no impact on housing prices!!!!!????
(64) Tosh - “I wasn’t attacking Bush in particular” No, I got that. I was just that yesterday a lot of conversation turned to which administration was the worst in our history and I was merely pointing out that this mess has been building for a while.
Clot, ok
I never sold a house, only bought. Maybe when I hear people talking about it, they are talking about the marketing you mentioned
3B (66):
People don’t pay attention. Not the masses and not most realtors. They pay attention when Paris Hilton farts, but not when our financial markets take a dump. Don’t believe me? Ask any blue collar or white collar who is not in the financial arena when the last time was that they looked at their 401K. Also, ask them what interest rate they are receiving in their savings/checking accounts. The masses are asses. That is the basis of my conclusion.
AIG at $5.90
WM $2.25
Even some of the so called white collar fiannce types may not pay arttention, until they have to.
Today both the WSJ and The NY Times were sold out at the train station in my Bergen Co train town.
That never happens, only The Post and the Record are usually sold out.
#67 - Cindy - Agreed, it’s been building for about 30 years and may finally be coming to an end. We may have to wait for history to correctly assign fault across the board though.
Ok, BC. What are the odds of Bush saying something like this:
“These are hard times, tough times. I know that. It is hard dealing with a cr-sis-ssss of confidence. Our economy his strong, and we are defending it against people like al-Qaeda and Sa-dem Hu-ssss-ain. We are doing the hard work. This morning, I spoke wirh Secretary Paulson as he was slipping out of the country for his bunker in Figi. He assured me that he is doing the hard work of addressing the crisis of con-feddd-ance that has people overlooking the success of the surge and focusing on short-term economic dips. Now if people would just take out another HELOC and use the credit cards to keep suporting our global economic partners we will get past this rough patch.”
Wasn’t AIG supposed to have an announcement before open this morning?
That never happens, only The Post and the Record are usually sold out.
A sign of the voters paying attention to the economy for a change?
BC (65)-
Hardy har! Maybe Man U can just put “Bankrupt” on the front of their shirts.
Think their deal with AIG is a joke? My team (Newcastle) still sports Northern Crock on their strips, and West Ham has XL Travel, which just failed last week.
Meanwhile, the Abu Dhabi guys just bought Man City & have vowed to spend whatever it takes to buy any player they see fit.
I don’t see Abu Dhabi Investment running into money problems anytime soon.
Sometimes you just have to think… We’re in this financial mess because of one industry and their slogan:
“It’s always a good time to buy.”
Right…
I can deal with two banks folding but this bit of news upset me really bad:
http://www.autoblog.com/2008/09/15/chevy-to-temporarily-halt-vette-production-due-to-economy/
Shore [74],
You nailed it. Are you his speechwriter?
3b (66)-
Do not underestimate the stupidity that is rampant in every segment of the population.
Just returned from month-long cross-country driving loop, focused mainly on national parks and monuments. All places (Grand Canyon, Yellowstone) reported drops in attendance by Americans, but more overseas visitors than ever. Many ‘For Sale’ signs on what looked to be vacation homes in Wyoming, Utah, Black Hills of South Dakota; lots of farmland for sale just about everywhere. Real estate broker friends in Chicago say the market is beyond dead there, with sellers still resistant to the suggestion of cutting prices.
Las Vegas casinos were packed though…which I think says a lot about the state (and fate) of the US economy.
#74 shore: To which I would add.
I also want people to know that being President iss haaard work. And I want the American people to know that I now will be working on weekends from now to the end of my Presidency.
Richie (78)-
That is a simple, gratuitous and utterly incorrect sentiment.
Sellers can remain in a fantasy regarding the worth of their house because they can. It’s hard to fool yourself about your 401k performance because you get a statement in the mail telling you how much you lost. With your home, you can remain in denial for months while your home languishes on the market. For many their home is their biggest asset, and has emotional connections, so with peoples’ myriad emotional biases it is hard to admit your home is worth so little.
“Hey LAURA, it’s hard, it’s HARD. Yippie. Sorry fellas, gotta end the press conference. It is time to drill baby drill. Yehaa.”
“Hey LAURA, it’s hard, it’s HARD. Yippie. Sorry fellas, gotta end the press conference. It is time to drill baby drill. Yehaa.”
#81 clot: I undertand, but it is still truly mazing in my mind.
(71) Stu “WM $2.25″
Does anybody buy them? Wells? Or are they goners?
Is the presidents backdrop going to be the oval office or is he on vacation again?
What happens to people who have 401ks through Lehman? I am not personally in this boat but I am sure there are people out there who are. In general are 401k balances safe from company bankruptcy? Is there any way to hedge the risk since your company chooses what bank runs their 401k program?
13 Nom- is FDIC up to 100k per SS#?(not that if the s*it hits the fan there will be enough $$$ to cover) I use ING and took $$ out so i was below 100k, my wife and I both have accounts there, can we have over 100k total in 1 bank if its under 2 separate SS#’s?
skf opens up +12 at 125.
another great call by a few people on this board. who’s selling?
All I could say is, thank God real estate is insulated in the NYC/NJ area. Whew!! Real Estate only goes up in this area, you know.
FDIC gets WM. This should put a big dent in their reserves. Then the bank run begins and everyone else get’s nada. Nothing to see here though.
I’ll do some research to determine deposits at WM vs. the FDIC reserve. Gimme a minute. Google here I come.
I forgot to mention- amidst all the excitement- that starting on Tuesday of last week, Toll Bros actually RAISED the base price in several of their Hunterdon/Somerset communities.
They saw rates come down 50-75 bps after the Phony/Fraudy bailout and decided they weren’t gonna leave that money on the table.
As if.
Stu,
I hear they are going to find something appropriate to the moment, something that sends a message about the state of the economy and the bush presidency. Thus, they will be doing the press conference in one of the mens’ rooms off of the diplomatic reception room. From there, bush can rapidly rush off to the South Lawn to play some tee ball. Yaknow, the bat is hard.
It is a bit surreal to now head for work where this week, I need to teach seven year-olds how to spell “boat” and “float.”
Clot -
I think TOL is going to get hit very hard on this - Arent they ones who are heavily into McMansions?
Nice: Someone did the research for me!
WaMu Failure Could Trigger Extension of Deposit Guarantees
“Washington Mutual had $143bn in insured deposits on June 30 - about three times the size of the deposit insurance fund, but less than half of its $307bn assets.”
http://www.nakedcapitalism.com/2008/09/wamu-failure-could-trigger-extension-of.html
laugh (93)-
Sell? Are you kidding? This thing saw $212 in July without anyone batting an eye.
All disclaimers.
laughing - sold at 125, and got back in at 119. Though I am ready to step away from this. Something stinks. Should have been way up.
#96 clot: Are you serious??
Cindy (98)-
Spend some extra time on “float”.
laugh (93)-
Sell? Are you kidding? This thing saw $212 in July without anyone batting an eye.
All disclaimers.
Clot, I love you, man. beer on me at the next GTG.
Q: How, if at all, will yesterday’s news impact the interest rates?
Cindy:
Take a chill. We are all in this together. On the bright side, the W tax cuts won’t really have any impact as there might not be much income to tax.
Kettle- remember the GTG at that bull-riding bar in NYC where we were talking about oil? I’m not at all trying to make it a “told ya so!” point because you made absolutely valid points that night and frequently on the board you have very insight comments, but… ;-P
I also saw last week you noted a change in your feelings about crude, so I know you’re not one of those stubborn people who stick “with their gut” no matter what changes take place in the environmnet.
I am a firm believer we are NOT going back to $50 /bbl, but I also don’t think we should’ve been at $140+ either. I guess it’s better to be lucky than smart!
-FDIC has $45 billion.
-FDIC has $70 billion in Treasury credit lines.
-Washington Mutual had $143 billion in insured deposits.
-Washington Mutual had $164 billion in uninsured deposits.
Cindy,
Treason, and undercapitalized might be good too. As might be depression.
As usual, my Ameritrade account is overloaded. Yahoo finance can’t keep up with the volume. I’m glad I’m not a day trader.
laugh (105)-
Won’t even touch the rate question.
However, I think a great way to size up everything is:
1. Determine what the worst possible outcome could be.
2. Determine whether the average taxpayer can get stuck with the bill.
3. Determine who has the most accelerant to throw onto the fire.
4. Determine whether the entity that can do the most damage is the one whose hands are on the controls.
If all four answers to the above are consistent with one another, assume that the worst can happen…and fast.
OK got back from the trading floor, traders are calling for an up close. Yep this froth will be blown off the coffee this morning and by afternoon we will recover whole three hundred points and them some. Well my jaw was on ground. Lets see if Dow closes up.
Cindy:
“Boat” and “float” might very well be the two keys to their survival. You might want to include a geography lesson as well so their floating boat can have a worthy destination. I was thinking perhaps, “Belize” and “Costa Rica”.
“OK got back from the trading floor,”
John. What the hell do you do for a living?
I don’t see any coverage on Housing Crisis chart (showing peak of ARM Resets occuring in 2011). Are these companies (BOA & JP) buying IB’s doing proper due diligence? Is there Black box that much better?
Crisis on Wall Street: Roubini Predicts TechTicker:
Another 20 Percent Stock Drop, Sale of Goldman, Morgan
Posted Sep 15, 2008 09:35am EDT by Aaron
After failing to find a buyer this weekend, Lehman Brothers filed for the largest bankruptcy in U.S. history while Merrill Lynch agreed to be acquired by Bank of America for $50 billion. Such extraordinary events set the stage for a wild Monday on Wall Street, and most likely beyond.
These incredible, once unthinkable developments have caught a lot of people off guard, but not Nouriel Roubini, of NYU’s Stern School and RGE Monitor, whose alarming predictions about the housing market and finanical system have been coming to pass with alarming frequqency.
This morning, Roubini forecast another 20% drop in stock prices, and reiterated a prior view that there will be no major independent broker/dealers standing before this crisis ends. In other words, Goldman Sachs and Morgan Stanley should be seeking suitors today, or face a similar fate as Lehman later.
3b 41,
No,
The average joe still has no idea of the magnitude of the situation we are in. If you ever catch regular TV news why would you be worried?
What will accelerate the process is not public awareness of the situation, but the financials finally forcing people to act, by selling, walking, etc.
Not sure if anyone else has coined this phrase yet, but how’s about this to describe LEH…
“Too big to rescue”
How must it feel to run a 150-160 year old firm into the rocks? Also, who would be surprised if it turns out that the current management 1) earned more than all prior management teams combined and 2) the current loss is greater than the summ of all prior profits?
Oh, which of the managers will step up and return their compensation checks?
can we start to coin the term that will identify today in the history books? my first suggestion:
morose monday
3b
# 3b Says:
September 15th, 2008 at 9:31 am
#47 clot: Well if this does not do it, than I do not know what will.
During the last real estae bust I seem to remember that sellers became much more realistic quickly.
And as I have said in the past that may be reflective that in general people were in much better shape financially (even during a recession), than now.
All I can say is it will most certainly be reflected in my bids on houses in 2009.
There is absolutely no reason in my mind to pay anywhere near most current asking prices.
Its desperation. With a negative savings rate most peoples only hope for financial stability has been tied to housing prices. people have no choice. You either get your asking price or face the reality that you own nothing as your debts exceed your assets, that you are not one of the beautiful people.
Damn..Ameritrade just kicked me off..and wont let me back in.
Damn, their phone lines are clogged too.
Ket, Bingo!
What is driving me nuts is that the “experts” are talking about the potential for a COLLAPSE of the economy in academic language, couching the discussion in terms most people will not underdstand. I suspect they are doing this so they can later go back and say, “hey, we were warning about this for (insert period here) and nobody listened to us.”
#121 kettle: Understood. But desperation at some point has to be followed by resignation,and acceptance.
[92] cooper
Yes
FDIC has $45 billion.
-FDIC has $70 billion in Treasury credit lines.
-Washington Mutual had $143 billion in insured deposits.
-Washington Mutual had $164 billion in uninsured deposits.
That’s exactly why the treasury and the Fed will backstop their takeover and Jamie Dimin knows this and is twisting their arm slowly.
It’s cheaper to put up 60 Bilion for the taxpayer then to bankrupt the FDIC.
In a very short period of time Jamie will once again buy WM for $2 and have the Fed backstop.
KFC Monday, the day the chickens came home to roost, then got burned.
[108] stu
I think that bottom number is dropping by the minute.
Stu,
95.
FDIC cash reserve………. aprox 45 billion
WM Insured Account value………. 120 billion
the FDIC cannot cover WM accounts without tapping the US treasury for a loan!!!!
WM will be an almost guaranteed bank run initiator.
#112 John: What are they basing this on?
Nice weather we’re having.
Inly down 298 so far. I would not be surprised if John is correct. Remember, it is always a good time to buy… anything.
Nom -
Did you hear back from NJPatient? Hope he is doing well.
Just a hunch but maybe Bush signs an executive order allowing AIG to go to the Fed for the loan. He would announce it at 11 am. If that happens then everyone goes to the Fed and we are on our way to falling into the abyss!
Bright and sunny days ahead!
MM:
“In a very short period of time Jamie will once again buy WM for $2 and have the Fed backstop.”
Yup!
But eventually our treasuries rating will be downgraded with all of these federal backings. At what percentage of our GDP (13 trillion) does the rating get lowered? Once the rating is lowered, then the shite really hits the fan.
I don’t think Bush makes any economic announcement whatsoever. He’ll do his typical, America #1 routine and will praise the stimulus checks once again.
Odds of Bush praising the stimulus checks? I put it at 3 to 1.
Cirrus 107,
Calls are not personal for me, they are about taking info and processing it. when you make an error correct it.
Regarding oil and our discussion in NYC:
At that point in time i was not confident enough in my opinion on the financial markets impacts to make a call downward on that basis.
I agree that oil will most likely not hit $50 or below. But, if the financials get as bad as clott and I think then we could see $60/brl. The downward effect is from both deflation and demand destruction. The tricky part is that production fundamentals are still negative and will not change long term. The question to answer is when and how much does each effect exert the most influence.
I also believe that there has been at least some energy market manipulation, as the market has been moving counter to certain influences that have been effecting the market until recently.
And hey, enjoyed the debate, maybe we can do it again sometime. say hello to the wife!
Stu,
If the old rule of thumb was 3X earnings for a mortgage, maybe it is 3X GDP for government debt.
I think Wall Street bonuses are poised for another record this year. Don’t you agree?
How long until we hear something similar from GM?
Markets could gain back most of early losses until Bush speaks. I think his speech will have negative repercussions. His simple presence sends the signal that things are pretty bad. Watch the markets this afternoon. Anything between the opening bell and 11:15 is nonsense. I would eye WM/AIG more than anything.
Thought of the Day
The man most responsible for the financial services and banking deregulation that made today possible, fmr. Sen. Phil Gramm, is the man John McC wants to put in charge of the whole economy.
