Bits Bucket And Craigslist Finds For March 17, 2008
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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My Goat Ate the Economy
http://www.huffingtonpost.com/marty-kaplan/my-goat-ate-the-economy_b_91759.html
Cited article mentioned: “the Fed’s rescue of Bear Sterns” — sure don’t look like no rescue to me, less’n Marty was talking about the real sterns of real bears.
It’s more like a “controlled liquidation” than a bailout.
Not that that is going to work either. They think they can “control” it but every bank will be frontrunning those positions.
At least there is liquidity…
What good is liquidity if you don’t have solvency?
Liquidity helps in the process of resetting the comps as the market tries to find a bottom.
Sure, just print more money. That’ll solve everything. Next time I make a bad bet in the markets I’ll expect a “liquidity injection” directly into my brokerage account.
Meanwhile, in the land of reality, gold blasts through $1000.
Bond holders will be made whole with a $30b guarantee -unsecured guarantee from the fed.
I seriously don’t understand how Bear Stearns could go down so quickly…are they truly worth only 2% of what they said they were? And this was ALL because of subprime etc? Is this all bankers do all day? Lend out money and pretend they have more than they do? Is everyone asking for their money back at once?
I’m just a poor scientist…if we do something even remotely deceptive, it gets found out REEAL fast. I can’t believe bankers they can get away with this…they build these gimundo mansions and think they deserve it for being so smart and don’t feel a shred of guilt. I’m at a total loss here.
Read the prior posts yesterday on “mark-to-market.” Lending in the last 10 years was based on a theory of ever increasing values. As we contracted, ppl tried desperately to keep false mark-to-markets for as long as they could (at least for themselves), and collateral calls and the need to keep reserves ate up all available cash/assets preventing them and their clients/counterparties from doing business. I know of no big investment bank, and few counterparties, that has been doing much business lately. They are all just trying to survive.
The hits also came from the otherside as those that needed to get assets off their books are now given bids even below historical norms because no one has cash. Manipulation is rampant.
It was a lack of transparency until Bernanke got a hold of the CIA manual for water boarding…Ace had a ‘come to jesus’ moment saturday.
Because they had to sell this weekend and when you have to do something very quickly someone is going to get screwed.
BSC couldn’t face another week of operations, nor could they rely on bankruptcy protection. All of their counterparties were unwinding trades (basically a run on the bank) and the run continues in bankruptcy because derivatives settlement were exempted in the newest bankruptcy bill. So they had to sell this weekend, and there were only a few big enough to satisfy the Fed: JPM and Citi, but Citi doesn’t have room to buy something new, so it was JPM’s deal and they got to set the price.
“And this was ALL because of subprime etc? ”
Subprime didn’t bring BS down. Their MBS portfolio consists of $15B in Prime/AltA (88%) and $2B in Subprime (12%).
Absolutely, this is all about mark-to-market, and doing everything possible to avoid it. But the vast majority of their holdings are Prime and AltA mortgage paper, which is really terrifying. $2/share firesale over the weekend basically says the company is worth nothing. So what about everyone else? They’re just the first shoe.
RE: $2/share firesale over the weekend basically says the company is worth nothing. So what about everyone else? They’re just the first shoe.
They sure seemed to be worth “something” when it came to year end bonus pay-out time.
The whole fookin’ game is rigged.
They are more like the first hangnail on the baby toe.
Leverage is awesome on the way up.
But on the way down, well…
“fundamentalist free-marketeers who have been living high on the hog, feeding at the public trough, intimidating Democrats,”
While I agree with most of the post, I about puked my coffee when I saw that part about intimidating Democrats. Oh, please. The Dems in Congress have acted like a bunch of victims, even when they get a majority. They’re the moral equivalent of a cowardly parent who stands by wringing hands while watching their children get raped, and maybe even wondering how they can get in on the action.
Impeachment is off the table. Thanks a pantload, Pelosi.