–Josh Marshall
ww.talkingpointsmemo.com
Gary,
Right on. Not just anyone can do these jobs. Its hard, hard work.
believe it or not. homebuilders are much better than general market today. banks are in line with the market. energy stocks are worse than market.
it’s
Stu, MM
The bond market is probably the key. If the US gets it credit rating downgraded we are toast as we cannot sustain the amount of money we borrow daily as a nation. hence deflation followed by hyperinflation. Deflation while the alphabet soup of credit derivatives evaporates and takes entire banks with it. And then Hyper inflation as the bond market for US treasuries falls apart. Once potential fly in the ointment is as the Itulip article linked above pointed out; if the market crisis hits our creditors hard enough they may be forced to shut off the spigot before they would have done so voluntarily.
Well, all this doom and gloom leaves me thinking that there is just one course to follow today: berate the staff.
Stu (114)-
Secret agent & man of leisure.
Fitch slashes Lehman Brothers’ ratings
LMAO!! Oh look dear, Lehman Brothers seems to have experienced a weak quarter, perhaps we should purchase more shares on the dip.
“The tricky part is that production fundamentals are still negative and will not change long term.”
>>100% agreement
“The question to answer is when and how much does each effect exert the most influence.”
>>Figure that out and let me know about 30 minutes before you pull the trigger, then I’ll meet you on your private beach and buy you a drink! LOL
Absolutely would love to make it to another GTG!! In the meantime, I’ll continue to enjoy the conversation and banter! Now back to my hiding hole - just got a TXT from a LEH friend who sounded pretty bummed :(
Stu (116)-
When was the last time Roubini was wrong?
I’m backing him until he slips up.
I work on wall street and not for any firm in trouble thankly, but that is just a matter of luck, most people would have killed in 2006 to get a job at lehman or bear.
John. What the hell do you do for a living?
Clot was dead on. The shadow banking system is gone. Too bad only about 5% of all Americans even knew it existed. They’ll feel its consequences soon, though.
I’m surprised to see trading talk on this board. With all the pending doom and gloom did anyone not see the writing on the wall?
Cash is king.
http://biz.yahoo.com/rb/080915/lehman_merrill_jobs.html
Here’s an interesting article but nothing new from the news today. I like the last sentence that states most jobs will go to the Middle East and Russia. I can see the new spin on Jersey Real Estate.
Buyer: The price of this house seems high. How is the commute time? Any train service.
Agent: No. But the airport is close and the commute time is very quick to Moscow.
Do you all realize I’m going to burn in hell as I’m slouched down in my chair, giggling like a school girl while reading these posts?
“With all the pending doom and gloom did anyone not see the writing on the wall?”
Mitchell,
What the hell are you talking about? We have been discussing this since the end of 2005.
If you are at work, Gary, it is okay just as long as you are not dressed like a school girl while doing it. If you are at home, all bets are off.
#152 John: that is good news for you. And as much as there will be consolidation at the top of the IB food chain, I believe that once the dust settles, there will be many new smaller firms that rise from the ashes.
Hey I thought GS was better when most people thought it was a jeweler or a law firm.
But in Minnesota, where M accepted the GOP nomination this month, O’s 12-point edge in the last CNN/Time/ORC survey – also conducted during the Republican convention — has disappeared in a new Star Tribune survey: that poll finds both men tied at 45 percent each among likely voters, with 10 percent unsure.
http://politicalticker.blogs.cnn.com/
Anybody do any open houses yesterday?
Bob,
I just talked to the White House. Bush asked, “What wall, there is a wall?”
Mitchell I hope cash is king and inflation doesn’t kill us, otherwise things are really grim.
#160 bi: Who cares?
3B
We went to some in Bay Head and Mant. Still overpriced. “This town NEVER sees a downturn. Many of the buyers work on WALL STREET (wink, nod).” BARF.
my gut feeling is that the market will end up near flat today, expecting tomorrow’s fed decision.
The SP baby name generator:
http://politsk.blogspot.com/2008/09/sarah_13.html
I am Krinkle Bearcat.
You leave for two weeks and all hell breaks loose. (Sicily was hot, the wine was flowing, and the canoli was stuffed like Pamela Anderson in a pre-teen bikini.) Glad to see things got clearly better in my absence.
#165 shore: Many of the buyers used to work on Wall St.
Gator: I posted about Phil Gramm a ways back.
See this article from February.
http://money.cnn.com/2008/02/18/news/newsmakers/tully_gramm.fortune/index.htm
Gramm was the one who said Americans are “just whiners,” this past July. He is M’s lead adviser.
uhoh….
Lehman 2007 Bonuses?
posted by Adam Levitin
Lehman paid out around $5.7 billion in bonuses in 2007. Are those bonuses safe? Maybe not.
The bonuses might be recoverable as fraudulent transfers—transfers made while insolvent without receiving reasonably equivalent value. (UFTA 5(a)).
Thus, the key question is whether Lehman was solvent when it paid out the bonuses? (The statute of limitations goes back past 2007, fwiw.) On an equity basis, almost assuredly yes, but on a balance sheet basis, that might be a closer call, depending on how things like MBS and CDOs are valued.
If Lehman was not solvent when it paid the bonuses, then I think there’s a fraudulent transfer. It’s hard to see how a bonus could ever be paid in exchange for reasonably equivalent value, when an employee has already been paid a salary for their efforts. There are various defenses to FTs, but none would seem to apply here at first blush.
Of course, it takes a challenge by a creditor whose claim arose before the bonuses were paid, but per the rule of Moore v. Bay (which I am teaching tomorrow), it only takes one of them, owed a single cent, in order to challenge all the bonuses. The lack of a creditor might protect the bonuses, but as creditors look to carve up what’s left of Lehman, the thought of recovering a decent chunk of $5.7 billion is going to look very appealing.
Any thoughts on where Wachovia stands in all of this mess??
3B
The next open house. “This is a 14 room home with both bay and ocean views. Uhhh, make that 13 rooms. THAT one is locked, until we get the blood cleaned up and the shotgun pellets out of the wall. For now, let’s just call it a BONUS room.”
#157 Yup along with buy gold group.
How’s that working out?
Anyone know what happened to MLS #2563074? This was a crazy Brigadoon asking price for living next to the train.
3b
Wachovia: One foot on the dock and one on deck?
my gut feeling is that the market will end up near flat today, expecting tomorrow’s fed decision.
Here goes Bi’s gut feeling again. Using this boards theory as a blackbox we should close today down 300.
Bystander,
It is not up against the tracks it is “enjoy the benefits of easy access to commuter rail lines.”
Well, the USA has one healthy industry left!
With White House Push, U.S. Arms Sales Jump
By ERIC LIPTON
Published: September 13, 2008
WASHINGTON — The Bush administration is pushing through a broad array of foreign weapons deals as it seeks to rearm Iraq and Afghanistan, contain North Korea and Iran, and solidify ties with onetime Russian allies.
Skip to next paragraph
Enlarge This Image
Petty Officer First Class Scott Cohen/United States Navy
From tanks, helicopters and fighter jets to missiles, remotely piloted aircraft and even warships, the Department of Defense has agreed so far this fiscal year to sell or transfer more than $32 billion in weapons and other military equipment to foreign governments, compared with $12 billion in 2005.
It’s a good time to buy a house. Interest rates are still near historic lows and there’s plenty of inventory to choose from. Just sayin’. [dripping with sarcasm off]
#157 Yup along with buy gold group.
How’s that working out?
Mitchell,
Patience my man. I’m sitting on the physical so I could care less what it does in the short term.
In the next 4-5 years I assure unless we get Tall Paul back in charge there is only one way our terribly flawed currency will go.
Talk to me in 2012-13 when I’l be able to purcase the whole Dow with an Ounce of my shiny stuff.
Wonder how many layoffs will occur at Merrill after BOFA takes over? If Bear Stearns is any guide that means at least a 50% haircut in employees. Merrill employs about 60,000 people worldwide. So that’s 30,000 people and I would say at least 1/3rd are probably in the local area.
So now ask are prices going to hold up in the blue ribbon train towns? RE Agents have been saying that these towns have staying power because of Wall Street. That theory should be thrown out the door.
With all of the wall street stuff happening, it will definitely affect home prices in the coming months. What the hell are all of these laid off bankers going to do for money, carry costs for their homes is going to be killer.
#163 jcer
Inflation is already killing us.
I’m just going to keep quiet that’s a whole math area that sickens me to think about. Lot of good people not making ends meet and maybe never will.
Wachovia issued 40 year 8% coupon bonds on 3-1-08 that are now trading at 47 cents on a dollar. Just six months later.
Problem is people are in denile. Or just keeping up a brave face. For instance my BMW. Was traded into BMW of Greenwich in late July at lease end. The BMW dealer listed if for the usual lofty CPO BMW price. When five weeks came and went without a sale and the car falling in value $600 a month rather than reduce the price they sold it at auction to my friend who is a dealer. This is similar to what the rich neighborhoods are doing, people are afraid to set the bar with a new low price. If BMW of Greenwich started blowing out 2006 five series for 28K who is buying the 50K new ones or the 32K CPO three series. Better to hide the lower price through the auction then let it all hang out. MLS is same concept, hide the REOS and FSBOs and show only the full price homes sold.
“What the hell are all of these laid off bankers going to do for money, carry costs for their homes is going to be killer.”
http://tinyurl.com/6ruc24
Excellent example John…
Sort of like the shadow banking system…
What the hell are all of these laid off bankers going to do for money, carry costs for their homes is going to be killer.
I propose prostituti*n.
[151] Clot
“When was the last time Roubini was wrong?
I’m backing him until he slips up.”
Roubini is also predicting the failure of some broker dealers that are part of a larger commercial bank (e.g. JPM) so what are you doing with your assets? Stuffed in a mattress? Are you just living in your house, holding onto some gold and keeping your $ in your safe next to the shotgun?
Where do you think Roubini is funneling his $ to?
Stu, my point is normal people jobs cannot support the lifestyle many of these people had. My parents know a person in CMBS at a large issuer who went from 20 mil a year income to their salary of 300k and is now at 0. This guy has 3 million dollar home with 45k a year in taxes, owns his own golf course, etc how the hell can any of this be paid for. I would hope for the 3-4 years he was making 15-20+ million he would have a big war chest filled with cash but based on the lifestyle I assume much of it was spent. If that is true asset liquidation will ensue.
#176 shore: Morgan Stanley/Wachovia merger??
LEH 0.1831
Now thats what I call an entry price. What ever makes it out the back of Chapter 11 should be worth that in Warrants.
Bush must have opened his trap. I see the market recovery has stalled. Now he can get back to the difficult work of being the prez. Time for some tea on the back porch with the president of Ghana.
Did he mention the stimulus checks?
WASHINGTON (AP) _ President B declared Monday that the U.S. economy is healthy enough to withstand “the adjustments that are taking place” in the financial markets.
Bush issued a statement during a joint appearance at the White House with visiting Ghanian President John Kufuor. B conceded in his statement that Americans “are concerned about the adjustments that are taking place in our financial markets.”
He said that his administration is focusing on the problem and “working to reduce disruptions and minimize the impact of these developments on the broader economy.”
Bush also said he was pleased with work done so far by the Treasury Department, Federal Reserve and major financial institutions to “promote stability” in financial markets shaken by the bankruptcy declaration by Lehman Brothers Holdings Inc. and the sale of Merrill Lynch & Co. to Bank of America.
He acknowledged that such convulsive developments can be “painful for people” directly involved. But B also said, “In the long run, I am confident that our capital markets are flexible and resilient and can adjust to these developments.”
# 191,
That is above my pay grade.. I will leave it to John and others with insight to opine on that.
from cnn
Lehman Lists Debts Of $613 Billion In Chapter 11 Filing Monday
September 15, 2008: 07:51 AM EST
Lehman Brothers Holdings Inc. (LEH) filed for Chapter 11 bankruptcy Monday in New York, listing debts of $613 billion and naming as unsecured creditors owed hundreds of millions of dollars banks from Tokyo, Hong Kong, New York, Singapore and Taipei, among others.
Topping the list of Lehman’s unsecured debts is approximately $138 billion in senior bond debt, followed by another $17 billion in subordinated and junior bond debt, according to documents filed at 1:45 am ET in the U.S. Bankruptcy Court for the Southern District of New York.
The bankruptcy filing by the Wall Street firm followed a failed effort to find a buyer or persuade the U.S government to bail it out of massive real-estate- related losses. The bankruptcy petition said Lehman’s assets are worth $639 billion.
Citibank and the Bank of New York are trustees for the huge load of bond debt that tops Lehman’s list of unsecured liabilities, court documents say.
AOZORA of Tokyo is listed as the largest bank lender, with a loan of $463 million. Next is Mizuho Corporate Bank Ltd. of Tokyo, with a $289 million loan.
Additionally, Lehman listed as unsecured debts a $275 million bank loan from Citibank, a $250 million bank loan from BNP Paribas, a $231 million bank loan from Japan’s Shinsei Bank Ltd., a $185 million bank loan from UFJ Bank Limited of Japan, a $177 million bank loan from Sumitomo Mitsubishi Banking Corp. of Tokyo and a series of other sizable bank loans.
Make [181],
If you bought in 2003 and managed the trade, it was a home run.
Seneca, Roubini tends to overshoot negative, his trending has been dead on and the IBANKS are going because of the risk inherent in the assets they are holding. The failed model is GS and that is what all of these banks were copying. The idea that an ibank should have such large positions is where the problem lies and even hedged positions carries systemic failure which is what Roubini is basing his call on. This is what has allowed GS/LEH/MER/UBS/JPM to have huge returns in the good times also allow for greater failures than ever before in the bad times. Being levered 20 to 1 is downright insane, even a more reasonable 5 to 1 is risky but is more in the area that these firms should be operating. I think ibanks most likely will survive in some form or other and those operating in the large integrated model firms are the most diversified and thus stand the best chance at survival.
$600 billion in debt. I remember when the National Debt was less than that.
It’s only a flesh wound?
systemic risk as bank failures occur.
Re 198
Jcer, Gasparino was on CNBC last night saying none of the Ibanks have even really deleveraged. Apparently Lehman had only delevered from something like 30 to 1, to 25 to 1.
#182 hardplace: There is not a lot of overlap between Mer and BOA, except in their Fixed Income (mainly muni business.
No matter what happens, the muni business always seems to get hammered.
BOA’s attemepts to build an IB business have been weak, remember the CEO’s comment last year about how he has had enough of the IB business.
However it could get interesting.
1. Does BOA officially move it’s headquarters to NYC?
2. What happens to the real estate involved? BOA has a large office building in mid-town, plus they are building another office tower in mid-town. Do they consolidate? Does Merill leave downtown World Financial Center? If yes what happens to all the plans for Ground Zero?
3. BOA has a big back office operation in Charlotte, do they consolidate that with Merrill’s operations, and do it all in Charlotte? What happens to Merrill’s big Princeton NJ operation?
One final thought for Leh, they have a beautiful headquarters in Times Square. Could GS buy it on the cheap, and forget about their new headquarters being built downtown?
Did I just see Bush with a bucket of fish and a ball; he must think he needs that to take care of the presidential seal.
See if you can determine what time our bozo in chief spoke from the following daily chart…
http://finance.yahoo.com/q/bc?s=^DJI&t=1d
202 3b,
I say we convert the WFC to condos.
Stu,
There are a lot of clowns who would resent being lumped in wirh Geo III.
[199] Shore “It’s only a flesh wound?”
LMAO!
What a squandered opportunity. Bush could have actually leveled with the public and called on congress to adopt sweeping cuts in spending to help the next pres protect the nation from harm. Twit.
seneca (189)-
“Are you just living in your house, holding onto some gold and keeping your $ in your safe next to the shotgun?”
Pretty much. Also have an imprudent (prudent?) amount deployed in shorting pretty much everything under the sun.
All disclaimers.
Wachovia is Mr Market’s b$%^ch for the day.
AIG is at $4.96. This could get very ugly, very quickly.
seneca,
why do you think clott would like me to procure an M1 Abrams for him?
If we are not careful, the economy will be like Ned Beatty in Deliverance.
Anyone hear any squeeling?
#205 shore: Condos??? We have tons of those down here all sitting for the most part,and many not on the market yet.
15 Broad St, 25 Broad St, 14 Wall St, 67 Wall St, 100 Wall St, 20 Pine St, up and down John St, and lots more all over down here.
shore (205)-
Rental condos.
Well Bush did not bail out AIG, they are a goner….
shore,,
did you say bucket?
http://tinyurl.com/2q9mnq
ECB injects 30 B Euros, BofE injects 9 B Pounds
http://www.nytimes.com/2008/09/16/business/worldbusiness/16markets.html
AIG = 4.53
3b,
Don’t ya know? NY RE is very hot. Very hot among the Europeans. Hot, hot. hot. Nothing is empty, everything is in demand. Buy early and often.
Arlo said “kill, kill, kill” but today it is “buy, buy, bye.”
Or maybe “buy, buy, bye-bye credit and economic security.”
AIG = $4.26.
At this pace they may be broke by the time I finish lunch!
Drill, drill drill!
AIG at $4
182 Hard Place-
Rough back of the envelope calc’s:
Top 10 train towns, about 100 homes in foreclosure each around October 2009.
Let me know if you want to see my calculations.
217
Yes like that. See, it is the same blue as the Air Force One planes and after Bush feeds the presidential seal, and plays presidential tee ball, and jumps presidential rope, he can take us to hell in that bucket. At least Nero could “fiddle.”
Someone better step in because AIG is now at $3.66.
Holy crapola!
WASHINGTON (CNN) — The U.S. credit squeeze has brought on a “once-in-a-century” financial crisis that is likely to claim more big firms before it eases, former Federal Reserve chief Alan Greenspan said Sunday.
Greenspan told ABC’s “This Week” that the situation “is in the process of outstripping anything I’ve seen, and it still is not resolved and it still has a way to go.”
“Indeed, it will continue to be a corrosive force until the price of homes in the United States stabilizes,” Greenspan said. He predicted that would not happen until early 2009, and said the odds of U.S. recession have gone up in recent months.
“I can’t believe we could have a once-in-a-century type of financial crisis without a significant impact on the real economy globally, and I think that indeed is what is in the process of occurring,” he said.
This guy needs to be stripped of all his assets and hung for treason.
Enough of this Finance talk, back to politics.
Is this little nugget getting drowned out in the noise.
Rove: McCain went ‘too far’ in ads
http://edition.cnn.com/2008/POLITICS/09/14/campaign.wrap/index.html
Time to flogg the staff.
Stu,
Don’t worry according to ChiFi it’s well capitalized.(sarcasm off)
MM
Q. What do Richard Fuld and many Home Sellers in the New York metro area have in common?
A. They think that their assets are still worth 85 cents to a dollar, but the market seriously disagrees with this.
I went around looking at homes this weekend. In my mother-in-laws community of about 200 homes 20 were for sale.
This is an astonishing amount of homes for sale. They range from 250,000-350,000 for those not on the water, and much higher (800,000) for those on the water. Only one waterfront property was for sale.
We drove around into established communities in the 400,000$ range to check on some low-ball opportunities and noticed that 2 of about 200 properties in established upscale community were for sale.
This left my wife and I scratching our heads. Apparently forclosures and forced sales haven’t come to the middle class in MD yet.
#213 # Shore Guy Says:
September 15th, 2008 at 11:49 am
If we are not careful, the economy will be like Ned Beatty in Deliverance.
Anyone hear any squeeling?
_______________________________________________
I hear Wamu-eeeee, Wamu-eeeee
http://www.youtube.com/watch?v=dDMce1USTB4
“Someone better step in because AIG is now at $3.66.”
Stu,
About to cover, think it will help?
Oh, I just found some coins in my drawer. Anyone want to go in on AIG? I say we offer $29.95 and ask the fed to both backstop all loses but also pay us each $25 mil in order to keep the top managers (us) onboard.
Last month, my sister in law asked me if I’d bought a house yet. The whole family has been after me to do so.
I said, “Not yet. I fact, I think I might buy a bank instead.”
She looked at me all confused, said, “Huh?”
“Don’t worry, you’ll understand the joke soon.”
She just emailed me, “I understand your joke now!”
158 re gary, dressed as schoolgirl….
…me. scrubbing my corneas with oxyclean and a Tide stain stick….
in a vain attempt to remove that image….
eesh.
sl
Question?
What will this crises’s do to home prices’s in NJ ?
HAHAHAH AIG! HAHAH!
I once worked for Chubb, AIG’s arch enemy. If there was dirt on AIG, and there was a lot, we knew it. The chickens are coming home to roost!
still_looking [237],
LOL! Don’t worry… it won’t happen. I’d have to be really, really drunk for something like that to happen! Well… ok, maybe a little drunk! LOL!!
oh, dear
aig being bailed out by the State of NY
NJ is right next to NY and nearly everything is a short drive from the beach. NJ has the Las Vegas of the east and is an easy trip to Boston and the center of the universe — Yankee Stadium — it is also close to DC. To answer your question, with rates this low, there has never been a better time to bid above asking price.
(tongue firmly planted in cheek)
Shore Guy [242],
They’re not making anymore land, ya know!
Gary,
Is this you pom pon, lol
aig ,,, rally mode
no taxpayers money at risk…
where’s Corzine,,,
Has anyone been keeping track of the overnight repos from the Fed? I just saw $50bil go past on my news ticker, with $30b from ECB and $9 from BOE.
#227 Indeed, it will continue to be a corrosive force until the price of homes in the United States stabilizes.
The prices of homes cannot stabalize until they finish falling. And they have not finished falling yet.
And since we are or will be in a recession, they will continue to fall,and so it goes.
#238 Just me-
See my post in 224. Look for many homes at the high end of the best towns to be sold for steep discounts in about 12 to 18 months.
Then, apply that down the ladder for lower end homes and towns. It won’t be even and orderly. Look for any new construction to languish and go at fire sale prices (reference intended).
#242 LOL. Atlantic City is no Vegas. Not even remotely close.
AIG got bailed out by the only suitor possible. They got a loan from a blind governor. Back to $6, but only temporary. Underlying issues still remain. I am more in the ChiFi camp. They have a lot of well performing assets to sell before they go under. What spooked the market is that no one seems to be buying. Sounds a lot like the housing market, don’t it!
Fed up to 70B in repos today.
I just heard that the state of NY is loaning AIG money …can’t risk the job loss
http://images.google.com/images?hl=en&q=transvestite+cheerleader&btnG=Search+Images&gbv=1
Obviously, the gubnor is back on the pipe again.
He should be removed from office and arrested immediately.
Saw a post on a local Montclair blog from a credit risk guy near Wall St. He says most open Home Eq lines of credit will be reduced to a $1 by this weekend. If you are approaching bankruptcy, this might be the last week for you to go shopping.
To all our wise finance folks,
What does this AIG meltdown mean to me I have an annuity policy. Does this affect me?
Thanks
KL
Someone will buy their good assets Rhyming Realtor. You should be fine.
248 BKLYNHAWK ,
thank you …will try .Wish me good luck.
What does this AIG meltdown mean to me I have an annuity policy. Does this affect me?
Thanks
No, but as a NYC tax payer the paterson bailout will sure effect me.
make (260)-
Try to effect a citizen’s arrest of Patterson.
Shore,
Can i be a temp for the day, i always enjoy a ggod flogging!
# Shore Guy Says:
September 15th, 2008 at 12:00 pm
Time to flogg the staff.
Ket,
Just don’t expect to get paid.
Back around 1991/1992 the only people renting empty 1987 wall street coops were the rub and a tug ladies.
3b Says:
September 15th, 2008 at 11:49 am
#205 shore: Condos??? We have tons of those down here all sitting for the most part,and many not on the market yet.
15 Broad St, 25 Broad St, 14 Wall St, 67 Wall St, 100 Wall St, 20 Pine St, up and down John St, and lots more all over down here.
Shore, 235
i have 73 cents left over from lunch….. I’m IN !!!!
SL 237
here you go
http://tinyurl.com/6q3psp
Did Roubini sign a contract with Yahoo Finance? He is all over their site today. Since when did people start listening to him? I feel for Ben Stein.
correction…the Gov of NY is asking the federal government to help AIG, the state is not putting it out…(no pun intended, or maybe I did mean it)
3266 I wonder if Kudlow finally throws in the towel tonight. One of his minnions was cut off in mid sentence last night on CNBC, after he said this whole thing is really just a financial event, not an economic event, and it should not be a problem for the economy.
The sheeple are waking up. All I can hear today is LEH, AIG and people planning to move money from their 401Ks into money markets.
Capitulation is near.
Ket,
Thinking outside the box, and always looking for economic opporrunities — if you wear Gary’s cheerleader outfit while being flogged, that m( attract a paying crowd.
BklynHawk - sure if you’re willing to share.
3b - True bofa/mer is a pretty good fit, but there may be substantial cuts. They may keep a good portion of the IB given they dismantled some of their previous IB team. They’ll probably keep a good portion of private client. The rest of capital markets and lending are up in the air. I would think minimum of 25% reduction.
” he said this whole thing is really just a financial event, not an economic event, and it should not be a problem for the economy”
Depending on the zize of his bonus the past few years, it might NOT affect HIS economy.
Agreed. The ramifications of this will play out over the next year or so.
how stable is the us economy?
http://www.pbs.org/wgbh/nova/bridge/tacoma3.html
Why AIG matters??
A blowup at AIG could have an even bigger impact on the stock market than Lehman, WaMu and even Fannie Mae and Freddie Mac have already had.
That’s because AIG is a component of the venerable Dow Jones industrial average.
A further plunge in the value of AIG would threaten to drag the Dow deeper into bear market territory since there is still a long way to go down. AIG, with a current market value of $32.6 billion, is worth nearly five times more than Lehman and WaMu combined.
The firm had $110 billion in annual sales last year and employs 116,000 people, 44,000 more than the combined workforces of Lehman and WaMu.
In addition, AIG is a company that more average consumers deal with than Lehman, since the firm has a massive life insurance business and retirement planning unit.
does BofA really have the cash to cover Mers liabilities?
does BofA really have the cash to cover Mers liabilities?
No. Window shopping will be necessary to push the deal through.
Why is Mer at $20 if BoA is paying $29??
267 Stu,
whew! thanks… my eyes feel better already - 8^P
sl
a closer look at the economy
http://tinyurl.com/5qfn2a
Why is Mer at $20 if BoA is paying $29??
The deal might not go through, hence MER does not reflect the full buying price.
So when do we call out the ratings agencies . the same ones who dont downgrade Leh until after the deal is done? the same ones who said Bear was just fine?
Who rates the rating agencies?
Reuters:
AIG gets New York’s help in accessing $20 billion
http://www.reuters.com/article/marketsNews/idINN1525741520080915?rpc=44
“He added that the plan was carefully crafted to pose no risk to New York taxpayers.”
The blind pot smoker has been fully assimilated.
Rating agencies.
Talk about conflict of interest. Same people that pay the agencies are the same ones asking for a rating.
Among the bullet points Pandit offered to Citigroup staff with a suggestion they be passed along to clients:
- Citigroup has raised $50 billion since November.
- It is considered “‘well-capitalized’” with regards to regulatory minimums.
- Its strength makes it a “favored counterparty,” meaning, presumably, that other Wall Street firms are interested in entering financial contracts with Citigroup.
- Citigroup’s balance sheet is more than $2 trillion with shareholders’ equity of $136.6 billion.
- Citigroup has large international and domestic base of deposits which should provide it with a “low-cost source of funding.”
The letter, which concludes by adding that, “Citi never sleeps,” is signed “Vikram.”
Anyone remember the bracelets that Mozzillo made th eemployees wear. “I will fight for my house”
Do banks have to put aside reserves for HELOCs? I was wondering why banks would pull lines. My equity line is with Wachovia and my total line is less that half of my home equity. The line is paid off, but it’s nice to have.
#285 Stu: beware of any sentence that uses the word crafted.
Stu,
I know that. Is market sending a strong message?
Like these Southern Crafted Homes?
http://www.southerncraftedhomes.com/
Stu if I remember correctly the deal does not include any cash and is a stock swap based on fixed ratio of boa shares for MER shares, so that 50b number was based on the market pricing when the deal was made. So really what will happen to MER shareholders is that they will receive fewer shares of boa than MER and since BoA is down the value of the deal is below $29.
AIG gets New York’s help in accessing $20 billion
is this legal?
bet Gross did not see this one coming…
Pimco, Vanguard Are Biggest Lehman Bond Fund Losers (Update1)
By John Glover
Sept. 15 (Bloomberg) — Pimco Advisors LP, Vanguard Group Inc. and Franklin Advisers Inc. are among investment companies that will face losses of at least $86 billion stemming from the collapse of Lehman Brothers Holdings Inc., the biggest bankruptcy in history.
Mutual fund companies’ filings show they hold more than $143 billion of bonds, led by Newport Beach, California-based Pacific Investment Management Co., manager of the world’s biggest bond fund, and Valley Forge, Pennsylvania-based Vanguard, according to data compiled by Bloomberg as of June 30.
seems like citibank has big exposure as well
The problem with AIG ( as stated by kettle1, the nigerian prince of finance)
AIG may have significant assets. I dont debate that point. There are 2 main problems though.
1. What is the real make up of the CDS garbage they hold? Does anyone really know?
2. Assets arent going to help you if no one is buying. if there is no market, the supposed value of you assets is 0.
PS
#3 a comment i heard of AIG recently “most of the problems are cause by shorts whipping up hysteria and mark to market accounting” So mark to market is a problem???? interesting
AIG is about to sell off some of its most liquid assets ( the 20 billion sell off announced over the weekend). So what are their primary assets after that? Which of those assets have functioning markets with buyers who actually have cash?
Absolutely MM. BOA has to first figure out what to do with Countrywide. This second merger might have been PPT work. Perhaps BOA backs out once the market settles. I don’t see why they would even be in the acquisition market in the current environement. If you recall didn’t price keep changing on the Bear/JPM merger?
oil will close under $100 for the first time for long time. gold up $18.
Still think the market is gonna close even?
Corzine sees NJ house prices going down, says NJ RE contraction is “just starting to catch up to the rest of the country” and expresses concern.
About 12:50 in:
http://cosmos.bcst.yahoo.com/up/finance?ch=4043681&cl=9743132&lang=
Corzine also has called for more stimuli.
Good grief!
come to think of it, I do have a fire proof safe…..
“A right to property is founded in our natural wants, in the means with which we are endowed to satisfy these wants, and the right to what we acquire by those means without violating the similar rights of other sensible beings.” –Thomas Jefferson to Pierre Samuel Dupont de Nemours, 1816.
“No nation is permitted to live in ignorance with impunity.” –Thomas Jefferson: Virginia Board of Visitors Minutes, 1821. ME 19:408
“If the children are untaught, their ignorance and vices will in future life cost us much dearer in their consequences than it would have done in their correction by a good education.” –Thomas Jefferson to Joseph C. Cabell, 1818. FE 10:99
this race is just getting more interesting:
The good news for M is that the map looks better for him than at any point so far in this race, and many of those red states that looked like opportunities for O (AK, GA, IN) look to be longer shots for him.
http://firstread.msnbc.msn.com/archive/2008/09/15/1398167.aspx
MJ
the amount of blatant disinformation and misdirection in regular news sources is repulsive. Anyone who doesnt actively seek out independent information on their own is likely to caught with their pants down. perhaps a few very public trials of political leaders needs to be arranged.
Also….
Dow 8K by Xmas?
The best stimulus package most ordinary people would benefit from would involve and overhaul of the country’s usury laws.
Cap all credit cards at 8%….no more universal default nonsense….and perhaps give a free firearm with a new savings account.
“Mission accomplished.” GWB, 2003.
“Who rates the rating agencies?”
Stu,
Until Phil Graham got his “reforms” through, it was based on the considered opinion of a group of homeless drug addicts. From 1983 until the reforms hit, the chief spokes-addict was a guy named Gus.” Amazingly, they did very well. After the reforms took over, the job was turned over to a bunch of Harvard MBAs who thought risk was always a good thing because, while playing 2 on 2, or when approaching women at the Coop, they always shouted “No risk no reward.” THAT later morphed into great risk, great reward. And then became, ” no matter what, I get a rewaed.”
“Who rates the rating agencies?”
Stu,
Until Phil Graham got his “reforms” through, it was based on the considered opinion of a group of homeless drug addicts. From 1983 until the reforms hit, the chief spokes-addict was a guy named Gus.” Amazingly, they did very well. After the reforms took over, the job was turned over to a bunch of Harvard MBAs who thought risk was always a good thing because, while playing 2 on 2, or when approaching women at the Coop, they always shouted “No risk no reward.” THAT later morphed into great risk, great reward. And then became, ” no matter what, I get a rewaed.”
CPI is out tomorrow. Should be another fun market day.
“Corzine also has called for more stimuli”
He must miss Carla.
from bloomberg…
these guys must be smoking a lot of opium… there is only the probability of a recession? of course that makes sense if recession is the new depression and economic slow-down is just the new recession.
“Policy makers see the probability of a recession in the U.S. is higher now, so the outlook for Chinese exports has deteriorated,” said Darius Kowalczyk, chief investment strategist at CFC Seymour Ltd. in Hong Kong. “This is the beginning of an easing cycle in China.” He was the only one of seven economists in a Bloomberg survey last week to predict a rate cut this year or in the first quarter of 2009.
I just stepped onto the blog. I have been very busy today. I have to be very careful not to make specific comments.
I will say two things:
(1) A company’s stock is not the same as its credit profile. Please review accordingly.
(2) You can have a certain opinion and then take market positions relative to that view. Subsequently, you receive news that should benefit those choices. If you are disappointed with the magnitude of the gains you are receiving, you should take a step back and think about it. You may be in a far riskier position than you suspect.
Bernanke Violates Federal Reserve Act Section 23A
Allowing banks to extend funds to their brokerage affiliates is in violation of Federal Reserve Act Section 23A.
Section 23A of the Federal Reserve Act ( Act ), originally enacted as part of the Banking Act of 1933, is designed to prevent the misuse of a bank’s resources through non-arm’s-length transactions with its affiliates and to limit the ability of a bank to transfer its federal subsidy to its affiliates.
Also, remember that while ALL the following are correlated, NONE of the following are the same:
(1) The economy
(2) The stock market
(3) The credit market
(4) Publicly traded homebuilders
(5) Housing prices
“A company’s stock is not the same as its credit profile.”
This should be repeated over and over again!
The way I learned it, stock price should be the last piece of an evaluation of the fundamentals of a prospective investment.
kettle, I noted over the summer that the dow could be in the 8’s…the peak was 14,400..that would be around 40-35% off peak. not unreasonable in my mind
“Who rates the rating agencies?”
Ackman, Einhorn and Paulson[John] did a pretty good job.
AIG gets New York’s help in accessing $20 billion
is this legal?
No man’s life liberty or property are safe while the legislature is in session.
“If you are disappointed with the magnitude of the gains you are receiving, you should take a step back and think about it. You may be in a far riskier position than you suspect.”
- Good Point, Chifi. This is one reason I have become very suspicious of SKF. May not be the best way to play this doo-doo fest.
Another thing, it would be constructive to take hyperbole down a notch here. Not that I don’t respect all of you, or the discourse, but under these conditions, I don’t think it serves the conversation well. There is a lot of information to digest, and I think that many of you are surprised at what you are observing.
If you were looking for something catastrophic and didn’t get what you wanted, be an inquisitive user of information. Maybe you need to adjust some of your expectations accordingly.
Victorian Says:
September 15th, 2008 at 1:41 pm
- Good Point, Chifi. This is one reason I have become very suspicious of SKF. May not be the best way to play this doo-doo fest.
Vic: I need to respond that I am not making any specific recommendation. People must recognize that this opinion is yours.
I apologize for being so stilted. Please cut me some slack. Thanks.
Stu (301)-
Where’s Carla?
I think CNNs front page says it all
Carla writes op ed pieces for the Ledger now. I read a horrible piece penned by her on Sunday. It was so lame, I can’t even remember her point.
Mortgage rate repricings coming through now. Looks like another 12-15 bps off a vanilla 30 for 720+ FICO/10%+ DP.
ChiFi 321,
excellent advice as always
Stu (325)-
How novel. OpEd pieces written by skanks under indictment.
I googled Katz piece. It was a complete rip of SP. The sad thing is that it sounded more like an autoboigraphy.
Rick Wright, founding member and keyboardist for Pink Floyd died today.
This is a sad day for music fans. Loved him on the Wish You Were Here album…
RE 314,
Maybe JP Morgan will buy MS and their new slogan will be “We’re putting the band back together!”
unusually Long lines @ WAMU….looks like everyone is running to withdraw their money.
You all should buy now or be priced out forever.
Vic (320)-
Take a look at the leaderboard today. What’s doing better than SKF (actually, MER is, but- IMO- they don’t count)?
There are also a zillion ways to play this, including shorting individual issues and other short and enhanced-short ETFs.
Whoever thinks SKF should be up 50% in one trading session probably has no idea of the index’s weighting and composition.
All disclaimers.
I wonder if we are going to see a week of media coverage of lines wrapped around banks.
Naw, Sara Palin is too sexy to be ignored
All Hype [330],
OMG! I love that band!! I saw Roger Waters last year in concert. Wow! That is so awful!
333 Gary
Do you promise? If I’m priced out forever I will have an easier answer to the endless “have you bought yet?”s.
#333 gary: Your assignment today, is an open letter to all home sellers, informing them as to what has transpired,and how in light of this they must accept reality and lower their prices accordingly
That should be easy enough for you. However, you must do it calmly and are not allowed to use any any bad language.
334- Clot. I am almost as much a SKF lover as you are.
My point was that we are way past the July lows for Financials. LEH gone, MER and BAC in unholy matrimony, FRE/FNM in conservatorship.
All this news - and we are nowhere near the highs reached by the ETF?
I freely admit that I am a novice at this stuff. But, dont you think that this is a wee bit suscpicious?
Beautiful day today; high sky, puffy, cumulus clouds.
I wonder how all these bank failures are effecting the drug trade???
I bet the mexicans and the afghanies arent very happy!
Via NakedCapitlism; Fed allows banks to use deposits to fund IB Operations.
Swell.
So who gets stuck calling the Mediene to tell them their accounts just vanished?
tosh 342
from anearlier post of mine
Bernanke Violates Federal Reserve Act Section 23A
Allowing banks to extend funds to their brokerage affiliates is in violation of Federal Reserve Act Section 23A.
Section 23A of the Federal Reserve Act ( Act ), originally enacted as part of the Banking Act of 1933, is designed to prevent the misuse of a bank’s resources through non-arm’s-length transactions with its affiliates and to limit the ability of a bank to transfer its federal subsidy to its affiliates.
can we get a warrant for bernanke now?
Any comments to this article?
NY Mag article
did i miss this before????
Chapter 11 is reorganization. As a financial-services company, Lehman is not eligible and their bankruptcy will be handled under Chapter 7.
Couldnt this spell serious trouble for all the banks? Liquidation of lehman assets will force a mark to market of their holdings. This is pandoras box, because many of the other banks hold similar garbage to one degree or another.
The so called assets that many banks hold could see serious write downs after a lehman liquidation.
From last night’s Fed decision.
The Board also adopted an interim final rule that provides a temporary exception to the limitations in section 23A of the Federal Reserve Act. It allows all insured depository institutions to provide liquidity to their affiliates for assets typically funded in the tri-party repo market. This exception expires on January 30, 2009, unless extended by the Board, and is subject to various conditions to promote safety and soundness.
3b,
Impossible. The words “seller” and “asking price” are like feeding a pit bull some dog food laced with gun powder.
Krugman calls it deflation … yet the fed won’t rule out further rate cuts.
We’re f’d.
328: You must have missed Tom DeLay’s commentary pieces on FOX News last year.
#348 gary: I have hopes. Every long journey begins with a single step.
HeHe
OR “We’re on a mission from God.” Oh, wait, I think Bush took that one.
NYtoNJ09: Kramer is a moron. He is not to be listened to. I feel bad for his charitable trust which holds a load of GS.
Barron’s did a great article on his pick results. Let’s just say that Bi has a rival.
3b
How very 20th century. Every journey begins with Google Maps.
funny thing is I wanted to buy some corp bonds today but volumne is so low and dealers threw out a spread to tresuries on Friday they have not updated. I see in trace investment grade bonds at 45 being offered at 65 when the mark up is supposed to be only 5%. The whole debt market is disfunctional today. Well I am having coffee and calling it a day.
Cramer is in the entertainment business.
from yahoo finance:
A source told Reuters the New York Fed has hired Morgan Stanley to review options regarding AIG.
The Fed and the Treasury Department declined to comment.
Stu,
please correct me if i am missing something, but the suspension of rule 23A now allows BOA to use the money in you personal accounts to run MER. hmm, no risk there.
Kettle,
They filed as a holding company which supposedly are allowed to file Chapt 11
Market Update
2:00 pm : Treasury Secretary Henry Paulson just wrapped up question answer session at the White House. When asked how the financial turmoil happened, Paulson noted market excesses and an “archaic” regulatory system. He said the American people can be very confident about their bank accounts.
The financial sector (-7.6%) extends its declines, hitting a fresh session low. The major indices fall in conjuction, and are trading near their worst levels.
(I did not piece these two paragraphs together.)
I went out to lunch today and to my surprise my favorite restaurant wasn’t doing as much buisness as usual.
Usually there would be a line out of the front door with people waiting to get food but I would put the number of people eating at 60% of usual.
Either Maryland has decided to brown bag it or everyone was too busy checking their investments to take a break for lunch.
Both scenarios are not good indicators.
I get the feeling (and I am not by any means an expert on all of this for I barely even understand much of this) that without the 23A suspension, no deal would have been made.
That’s even scarier.
#344 - Sorry for the dup kettle; lots-o-posts and I’ve only been half reading some.
can we get a warrant for bernanke now?
I was thinking on Sat. about how most of the b-tards responsible for this mess were all in 1 boardroom down on Maiden Ln. I was thinking along the lines of, “Remember, remember, the fifth of November”.
Then I recalled how that one turned out for all involved.
Tosh,
I saw that movie last night heh. V for Vendetta.
http://www.reuters.com/article/bondsNews/idUSN1550409020080915?sp=true
AIG shares plummet, debt protection costs surge
Shares of American International Group fell nearly 40 percent in pre-market trading after reports that the insurer had turned to the Federal Reserve for $40 billion in bridge financing to ward off a liquidity crisis and ratings downgrades.
The up-front cost of insuring $10 million of AIG’s debt for five years jumped to $3.05 million from $1.3 million on Friday, in addition to annual payments of $500,000, according to Markit Intraday. The insurer, which has incurred $18 billion in losses over the past three quarters from guarantees it wrote on mortgage derivatives, was hit on Friday by Standard & Poor’s putting the company’s credit ratings on negative watch, indicating a possible downgrade.
Over the weekend, AIG executives and New York state insurance regulators scrambled to hatch a plan that would boost AIG’s liquidity. It was not clear early on Monday when AIG would reach a plan. A spokesman did not immediately return a call seeking comment. AIG shares have fallen about 80 percent since the start of the year.
#363 - I was thinking of the real Guy Fawkes, but the movie will do.
3b (338)-
I’ve delivered an eloquent and dispassionate spoken-word version of such a letter to a couple of listing agents today.
The high points?
- My clients can wait as long as necessary.
- They are in rentals in which the rent is a fraction of equivalent PITI.
- We are continuing to consider other homes.
- As the market deteriorates, we will- with no prior notice- be amending downward the amounts of our offers…should my clients even care to do so.
Time to go for the kill.
More Roubini:
Top Economist: Americans Should Worry About Bank Deposits if Congress Doesn’t Act
http://finance.yahoo.com/tech-ticker/article/56994/Top-Economist-Americans-Should-Worry-About-Bank-Deposits-if-Congress-Doesn%27t-Act?tickers=LEH,MER,BAC,AIG,WM,^DJI,^GSPC
That “run” could accelerate as people realize the FDIC fund has about $50 billion to “insure” about $1 trillion in assets at the nation’s financial institutions, says Roubini. “They’re going to run out of money” unless Congress acts soon to recapitalize the FDIC
[314] Ket,
Unfortunately, the Fed can waive 23A, and apparently has done so here. This isn’t new or unprecedented, but it usually comes at the request of an institution and is done ad hoc. This is the first time I have seen a blanket order. The Fed’s BS+R section does monitor this closely.
i see the end of the tunnel is near when this board feels it is the end of the world.
Vic (339)-
No. You may disagree with the current share prices of some of SKF’s components, but the index is the index, and it’s clearly spelled out for all of us to see.
If you think further drops (or, in our case, gains) are merited, buy some more SKF.
If you think the PPT has their hands all over this stuff, keep shorting the living daylights out of it. Sooner or later, all their bazookas will be used up.
#362
Toshi,
Remember, remember, the fifth of November.
V is for Vengeance. Love that movie. Just saw it last night on cable.
[346] Ket,
For all intents and purposes, LEH is done. Fact that is Chp 11 or 7 is immaterial in real terms. They will end up in the same place.
bi (369)-
I see you as Wil E Coyote, racing into the tunnel after the road runner.
US government blocks Fannie, Freddie CEOs’ exit packages
The federal government will not pay the ousted chief executives of mortgage finance companies Fannie Mae and Freddie Mac up to $24 million in exit packages.
The Federal Housing Finance Agency notified former Fannie Mae CEO Daniel Mudd and former Freddie Mac CEO Richard Syron that such “golden parachute” payments will not be paid. The housing agency, which took control over the companies earlier this month, made the announcement on Sunday.
Lets have congress legislate a raise in taxes to make sure that the deposit insurance can pay us when the banks go under.
Yes, taxpayer, you will bear the full brunt of the financial collapse, there was no insurance; it was a mere illusion.
Sorry, V for Vendetta, not Vengeance. Not much difference though.
#376 - Sorry, V for Vendetta, not Vengeance. Not much difference though.
Only to former Lit. majors:)
“US government blocks Fannie, Freddie CEOs’ exit packages”
bread and circus’
Nothing more, nothing less. As the US financial system collapses, the masses will discuss how great it is that Syron and Mudd don’t get their exit packages. At 7 million a year, do they really even care?
Amazing….I think everyone on this board knew this day would come….and then some.
378…Yes.
Crap,
Bi just called a bottom. That means we have a lot further to fall given the success rate of the Anti-Bi blackbox model so far
End of the day sell off is here. 85 minutes until Bi’s inverse prediction streak remains intact yet once again.
I just heard that McCane has tasked Bi to replace Gramm as his economic adviser.
Sorry to detract from the lively LEH and MER chat…but can anyone RE veteran here help out with a little problem associated with RE transactions:
Can anyone recommend a good moving company to handle a New YorkBoston move?
Thanks in advance.
Clotpoll [366],
As the market deteriorates, we will- with no prior notice- be amending downward the amounts of our offers…should my clients even care to do so.
Like music to my ears.
#321
“Another thing, it would be constructive to take hyperbole down a notch here. Not that I don’t respect all of you, or the discourse, but under these conditions, I don’t think it serves the conversation well.”
all I can say is that after having worked all weekend and been very frightened at what might happen come today is that things are remarkably under control given the circumstances. for that we should be grateful.
another thing to keep in mind what with all of the schadenfreude at wall st’s expense going around right now is that a small percentage of the people at these firms are fabulously rich. most people who worked at places like Lehman were pretty ordinary and were not the “risk takers” that many would like to portray them as. in other words, it is not really their fault that this happened and they are still suffering greatly.
Try looking up Frank and Pretorious movers. They really could use the help these days ;)
Somone named Bi calling for a bottom is usually only something heard in a small booth in Times Square.
stu 378,
yes indeed my friend. However it is necessary bread and circus as the people has become aware ( at least in some cursory manner) of F&F failing. SO any golden parachute would be recognized by the public and could cause real backlash. We must appease the masses
Tech Ticker:
Your Loan Denied: Main Street Fallout of Wall Street Crisis
Posted Sep 15, 2008 01:58pm EDT by Aaron
The drama on Wall Street is already hitting Main Street U.S.A. in the form of lower stock prices and declining home values. But the situation got even worse over the weekend.
With financial institutions so focused on preserving capital as many fight for survival, “it’s going to be much more difficult, if not impossible” for consumer to get a loan now, says Diane Garnick, investment strategist at Invesco.
Given the U.S. economy is driven by consumers, whose spending has been increasingly funded with debt this decade, the inability to get a loan will have profound effects on the U.S. economy. The “credit contraction” that has just begun explains why economist and executives like Bank of America’s Ken Lewis are now moving their recovery forecasts to 2010 from 2008 or 2009 previously.
Garnick, whose firm has approximately $500 billion of assets under management, shares these concerns and says the U.S. stock market is far from a bottom as a result.
#387 - John those types of booths are long long gone from Times Square. He might have luck in Sayerville.
#355 BC Bob: I saw Cramer one night on Eisner’s takk show, and he said first and formost he IS an entertainer.
It is criminal IMO that people take this clown seriously.
#385 skeptic:in other words, it is not really their fault that this happened and they are still suffering greatly.
Agreed. And I truly feel for them, but that is always the way it is.
Last place I’ve seen the booths was in Atlantic City. I could only imagine how long the peep would last for a quarter today. My guess is that the window shade would never even stop in the open position.
Note to self, research peep show issue next time in AC. Reminder… bring quarters. Additional note… Don’t mention open position and peep shows in same paragraph.
#369 bi: Why? Actually a better question is why I am even asking?
#366 clot: Perfect. If you do not mind I will paraphrase those points when bidding next year.
313 Chifi
You forgot: 3) nice weather we’re having today.
273 Hard Place-
Ok. You asked how MER/LEH situations would affect NJ RE market. Here’s my off-the-cuff/back of the envelope calculations:
NY/NJ employees of MER/LEH: 20-26K
% who will get reorged/downsized (based on Bear): 50%
Total: 10-13K
Total who will have work within 12 months: 5-6.5K
% living in Manhattan/other 4 boros/Westchester/CT/LI: 80-90%/avg. 85%
Est. # in NJ = 1-1.5K
Divide by top ten towns = 100-150 per town.
Then, you just have to assume they will be under severe financial stress in 12-18 months. This doesn’t take into account how many rent, how many have 2nd income that will cover home costs, large liquid assets to tap in emergency. But, I think it gives order of magnitude and rough idea on timeline.
#391 3b,
Cramer is an entertainer. So is Billy Joel. Maybe Billy should have his own financial show. I’d watch that.
-400
“Secondary Market Says:
September 15th, 2008 at 10:16 am
can we start to coin the term that will identify today in the history books? my first suggestion:”
“morose monday”
Secondary,
How about Manic Monday?
http://www.youtube.com/watch?v=G7B_6pE93es
Well we’re living here in Allentown
And they’re closing all the factories down
Out in Bethlehem they’re killing time
Filling out forms
Standing in line.
I think I can translate Bi’s 369 end of the tunnel comment. BI has 3 investment strategies.
1) What goes down will eventually go up (Stocks).
2) What goes up will eventually go down (Commodities).
3) Any 6-word or shorter investing strategy penned by Warren Buffet.
In this case, Bi is referring to Buffet’s oft repeated quote, “”Be fearful when everyone is greedy and greedy when everyone is fearful.” Warren Buffet
Am I correct Bi?
Sorry, slight amendmant. That should say:
“Total who were re-orged out who will have work within 12 months.”
Again, these are all guesstimates, but seem to put some reasonable order of magnitude predictions.
Or would Pressure be more appropriate?
Grim, what song do you think BJ was singing the second time he drove drunk into someone’s living room? Could it be something off of Songs from the Attic?
“When asked how the financial turmoil happened, Paulson noted market excesses and an archaic regulatory system.”
So, does this mean he thinks all would have been sunshine and roses had there been NO regulation at all, or is he pushing for a reformation of regulation, even if it means more of it?
“Matter of Trust” would be my selection, followed by “Movin’ Out!”
From the lips of Meredith Whitney…
“Home prices should fall well north of 45% peak to trough.”
362 Tosh
Not on Saturday they weren’t.
#408 Simon: Meridith are you sure?? cause Suzanne researched this,and says otherwise.
John, Stu, quarters, etc. It is clear that I have lived a very sheltered life.
Bi and Johns predistion that we will end the day flat or up seem to be coming to fruitition. sarcasm off
Since I do not remember what happened during the Drexel failure, anybody know if the Leh people will get any severance? I would think with a bankruptcy the answer would be no.
fruitition? Is that the new name for former Lehman/Bear employees?
http://preview.tinyurl.com/6ruc24
I loathe Billy Joel. Today is a day for Iggy, Dead Kennedys and the Pistols.
Your Loan Denied: Main Street Fallout of Wall Street Crisis
Where is Jello Biafra at our moment of national despair?
I posted this chart before,
FED assets:
http://www.cumber.com/home/Factors.pdf
what happens when the Mark to market shows all the TAF and other IOU collateral to be worth pennies on the dollar? Does that represent a threat to the dollar?
-401 with about 36 minutes to go.
413 3b
highly unlikely
Paulson: Don’t panic.
grim (421)-
There’s your offical call to panic.
#417 - Where is Jello Biafra at our moment of national despair?
Good question! And how did we screw things up so bad that he was accurate in his predictions?
Kettle1:
Look how big Maiden Lane is! Could you imagine if FNM/FRE were in the chart? Good thing the gubmint decided to leave their numbers out. Otherwise, people might have noticed.
Grim,
Which I have never heard anyone ever say unless there is good reason to do so.
Billy Joel?
http://www.youtube.com/watch?v=dE-LDfroa1w
Now there is talk that MS is going to put itself up for sale, and GS will be looking to buy a bank.
With all that has transpired anything is possible.
What Clot said.
Wait ’til Asia opens.
Today is just the overture.
-427
Where is reinvestor, pret, and, frank? Oh and whatever happened to rich?
Those GS guys really are smart. Every IB who made public that they are shopping themselves around died. So what does GS do? They became the buyer!
John must have interacted with Goldman traders this morning.
Bah 400 points ain’t nothing, the Asian markets really know how to panic, lets see what happens tonight.
Does the house get posted next week?
What I don’t get is the $40K car with a Fram (WalMart?) oil filter.
http://newjersey.craigslist.org/cto/841344524.html
Grim,
I might have a solution for the credit crisis.
US govt should start three funds for people to invest. Fund names are 0-10 cents distressed debt fund, 10-20 cents distressed debt fund, 20-30 cents distressed debt fund. Fund minimum is 10,000$. 0-10 cents fund, buys mbs,cdo debt which is selling for less than 10 cents on the dollar. govt keeps buying as it receives cash. Ii has five year locking period. this way we can keep all the toxic debt off the market and can make hell lot of money for citizens
Ramesh? Can we put our social security holdings into these accounts?
Fed is asking JP & GS to extend $70 - $75 bil lending facility for AIG
Stu (432)-
Funny thing is, GS is dead man walking itself.
They just haven’t gotten the message yet.
AIG link via CalculatedRisk
http://calculatedrisk.blogspot.com/2008/09/federal-government-asks-banks-to-lead.html
stu,
putting social security money becomes political. i would rather have it optional but govt will ask all 401ks to have this option. United Investors of America will fix this crap.
PGC,
Check out the crap this guy sells for a living. I have a feeling that it is not his home or hummer.
JP & GS
http://tinyurl.com/6gf6nf
Ramesh…What happens if this toxic paper does not come back and goes to zero? Let the firms who bought it, die with it.
So, what are each of your local governments and school districts doing to tighten the belt with all this economic uncertainty? Have any of them proposed a 1% decrease in their budget (in real dollars)? People need to raise hell at the school board and council meetings. Until this happens, we are all s-crew-ed.
Abolish pensions for all local and state elected officials, except judges.
445 comments by 3:42pm.
And they said this blog was dead…
#445 shore: NO!! In fact they will go the other way. There was a piece in last Sunday’s Record, from the head of the NJTU, wherby she stated that now more than ever in “these uncertain economic times, it is imperative that we approve all of school budgets so that our children remain number one.”
You cannot make this stuff up.
[#413]3b
from a friend, they’re getting 6 months health care and a pat on the back
Banking is supposed to be about minimizing risks, not surfing the crest of the risk wave.
It looks like a 50′ wave broke faster and harder than the big risk takers anticipated. If they had succeeded, they would reap the rewards, so let them reap what they have sown: ; adding a prison term is okay too.
friendly advice to bi:
in your investments, or life in general - do the opposite of what your gut is telling you. if you do, you will live a very rich life.
and please, let us know when you feel it’s time to sell your house.
bi Says:
September 15th, 2008 at 10:53 am
my gut feeling is that the market will end up near flat today, expecting tomorrow’s fed decision.
Bi:
Can you please start supporting Obama? I am afraid that if you keep supporting MCain he will loose !!
450 f_gardner…nice!
Hey, better stake out a corner. Competition is going to get fierce…
http://www.spartacus.schoolnet.co.uk/USAwallst.jpg
on the 23A issue, the rule limits transactions with a single affiliate to 10% of a bank’s tier 1 and tier 2 capital and transactions with all affiliates to 20%. so even if the Fed is easing the qualitative portion of 23A (i.e., that such transactions must be as if on an arm’s length basis), banks are still greatly limited in the degree to which they can use their balance sheets to prop up struggling divisions
Thank you skep. Where did you find these fine details?
DJIA is sub 11,000.
#454
http://www.amazon.com/Federal-Banking-Law-Regulations-Handbook/dp/1590314735/ref=sr_1_1?ie=UTF8&s=books&qid=1221508433&sr=8-1
#445, Shore,
Why not judges too?
PPT tried and failed
$48 for that book. I guess I’ll just have to trust you Skep.
Stu– as I am a homeless person who merely has a heavily used library card, that would be taking a huge risk
I agree, f*ck Billy Joel, gimme some f*cking Motorhead!
Ameritrade is down again!
493 almost hit the 500 mark.
The Ace of Spades!
-500
Dow Down by more than 500
#429 #434 Asian Markets - Yup. I’ll bring the popcorn.
rough day all round….
BNP Paribas
-7,14%
CREDIT AGRICOLE S
-7,36%
Societe Generale
-9,60%
Hypo Real Estate
-4,41%
Allianz
-6,11%
Deutsche Bank
-6,37%
Dt. Postbank
-7,32%
Commerzbank
-9,03%
[453,454] skep and stu,
I would have answered more cogently but I usually bill for that.
Few more posts and we’ll be 1:1 with the Dow! w00t!
my gut feeling is that the market will end up near flat today, expecting tomorrow’s fed decision.
Gold, Jerry, gold.
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_weil&sid=atzOPo2aWj2I
Lehman Fails, Cops Get Caught Eating Doughnuts: Jonathan Weil
Commentary by Jonathan Weil
Sept. 15 (Bloomberg) — Now can we get some subpoenas flying?
What happened this weekend at Lehman Brothers Holdings Inc. is nothing short of remarkable, and I’m not just talking about its death. Sunday night, one by one, stunned Lehman employees were filmed by TV news crews leaving Lehman’s offices carrying away boxes and duffel bags full of heaven knows what.
Is there anybody left in the government with a pulse? Where’s the yellow police tape? How about a cease-and-desist order to prevent document destruction? Are we supposed to believe that everything carted out of Lehman this weekend was a personal effect?
Can anyone give me a good reason why Lehman offices shouldn’t be treated as a crime scene now? Or why there has been no sign of any investigation by the Securities and Exchange Commission into any aspect of Lehman’s accounting or disclosure practices? Where is the Justice Department? Where is New York Attorney General Andrew Cuomo? How about the Financial Industry Regulatory Authority?
Not only is Lehman dead. Fannie Mae and Freddie Mac, which cooked their books in broad daylight, are taxpayer-owned zombies. American International Group Inc. and Washington Mutual Inc., whose accounting practices also stink, are on the brink. And while it’s true that AIG is the subject of SEC and Justice Department probes, there’s no sign that anyone in the government is looking into whether executives at these other places violated the law.
Never has it been more evident that the SEC and other government agencies think their job is to protect financial companies and financial executives, rather than the investors they rip off.
# grim Says:
September 15th, 2008 at 3:42 pm
445 comments by 3:42pm.
And they said this blog was dead…
And I think this is the first time I read every post!
When the news media talks about housing prices “experiencing the largest price decline since the great depression.” Why doesn’t anyone talk about the enormous and unusual increase in housing prices proceeding this?
Yield on the ten year down to 3.42%. That will help jump start the housing recovery.
#475 forgot to add. (sarcasm off)
#471 Schabadoo,
Today’s like Festivus for the rest of us.
Rich52,
Now is a great time to buy as interest rates are near historic lows and there’s plenty of inventory to choose from. Besides, they’re not making anymore land and we’re insulated here because of our proximity to NYC. Many realtors have told me this so it must be true.
No offense meant towards to anyone on the board…. but i thought this was an astute observation by a blogger at another site. The 1st statement is from a finance guy on the blog. second is from random blogger who isnt a finance guy.
for me, the second paragraph sums up why the so called experts are so shocked and a a random mix of bloggers have gotten it right.
———————
And lastly, I will confess that my main interest in your blog, and others like it, is that somehow you all have managed to get a significant amount of all of this right, with a correct call from the beginning, yet it seems to me that you all lack real training in and knowledge of finance. So somehow you all intuited this, which is either very impressive (and I would like to better understand), or it is just plain casino luck in and of itself.
The credit engines had been growing not just at an exponential rate, but at an ever increasing exponential rate for long enough to make it seem normal. People got used to it. But since all credit is a claim again the future, when the future fails to grow at an ever increasing exponential rate, well then there is a problem. But the bankers don’t see it this way, their worldview developed in a different era. To the bankers there is a short term liquidity squeeze due to the housing bubble, which will sort itself out if the fed lowers rates. The ever increasing exponential rate isn’t just built into the system, it’s built into the minds of the people that the system is made of.
#475 Rich52: Coupled with rapidly decling house prices it will. Until the sellers capitualte, low rates mean nothing as you know.
Patti,
Why not the judges? I want judges to go onto the bench and to stay there, honing their craft, thinking deep thoughts in tyhe absence of considering, “Humm, what am I going to do for a living next year.” In the legislative process, there are many ways to prevent self-serving twits from beiong, well, self-serving twits. The judicial branch has such discretion and operates in public but out of peoples’ day-to-day discretion that a self-serving judge can do more harm.
#472
“Messes like the one we’re in don’t happen without a large number of highly paid people doing something very wrong.”
This is the last sentence of that article and I think it is an overstatement. Millions upon millions of people had a poor understanding of risk through the course of this bubble. this is not the same think as malfeasance. While I do think there were criminal elements at every level in the real estate market, I also think they were greatly outnumbered by the people who simply made bad business decisions. by all means we should prosecute people who really committed crimes, but I do not think we should jump to conclusions simply because there was a bad outcome at this firm
Look like John’s trading buddies got it wrong too, on the market closing flat today.
478,
Gary,
They told that to youbecause it is true. Here in the land of Oz, we are immune to the laws of economics, and physics for that matter.
Renter #474. I couldn’t agree more with your sentiment. When I hear the media, friends & family speak of the current housing “crisis”, I can’t help but think the real “crisis” was 2000-2006 with out of control prices.
RE: 462
Stu,
Every time you mentioned it I logged onto my Ameritrade account to check. All was, and is well… perhaps its some sort of internal server placement thing. No clue.
3b [483],
They were Goldman traders. No?
#481 Shore Guy
I think Patti was just wondering if the wife was a judge?
#487 BC Bob: probbably.
3b
Just need to redefine “flat,” that’s all.
Just like they redefined good credit risks, with respect to mortgages, to include any one capable off both fogging a mirror and lying about their income.
Theo,
No self serving here. No.
Realtors Lament:
I would not be such a nuthin; my head all full of stuffin’; if I only had a brain.
As putrid as the song is, perhaps Paulson should take a cue from Billy Don’t be a hero:
“Henry, don’t be a hero, don’t be a fool with our bucks”
Did NNJ just shift further away from WS? A seismic event?
not only does GWB have the Iraq war and associated garbage attached to his presidential history, he now has a economic meltdown! I dont think he has to worry, his place in history is all but assured at this point.
492, and “if I could only hang onto this lease”
“And what do they have that you don’t have?”
Hey I guess that is why trading people are having a bad year. One thing that is safe to say that the building in Times Square that the most people got screwed in is the Lehman Brothers HQ.
Sometimes I wonder how exactly Stu gets any work done during the day : )
Shore [493],
Badlands[Boss] may be more appropriate;
Poor men wanna be rich, rich men wanna be kings, and a king aint satisfied till he rules everything.
#494 BC Bob: What will the realtors use to replace it? Perhaps beintg close to Broadway, or the MET.
For me it would be, being close toe the Post house.
“Crush on You” Bush to Putin
“Crazy Train” The economy in general
“War Pigs” Self evident
Gator,
Those quarter booths apparently have wifi.
Kudos to AG, he finally go it right;
“once in a century event”
Instead of upselling by telling your clients that it within 1/2 mile to train for easy commute, you should mention that it is 1/2 mile close to a soup kitchen.
Ket,
The truely tragic thing — for the country anyway — is that I do not believe that GWB has a clue as to how awful he has been. When he walks out of office I have full faith that he will view NCLB and the “Global War on Tarra” as guaranteeing him a spot amongst the top presidents.
Giving the dolt his due, he did a good job invading Afghanistan after 9-11. That said, even a ham and cheese sandwich would have known to do that.
I trust the GWB will walk out of the wrekage he has created oblivious to the longetrm damage he has done to ther country and without any knowledge or understanding of how close he has come to destroying our future as a great power.
NEW YORK (Reuters) - Standard & Poor’s on Monday cut its ratings on Washington Mutual Inc (WM) into junk territory, citing exposures the bank has to bad mortgage debt and volatile markets.
“The company’s weak equity pricing in the markets is also a concern, and it increasingly appears that market conditions could overtake credit fundamentals and leave the company with greatly diminished financial flexibility,” S&P said in a statement.
The bank’s liquidity, however, is adequate to meet its fixed obligations through until the end of 2010, S&P said. “During the past year, WaMu has conservatively and prudently managed its holding company liquidity position,” the rating agency added.
S&P cut WaMu’s counterparty credit raring to “BB-minus” three steps below investment grade, from “BBB-minus,” the lowest investment grade. The outlook is negative, indicating an additional downgrade may be likely in the next two years.
“Should earnings, capital levels, or liquidity weaken precipitously, we could lower the ratings further,” S&P said.
hey– I know it is cool to bash Mr. B, but this guy has had the misfortune to deal with (1) the largest foreign attack ever on American soil; (2) the worst natural disaster ever in the history of the U.S. and now (3) the biggest financial bubble in world history. All of these events were beyong his control and I do not think it is obvious that anybody else would’ve handled them significantly better. everyone is now invited to call me an idiot and a fascist
here is a good quote:
“Lehman was only incompetent enough to blow up and destroy themselves, where as Bear’s degree of incompetence was enough to threaten the entire financial system,” Ritholtz said.
we added 70B today to calm the markets. Does anyone know how much has fed injected since last year to provide liquidity.
M1 and M2 must be through the roof. M3 is next.
Idiot fascist!
SEC Statement Regarding Recent Market Events and Lehman Brothers (Updated)
The decision by Lehman Brothers Holdings Inc. to file for protection under Chapter 11 of the bankruptcy laws is expected to lead to the winding down of Lehman Brothers Inc., its U.S. regulated broker-dealer, outside of bankruptcy. The accounts of Lehman’s U.S. retail securities customers are with the broker-dealer. In cases such as this, Lehman Brothers’ customers will benefit from their extensive protections under SEC rules, including segregation of customer securities and cash as well as insurance by the Securities Investor Protection Corporation. These safeguards are designed to ensure that a broker-dealer’s customers will be protected.
In the weeks ahead, SEC staff who have been on-site at the U.S. broker-dealer will remain in place to oversee the orderly transfer of customer assets to one or more SIPC-insured brokerage firms. The holding company bankruptcy filing does not affect in any way the SIPC protection applicable to the firm’s customers.
The SEC is also coordinating with overseas regulators to protect Lehman’s customers and to maintain orderly markets.
“For several days, we have worked closely with regulators around the world including the FSA in the United Kingdom, the BaFin in Germany, and the FSA in Japan, as well as our counterparts in other markets around the world, to coordinate our actions in the interest of orderly markets,” said SEC Chairman Christopher Cox. “In doing so we have also worked closely with the Treasury and the Federal Reserve and market participants. We are committed to using our regulatory and supervisory authorities to reduce the potential for dislocations from Lehman’s unwinding, and to maintain the smooth functioning of the financial markets.”
In furtherance of these objectives, the SEC is focused on ensuring that customers of the U.S. broker-dealer, which is not part of the bankruptcy filing, remain protected through, among other means, enforcing continued compliance with the SEC net capital and customer asset protection rules, and with SEC requirements that the U.S. broker-dealer conduct its affairs so as to minimize the effect of the holding company’s bankruptcy on customers, and that it ensure access to customer cash and securities.
In the meantime, Lehman Brothers Holdings Inc. will continue to operate while the bankruptcy process facilitates the reconciliation of claims and the realization of value from its assets in an orderly fashion.
Customers of Lehman Brothers Inc. may contact the SEC’s Office of Investor Education and Advocacy for individual assistance at help@sec.gov. (Press Rel. 2008-198)
507….If this were a sailing ship in the early 18th century….they would have thrown him overboard.
chifi,
that’s why the fed backstopped jpm on the bs bail out, while lehman was not thrown a lifeline.
3B (431),
Where is reinvestor, pret, and, frank? Oh and whatever happened to rich?
Did I miss something today?
499………yeah baby….BRUCE was amazing on Monday in the Meadowlands. Best I have EVER seen him
kettle1 Says:
September 15th, 2008 at 4:26 pm
for me, the second paragraph sums up why the so called experts are so shocked and a a random mix of bloggers have gotten it right.
———————
And lastly, I will confess that my main interest in your blog, and others like it, is that somehow you all have managed to get a significant amount of all of this right, with a correct call from the beginning, yet it seems to me that you all lack real training in and knowledge of finance. So somehow you all intuited this, which is either very impressive (and I would like to better understand), or it is just plain casino luck in and of itself.
Vodka: You consistent irritate me. Two comments: (1) a broken clock is right twice a day; (2) this type of thinking will allow SP to become VP.
consistent = consistently
Shore Guy Says:
September 15th, 2008 at 4:54 pm
Ket, The truely tragic thing — for the country anyway — is that I do not believe that GWB has a clue as to how awful he has been. When he walks out of office I have full faith that he will view NCLB and the “Global War on Tarra” as guaranteeing him a spot amongst the top presidents. Giving the dolt his due, he did a good job invading Afghanistan after 9-11. That said, even a ham and cheese sandwich would have known to do that.
Shore: It is our fault for allowing him to be there. We even had the chance to kick him out in 2004 and failed.
3B, (431),
Ohhh, you mean Richard!
Now had you said dick I would have known how you were talking about.
“Now had you said dick I would have known how you were talking about.”
Rich,
Oh yeah, unlimited and perpetual liquidity. Gottta love that one.
Chi (516)-
This is more than a case of the broken clock being right twice daily. The best of the blogosphere demonstrates that:
- common sense is an uncommon thing
- unedited, real-time dissemination of info generates a lot of crap…but there are gems hidden within the dung piles
Back now to the decline of Western civilization.
BTW…we deserve SP as VP.
507
1) Yep, failing to prevent that was bad. All those Saudis attacked us, and he’s still chums with them. But, we did invade Iraq!
2) His response was less than ideal.
If only it had happened in Iraq, they’d have probably airlifted emergency supplies in hours. Oh well.
3) Ownership society.
on the bubble, greenspan likes to make a lot of excuses for himself, but one which has a lot of truth to it is that this bubble was global in scope. it was not isolated to the U.S. and GWB’s “ownership society”. I am simply saying that it is reasonably to blame this man for things within his control, but it is not fair to blame him for every negative world event.
Rich [519],
I have to admit, I do miss the chap.
“Richard Says:
April 30th, 2007 at 10:05 am
wouldn’t mind seeing a couple of rate cuts so i could refinance and save some $$$. house buying fence sitters won’t be happy as they see less interest on their nest egg.”
Guys
Whats your prediction on housing markets in NJ train towns. During next 6 months, can we hope to see lot of foreclosures/short sales or 30% off or 50% off or buy 1 get 1 free ??
Thanks.
Is 500+ a one day record? If I recall, only when Dona/d Dnck was here did we get this high, and most of his posts were bogus crap….
Greetings;
What a day on Wall St… Wow… Below is more fair warning of an issue which receives little press, as risk remains in financials. Approximate solvency figures of level 3 assets > equity capital are note below; currently, those firms with the worst exposure are now Morgan Stanley and Goldman Sachs (only two broker dealers left on Wall St).
The vultures (shorts) will be circling these entities too; its just too bad that Wall St decided to leverage their bets > approx. 30:1. With all these mark to “Alice in wonderland” securities on their balance sheets, the remaining players are without support of regulators, and thus, these entities must bail themselves out (http://www.bloomberg.com/apps/news?pid=20601087&sid=aQD6.DKvN3yQ&refer=home). I believe the US Treasury Secretary made this point loud-and-clear, as you probably found out after work today, our Government didn’t ride in on the white horse and save Lehman this weekend! Hip-Hip-Hurray! Maybe our financial system can be saved.
Level 3 assets to equity ratio summary: (Definition / Accounting treatment of Level 3 assets: http://www.themoneyblogs.com/urbandigs/my.blog/level-3-assets-credits-next-concern.html
1) Bear Stearns (BSC): 313.97% (Gone! Bailed out by US tax payer, then purchased by JP Morgan Chase)
2) Morgan Stanley (MS): 234.88% (Tonight Collateralized Debt Obligation Insurance on MS bonds are soaring tonight (e.g. means the Street sees a much greater risk of MS bond default)
3) Merrill Lynch (MER): 225.4% (Gone! Purchased by Bank of America)
4) Goldman Sachs (GS): 191.56%
5) Lehman (LEH): 171.18% (Gone! bankrupt)
6) Fannie Mae (FNM): 161.48% (Gone! Bailed out by US Tax Payer)
7) Northwest Air (NWA): 142.02%
8) Citigroup (C): 125.06%
9) Prudential (PRU): 119.36%
10) Hartford (HIG): 108.52%
11) AIG: ? Largest Insurer in the US–I couldn’t find the figures, big in credit default swap business; AIG has increased exposure over the last year via unrealized accounting losses.
12) Washington Mutual (big in subprime mortgages)
http://www.myprops.org/content/Ten-companies-now-have-more-Level-3-assets-than-capital.-Some-of-these-companies-WILL-go-bankrupt/
Now Morgan Stanley and Goldman Sachs are highly suspect. I doubt this revelation will be televised, though…FOX news will not tell you these things… I don’t even think Cramer has discussed this topic as well. The piper has to be paid, if not, our country will be a laughing stock of the world!
#526
at least 2 of the biggest employers in the area are gone for good and another one will probably be drastically downsized. this is going to have a major effect on the RE in the area not just from the people who are losing their jobs now, but from all of the new people who will never move to the area to work at these companies and related businesses in the future. I think this puts a fundamental dent in the value of local real estate, but it is hard to say how much
King Lewis, kinda has a nice ring to it.
Tom/526-
My thoughts are laid out in #397. Not six months, more like 12-18 months.
Grim, et al-
Musical references how about Talking Heads “Once in a Lifetime” and “Road to Nowhere”
Link to Once in a Lifetime:
http://www.youtube.com/watch?v=EYbUCvz1LYE
I did my part to keep GWB out of office then throw him out, but was outvoted (at least in ‘04).
His inattention to terrorism pre 9-11, despite strong warnings (remember he was proposing a cut in counterterrorism funding as late as 9-10 !!!!!) is all on him. He did not make it a priority, so the departments under his control did not either.
He ignored urgings to strengthen the protection arould NOLA, and did not. Then FEMA, again under him, failed utterly. Now FEMA seems to be doing no better in south Texas.
The man may be a nice guy, but he is worse than Carter, woese than, Hoover, worse than Coolidge. When one is looking at Rutherford Hays, Millard Filmore, and Andrew Johnson to see if he is the worst ever, one is plumbing the depths.
How many days and counting, Stu?
Road to Nowhere link
http://www.youtube.com/watch?v=sQXsuAey-NE
Or, Talking Heads Burning Down the House…
http://www.youtube.com/watch?v=zm3pm-zGQoI
“I know it is cool to bash Mr. B, but this guy has had the misfortune to deal with
(1) the largest foreign attack ever on American soil;
- “Bin Laden determined to attack the US” - The report was staring in his face - did not act on it. As has been evident in many of the memoirs which have come out since then, was plotting to invade Iraq from Day 1. We went to war without raising taxes, funded the war off the balance sheets.
(2) the worst natural disaster ever in the history of the U.S.
- Response proved the efficiency of the governance of George Bush. Has appointed cronies all over the place for whom incompetence is an understatement.
and now (3) the biggest financial bubble in world history”
- Asked America to go and spend in the event of 9/11. De-Regulation and tax cuts are the answer to everything.
Hawk,
Desolation Blvd — all over due to REO.
Destination Umknown
Jailhouse Rock — for thosw who brought this upon us.
Planet Claire — for POTUS
…Gartman just said he was frightened
#514 Rich: Sorry about that. I should have sid Richard from Brigadoon,not you. So sorry.
#516chgo: All it took was simple common sense, imagining what supposedly could not happen as happening, and a healthy respect for history.
Something perhaps all those Harvard MBA’s could learn from.
3b: You comment is more provocative than informing….
Let’s get the right mood music - OK?
Start of the Breakdown
Tears for Fears
Scratch the ice
Let the telephone ring
Sense of time is a powerful thing
And we love to laugh
Love to cry
Half alive
We love to
Go slow when we’re dancing for rain
Dry skin flakes where there’s ice in the vien
And we love to cry
Half alive
Is this the start of the breakdown ?
Scratch the earth
Dig the burial ground
Sense of time won’t be easily found
And ten out of ten
For the ones who defend
Pretend too
Breakdown is a final demand
We stand firm with our heads in our hands
As we love to to cry
Half alive
Is this the start of the breakdown ?
I can’t understand you
Is this the start of the breakdown ?
#%30 bklyn: I think it will be more like the 6 to 12 months.
#539 chgo:Be that as it may in your opinion, it does not change the fact that it is true.
No more provacative than a broken clock is right twice a day. Which to me is a cop out or catch all.
Do not wish to argue with you, but at the risk of being provacative, it really was just plain common sense.
ChiFI,
Dont take it personally. it is not my intent to annoy you. Might i also suggest you take me a little less seriously. No one should be taking anything i say seriously even if you may have met me once or twice. My postings here are 1/3 nonsense, 1/3 learning experience, 1/3 personality disorder. dont take my disagreements with you as a personal attack
and how does my thinking get VPILF in office?
I’ll start counting the hours once I feel more confident about O’s chances to win. What I found interesting today is how there was 0 political talk when our minds are busy processing the market drop. I also noticed that Bi did not mention anything about SRS today :P
Roubini: BofA’s Lewis ‘Totally Overpaid’ in ‘Reckless’ Deal for Merrill
Bob (520 / 525),
You’re right; he was an arrogant piece of fresh air from time to time that broke up the monotony.
On today’s news: I can’t help but snort at these talking heads who say “this is something that you couldn’t predict. No one can see an asset bubble until it’s popped.”
I guess this board (and Shiller once again) will look like all knowing oracles.
Who’s up for an Bergen County Octoberfest GTG?
3b: Havard MBA’s have always been long on the smarts and hubris. Some people call it entrepreurial and maverick. However, these failures are more the hubris than stupidity or ignorance of history. Also, they tend to be quantitatively challenged, so you have other guys running the desks and shops, while the Harvard people sit as the Master of the Universe in the corner office somewhat oblivious until their world comes crashing down. It is convenient to take potshots at them, but it reeks of pettiness and superfluous degradation. In fact, these are impressive and substantial people that made some poor choices. Believe me when I say that a public humiliation is of primary importance to someone with a huge ego.
god damn today was a great day!
SAS
WaMu gone…
SAS
and so does the US dollar…
SAS
NYT:
One if by Land, Billions if by Sea
By DAVID S. ABRAHAM (oversaw offshore oil and gas revenue at the White House Office of Management and Budget from 2003 to 2005)
Published: September 14, 2008
http://www.nytimes.com/2008/09/15/opinion/15abraham.html?_r=2&ref=opinion&oref=slogin&oref=login
“Despite its cost, the plan would do little to increase the supply or reduce the price of oil. Oil companies already have access to nearly 80 percent of all American offshore oil that is technically recoverable. This bill would probably open up less than half of the remaining 20 percent, amounting to approximately two-thirds of one percent of all globally recoverable resources. The Department of Energy has already stated that the effect on prices would be “insignificant.””
#547 I worked with many of the Harvard MBA’s at Goldman, many were brilliant, many were clueless.
Many of the brilliant ones would have been brilliant wherever they graduated from. And some of these guys did sit on the trading desk. I remember one whose trading strategy blew up in 1998, and one small desk lost 30 million on one trade. Alot of money back then for one small desk.
The problem is that some of these folks really did think they were special, and that the rules did not apply to them. And yes more than a few lacked common sense. Sorry I saw a lot of that over the years, with quite a few of the Ivy League types.
I will never forget the young woman I had in the training class I ran, MIT undergraduate, Harvard MBA, who could not understand the inverse relationship between price and yield.
No eney or anything on may part just telling you my experience over the many years I worked with many of them.
At the end of the day I stand by my original statment. We can agree to disagree.
Wow 552 comments. I’ll never get through all this.
CNBC reporting Moodys (and Fitch?) downgrading AIG tomorrow.
Earlier WSJ reported (if not posted here already)Fed is asking GS and JPM to provide $75billion loan to AIG.
Batten down the hatches, this one is going to be one hell of a storm.
Lemom brothers.. lol
total fkn losers.
next up WaMu.
say goodbye to WaMu….say goodbye my baby.
SAS
Whitney On Wall Street’s Future
http://www.cnbc.com/id/15840232?video=856915680
I worked with a Harvard MBA…..she was the something or other on a pitch team….and I was leading it….she actually nodded off during one meeting and the client said they would work with us ‘if’ she was not servicing them. Hilarious.
Rich (546)-
Celebrator Dopplebocks for all!
157 Gary
Don’t worry. I’m taking over hell when I get there. You can come sit by me. :)
Steve (554)-
Why the hell would GS and JPM say yes to a guaranteed loss?
GS probably doesn’t actually have the jack, and Dimon is probably still fuming at having to pony up $10 for Bear.
Any shop that’s going under now will have all the others standing around, watching them sink.
problem with the Ivy League is that the ones that get into the undergrad are very bright and ambitious HS students, then they get in and in comes the grade inflation (can’t have mom and dad’s 80K per year going to Cs and Ds) and by the end of 4 years, who knows what you are really getting.
http://georgewashington2.blogspot.com/
Does anyone else on this board feel vindicated? especially those who sold their houses and rented before the peak?
bairen,
we still got a long way to go bloke!
SAS
563.
I did not sell my house but I don’t the proceeds to buy, it is a multi so I plan on keeping it and renting out my apt.
It is too soon to feel vindicated, that probably won’t happen until I finally get that single fam in that town but I am getting hopeful.
Plumber, investment banker, broadcaster…you name the business.
Common sense is an uncommon thing. In fact, our entire educational system is structured to deliberately wring the common sense out of any youngster who demonstrates it.
Oh, for a few people in DC and on Wall St who can distinguish the difference between simple and easy.
Favorite quote of the day: “We need catharsis. This has been like having food poisoning and not being able to throw up.”
bairen (563)-
Don’t forget that old saw about betting on Armageddon.
#563 sas: I think we are rapidly getting there.
#561 barbara: the problem, is when these people are put up on a pedestal, and told they are special. They are no more special than anybody else.
I will admit that after several months of my friends and associates calling me an a**hole for getting short, it’s nice to hear the apologies today…even if they are half-grumbled, sotto voce.
Nice is about as far as the feeling goes. Exhilaration? No way.
I had to talk with my daughter this afternoon about not divulging any of her short positions to friends. God forbid one of their parents works for one of the companies we’re shooting at.
I agree completely Clot.
What I find a bit terrifying is the Fed actually felt the need to ask - for something which was seemingly such a non-starter. It simply reeks of desperation.
These guys are all going to be hoarding cash praying to be the last man standing.
Perversely, I wake up each day now hoping for our (shared) investment to be dropping in value. However, my gut says this goes up, and job security goes down down down.
clotpoll,
Haven’t forgotten that one :)
does anyone know if the Lehman employees can still get a severance package, or are they now creditors and waiting to get a few pennies on the dollar?
I know a lot of ops and mid office folks at my former IB who didn’t save since they figured their severance package would cover them.
#567 clot: True. If this continues and worsens, lower housing prices may be the leat of the problems we might face.
#572An earlier poster saod that according to his friend at Lehman they will receive 6 months health insurance. Thats it.
“#563 sas: I think we are rapidly getting there”
agreed, the velocity has sure picked up.
but hey, just watch the ball game, eat a slice of that great NJ pizza, while the wife talks to other wives about the sale at Target (because thats all that matters).
he he :)
SAS
#574 3b
Ouch. I missed reading that earlier post.
Chifi,
Tears for Fears?
Uggh. Try, Working for the Clampdown (Clash)
Or Rudy Can’t Fail (Clash) (Or, if the rude boy worked om Wall StreetM Rudy THOUGHT he can’t fail)
today I heard a women saying they were delaying entering their kid in kindergarten 1 year because this town is so competitive?
WTF? I can’t wait for mk kid to reach kindergrten. My daycare costs will drop over $500 a month when he switches from daycare to after school care.
Of course if my wife and I both wind up out of work our daycare costs will drop to zero.
I don’t know why all you blokes are sappy eyed over Lemon brothers.
they were total loser, another one bites the dust.
but, there are still upsides.
world ain’t going to end tomorrow.
however, this is a good reality check to ones owns finances, and to have a plan B.
your buddy..a happier than a rooster in a hen house..SAS :)
Shore Guy,
All Lost In The Supermarket
Clot (570)
Got some of the same calls today.
I felt like complete sh*t. There’s just no way to be happy about what’s happening right now, watching legendary institutions disintegrate and thousands lose their jobs.
SAS (579),
When they’re your friends, colleagues and their families, it gets real personal, real fast.
Especially when many don’t have a chance in hell of getting another job for quite awhile.
“watching legendary institutions disintegrate and thousands lose their jobs”
hey bro, where were the kleenex tissues when Lemon brothers and MER totally screwed people over on a daily basis and did alot of illegal money laundering?
SAS
Reading all this has literally sucked the life out of my laptop’s battery. Thank you!
The bigwigs did this to themselves. I feel sorry for the worker bees, but the MDs and higher should have known better. Let’s see. We’ll leverage ourselves 30+ to 1 to buy subprime MBS, negative arms, liar loans, etc. How can anything go wrong? Safe as houses, right?
Johnny Cash’s Ring of Fire has been stuck in my head all day.
Barbara,
Good one.
Then there is Robert Johnson’s Crossroad Blues. We are certainly at a crossroads.
Clott
“Common sense is an uncommon thing. In fact, our entire educational system is structured to deliberately wring the common sense out of any youngster who demonstrates it.”
it gets worse. I’m in Chemistry getting my doctorate. I find that most schools (that includes Ivy League) are content to graduate kids with PhD’s in sciences like Chemistry, Physics, Molecular Biology, Engineering for doing nothing and completely lacking common sense. Even the Med Schools are doing it. Furthermore, the incoming college students are the first prototypes of the “no child left behind generation”. It gets worse and worse every year. I would know, I grade hundreds of exams each semester. It’s a big mess. All our young teachers are ignorant and unqualified, yet they all have Masters degrees in teaching. The school system is content with a crappy teacher as long as they have that Masters. Hell, the superintendent at Freehold didn’t even bother earning his degree. He just mailed away for one.
S&P just downgraded AIG!
Anybody know this one?
http://www.youtube.com/watch?v=u1HT27qPsSE
where is Bobby Fisher when you need him?
wait a minutes, its Mon. ha ha ha!
“My sense is that Lehman feels a need to take action now to stop, for once and, hopefully, for all, the constant stories and rumors swirling around the company,” says Dick Bove, who rates Lehman shares neutral,
SAS
#586 lostinny
I’ve had “It’s the end of the World as we know it” and “We Will Rock You”
electricsheep:
They are toast, extra burnt. They are gone by Friday for sure. Unbelievable….
The bigwigs did this to themselves. I feel sorry for the worker bees, but the MDs and higher should have known better.
________
Point taken. But how many MDs are in Lehman’s 25,000? Citi’s 400,000? AIG?
And how many are people earning far, far less?
But it’s actually all besides the point.
All due respect, but if anyone thinks average middle-class American, or themselves can just skate through the effects of a (possible) multi-year systemic meltdown - which many have no idea is coming - I’d beg to differ.
Good people who had nothing to do with any of this will be wiped out, pure and simple.
And it will be as indiscriminate as a few of the comments above.
Asia off to the races..
http://www.marketwatch.com/quotes/?sid=123712
#594 Steve,
What’s real bad for the ops and middle office people is they were probably making at least 80k, if not 100 to 150k a year. There are very few jobs like that available on the street, and their job skills will not translate into similar paying jobs out of Wall St (I know this from first hand experience as I’m an ex ops and middle office guy)
Chi [547],
They may be brilliant, may/may not be quantitatively challenged. That’s not important. They leveraged at gargantuan levels, greed, and lost. Somewhere in the process, they lost sight of simple/basic risk management rules;
1) Cut your losses before they carry you out. Live to fight another day.
2) Don’t double down on a losing trade.
Mr Market does not give a hoot whether you are a drop out, a PHD or a master of the universe. At the end of the day, everybody’s statement contains the same info; credits/debits.
well Steve,
we will have to just agree to disagree.
but I must admit, I am a little bias, I just don’t see any doom and gloom in anything since the days of Operation Hastings.
Cheerio
SAS
According to CNBC S&P just downgraded AIG.
DJI futures off by 120 in the after hours market. Here we go again. Black Montuesday?
Hype (593)-
Friday? AIG is done tomorrow. Their cash shortages are being compounded by the collateral calls being triggered by the downgrade.
Sorry chifi,\
but i am going to be childish tonight….
tell me again how strong AIG is?
SAS,
Understood. And Agreed :)
I’m the most ardent critic of Wall St and every unethical slimy thing that has been done to people over the years.
Just making the point there are plenty of people that work at these places, and those with the real power to make such decisions are a subset.
Having said that, I wish I’d kept up with Med school. :)
Gotta jet. Got GG on the TIVO.
AIG Rating Cut to A- by S&P; Remains on Watch Negative
By Steve McPherson
Sept. 16 (Bloomberg) — American International Group Inc.’s long-term counterparty rating was cut to A- from AA- by Standard & Poor’s.
The U.S. rating company in a report cited a “combination of reduced flexibility in meeting additional collateral needs and concerns over increasing residential mortgage-related losses.”
S&P also lowered AIG’s short-term counterparty credit rating to A-2 from A-1+, and cut its counterparty credit and financial strength ratings on most of AIG’s insurance operating subsidiaries to A+ from AA+. The ratings remain on watch for a possible further downgrade, S&P said.
h++p://www.bloomberg.com/apps/news?pid=20601087&sid=aHdlGMn29NOs&refer=home
What a situation. Why don’t we all go pour ourselves a drink, pet the dog and count our blessings.
WHAT THE HELL IS THE FED DOING?!!??
AIG needs help. Lehman needed help. Bernake, get off your azz and do something. The damn sharks are circling. They can lend some damn money to AIG. They could have facilitated someone purchasing Lehman. Bernake is the absolute worst.
Just got this in my email from the foreclosure store.
Hi Michael,
When you woke up this morning, you must have heard the headline news about real estate investment firm Lehman Brothers planning on filing for bankruptcy and Merrill Lynch being bought by Bank of America.
Was your initial reaction to the breaking news, “What does this mean for my family and I?” Well, the instability in Wall Street has created the prefect market for you to buy a beautiful foreclosed bank home in your area!
With a free account, you can find the house of your dreams, or your next great investment.
Look at some of the bank homes based on your search results in your area:
I guess that says it all as far as re is concerned.
#610 renoinvestment: Putting the free back in free markets.
#610 re101
Bernake is the absolute worst.
Bingo. Of course our reasons for thinking this may be a bit different.
Although I think Greenie was worser since he incubated this mess and did nothing to reign in the IBs and lenders
reinvestor101 what the hell is he doing??!?!?!??! I NEED HELP TOO. Cry me a river. If they need help, they can give those bonus checks back they took in the past 4 years. Oh wait, they probably invested them in real estate.
sadly, this bad situation will probably not be confined to wall street, this is going to spill over into the broader economy. So before you get too giddy, remember what my daddy said:
you know what trickles downhill,
poop
it is coming our way.
#581
This is a very common practice, especially in affluent suburbs in the midwest where the mother doesn’t work outside the homes. Almost all of my friends waited until their children were six to enter kindergarten. They want their kids to be the “biggest and the strongest kid in the class.” It is similar to the SUV phenomenon. You don’t want to be in a compact car when it collides with a Hummer so you buy a bigger car than you prefer. Once the majority of people wait to put their kid in kindergarten then you feel forced to wait also or your child will be trampled on.
Shut your trap. Your personal problems are no threat to the main street. AIG and Lehman are a threat to main street. Bernake is a real dirtbag. He needs to save them and save them NOW. AIG is too big to fail dammit.
ben Says:
September 15th, 2008 at 9:44 pm
reinvestor101 what the hell is he doing??!?!?!??! I NEED HELP TOO. Cry me a river. If they need help, they can give those bonus checks back they took in the past 4 years. Oh wait, they probably invested them in real estate.
[616],
The poop has already landed, 2003-mid 2007. The problem was too many pigs wanted to dive, head first, in it. If one is not presently prepared to be shoveling the poop, for many years, unfortunately, it’s too late for them.
50.5,
Main Street is a bigger threat to Main Street.
…buying shovels…..
9/15, the day the IBs died.
kettle1 Says:
September 15th, 2008 at 8:54 pm
Sorry chifi,\
but i am going to be childish tonight….
tell me again how strong AIG is?
Nick: you are an amazingly stupid a55….this situation is not funny….look, I don’t personally care, because I have no financial interest, nor do any my personal clients, but a lot of people….bigwigs, sixpacks, Joe Harvard and Joe Blow are going to be affected severely if this one tanks….this one is a Dow component and touches everyone and everything everywhere.
Yo 50.5,
By Main Street do you mean the people who bought houses and cars they couldn’t afford with borrowed money that should never have existed? The folks that have 1,000 dvds, flat screen tvs, designer clothes, yet never contribute to their IRAs and 401ks and have less then 1 paycheck of savings? The ones who hit the housing ATM like it was free money? that Main St?
#625 That’s the one!!!!
3b: I have to call a spade a spade….you are jealous….I had to deal with people like you in my career, and you stabbed me in the back and tripped me up because you thought I deserved it. Meanwhile, I was naive enough to trust people such as you. You are more politician than person…..
chicagofinance:
AIG can suck it.
How many employees does AIG have in NY and NJ? I know NYC is its hq for the US and they have a big facility in Berkeley Heights.
If AIG fails what happens to all the insurance policies and annuities the general public purchased from AIG and its subs? Could just parts of AIG be allowed to fail and others like its life insurance, liability, and annuity divisions survive? Anyone have some info on this?
MJ Says:
September 15th, 2008 at 10:07 pm
chicagofinance:
AIG can suck it.
MJ: bad idea….has worse consequences that you could imagine….
bairen Says:
September 15th, 2008 at 10:08 pm
If AIG fails what happens to all the insurance policies and annuities the general public purchased from AIG and its subs? Could just parts of AIG be allowed to fail and others like its life insurance, liability, and annuity divisions survive? Anyone have some info on this?
bairen-it-all: Good and reasonable questions. Several parties seem disturbingly asleep at the switch here. There is a indirect wholesale business relationship that my business shares with AIG, and we have recieved no information…..no Q&A….zip….very disturbing and unexpected…..I hate to say it, but Hank Greenberg never would have f—ed up like this…..thank you Spitzer….
reminds me of that SNL skit where Sean Connery tell Alex Trebek to “Suck it Trebek!”
no - on a more serious note, I think that above all, everyone here is rooting for house prices to come down (I am), I feel like I make good $$$ and should be able to afford a decent house. I was cheerleading fo rhte same thing.
Problem is, the way this is playing out seems to be spinning out of control. I think that the implications are now far more wide-reaching than originally intended. I think a pretty bad recession is now baked in the cake, perhaps worse. This will affect many more people than the “greedy sellers”, and I am afraid there will be plenty of collateral damage (including those who didn’t buy plasmas and lucky jeans and hummer H2’s). They are going to lose their jobs, and not be able to find new ones for a while.
No turning back now. See you guys around the barrel!
The Asian Markets are bent over right now…
Nikkei down 600.
I have to concur “lurk”, I just want to be able to afford a small home in a blue ribbon school district. I don’t feel any closer to that today than yesterday.
I do not feel Schadenfreude.
Korean Trading halted!
http://www.bloomberg.com/apps/news?pid=20601080&sid=aqRmkgJtxXoU&refer=asia
HP laying off 24,000
nothing to do with housing, CDS, CDO, ABS, MBS
everything to do with EDS
not good….probably a lot more of this to come
Clot - Here’s your VPYLF. At least she paid for it herself. God help us all if she’s running the show in a year.
On the campaign trail, SP likes to brag about how she put the Alaska state jet on eBay and fired the governor’s personal chef. One item that doesn’t appear in her stump speech, however, is the personal tanning bed Palin had installed in the governor’s mansion.
http://tpmmuckraker.talkingpointsmemo.com/2008/09/its_sunny_all_year_round_at_th_1.php
#627 chgofinance: Furtherest thing from the truth kid. And anybody that knows me, knows that to be the case.
Jealous of Harvard, no, not in the least. AS the child of immigrants I have done well for myself. And never in my career have I screwed anybody. I sleep well at night.
I worked at Goldman for many years and left as a VP, just like so many of the Harvard MBA’s. No malice, no jealously. Just hard work.
You sound like you have a real chip on your shoulder, and easily prone to anger. Not to mention paranoid.
No one screwed you kid, but your attitude and condescening tone to others will. I suggest you look inward.
Hopefully as you mature you will out grow it.
And no you are no special no matter where you obtained your MBA from.
AIG going under would be a catastrophe. That company is involved in so many businesses, in so many differnet sectors, the consequences would be disastrous. …………the ripples through the entire economy is quite scary…
just saying
not to mention another 90k people looking for jobs
“roll out the barrel….”
@640
that too……..
I don’t know about you Chi, but i don’t trust anyone like who likes to go into stores and squeeze the damn Charmin while at the same time refusing to buy some and uses damn corn cobs instead.
Look 3bonehead, I don’t care where the hell you immigrated from, but let me tell you what the hell we do in America; we buy and use toilet tissue. We don’t do use corn cobs and outhouses now. Either go back to your damn country if you want to behave like that, or integrate yourself into the mainstream of this damn country by adhering to normal sanitary practices.
chicagofinance Says:
September 15th, 2008 at 10:05 pm
3b: I have to call a spade a spade….you are jealous….I had to deal with people like you in my career, and you stabbed me in the back and tripped me up because you thought I deserved it. Meanwhile, I was naive enough to trust people such as you. You are more politician than person…..
bairen,
Whan an insurance fails or thake big losses then one gets into the realm of reinsurance. Anyone here know who is reinsuring AIG?
I heard it this morning on bloomberg, shadow banking is dead.
What will arise now is the question.
Got gold?
# renter Says:
September 15th, 2008 at 10:26 pm
I have to concur “lurk”, I just want to be able to afford a small home in a blue ribbon school district. I don’t feel any closer to that today than yesterday.
I do not feel Schadenfreude.
NEVER going t happen - there is no “Blue Ribbon” anymore… And there haven’t being for a while
3b Says:
September 15th, 2008 at 10:32 pm
#627 chgofinance: Furtherest thing from the truth kid. And anybody that knows me, knows that to be the case.
Jealous of Harvard, no, not in the least. AS the child of immigrants I have done well for myself. And never in my career have I screwed anybody. I sleep well at night.
You sound like you have a real chip on your shoulder, and easily prone to anger. Not to mention paranoid.
No one screwed you kid, but your attitude and condescening tone to others will. I suggest you look inward.
Hopefully as you mature you will out grow it.
And no you are no special no matter where you obtained your MBA from.
3b: You have essentially supported my intuitive response to your inane putdowns.
As a 40 year-old child of “immigrants” your comments are a laughable as they are illustrative of your character.
My true weakness is a compulsive need for justice…maybe you feel too much heat from that fire…..
since he was profiled by the NYT Magazine?
Look, I still say AIG can suck it.
I don’t care how many business they are involved in. They are, and always have been, a despicable, slimy, dirty company. Any company that relied on AIG was foolhardy. For individuals who rely on AIG, I’m sorry they weren’t better advised.
My company did work for AIG. We did a good job for them. They paid on time. But I will not miss them. They treat their customers and insureds like dirt, and their employees like criminals. Hey, it turns out, many of them are!
Oh, I should note, while I was doing a project for AIG, the phone in my temporary office was ringing every day — someone calling, desperate to get AIG to pay for services rendered.
And now that I think about it, they did get three months behind in paying us, but caught up by the end — probably only because they were afraid we’d leave while the work was still incomplete.
If I hear one more talking head refer to citizens as consumers, I’m gonna, well, I’m gonna get more angry. And I mean it.
is AIG dead yet?
I am waiting to do a grave dance.
SAS
LAST!!!! Tokyo off 5% AIG on the Brink. What a day part two.
speaking of GS they report today. c-level at GS said if the perfect storm continues they think GS could bottom at as low as 50 and encouraged employees to sell if that is money they need. Earnings today.
#646chgo: You need to get over yourself boy wonder. You are a pompous self important twit.
ha ha ha ha ha ha ha…