“Impeachment is off the table. Thanks a pantload, Pelosi. ”
Grow a spine or at least find some cartilage. How much courage should it take to do what the people both want and need you to do? You’ll still have to clean up the mess and since you left the monkey in charge for another two years it’ll be a bigger mess that needs cleaning.
Um, I assume you’re addressing Pelosi and not Palmetto?
Yes, Pelosi and not Palmetto. Palmetto’s comments are too true.
Palmetto is right. Dems got elected to hold Bush back, and they have done nothing, zero, nada, zip. Calling them moral cowards would be too kind.
They haven’t done nothing: they’ve collected nice salaries and other perks of being in office, gotten plenty of bribes, rolled around in the slop like all the pigs who run the show, etc. Just like one would expect politicians of any party to do.
Oh - you meant they haven’t kept campaign promises… well, yeah… no surprise there!
I’d like to chime in here and defend the Democratic Congress. I’d really like to, but I can’t. I am constantly amazed how they kowtow to a President with the lowest approval in History (20% last I saw.)
I’d really like to, but I can’t defend them, either. Pelosi, Reid, Schumer and Rockefeller should all be given their walking papers — at least from their leadership positions.
Their role in enabling this administration has been unconscionable.
RE: they kowtow to a President with the lowest approval in History (20% last I saw.)
Easy to kowtow when your own rating is 11%.
This is true, but if you read the poll numbers further you will see that the main reason for disapproval is that they DON”T stand up to Bush.
You’re right, Palmy. The Huffington Post is a partisan blog, and Marty Kaplan is a voice of the left. He’s trying to let the Democrats off easy. There’s a lot they could have been doing. What blows me away is that people like Bob Rubin and Chuck Schumer seem to understand less than HBBers about the overall economy. I think that Hank Paulson knows and has known exactly what is going on, enough so that he could profit from it personally. I guess that makes him truly evil.
You all have got to see this guy about BS Cramer……
http://www.youtube.com/watch?v=4sZCNlPwG8o
Cramer’s comments last Tuesday are priceless, almost as priceless as Bear Stearns stock.
I thought that when Bush smirked and said “these are interesting times” that he was referring to the Elliott Spitzer situation. Some people in the room laughed.
Vive La France…
http://www.gold-eagle.com/editorials_08/schiff031508.html
Let them eat mistake
(with apologies to Marie Antoinette)
No cake for them…
i have spoken to several people today and every conversation was in regards to bear stearns
i think people may start realizing that this is bigger then an inflated house and are getting nervous
who is next? citi- ubs-
BSC is trading at near $4. That is a screaming buy.
LEH is getting crushed in the pre-market. Can the Fed swoop in and trigger yet another rally?
Lehman has 600K shares of our pig. That deal needs to get finished now.
Ides of March Madness Sale…
up to 98% off of selected values
txchick57,
“Lehman has 600K shares of our pig.” Would you mind explaining this if you have the time?
Thank you.
I think she might mean Bear Stearns.
LOL - I love TxChick but the Oracle at Delphi could take some lessons from Tx on cryptic.
When i was a kid, I remember seeing a scene from a movie where Superman didn’t arrive at the disaster as it was happening and the people got whiney…it use to annoy me. Why do they just expect Superman to come in and save them
I can’t help but feel that Wall St. is kind of like those whiney people that expect, no, insist that Superman has to come and rescue them. Of course, the Fed is no Superman….
THe PPT will have its hands full this am…
“Tell everybody waiting for Superman
That they should try to hold on best they can
He hasn’t dropped them, forgot them or anything
It’s just too heavy for Superman to lift ”
Thank you Flaming Lips.
Or, from the same album, for Bear Stearns:
But life without death is just impossible
Oh, to realize something is ending within us
Feeling yourself disintegrate
Feeling yourself disintegrate
Feeling yourself disintegrate
Feeling yourself disintegrate
Wish I could fly like Superman.
Lehman or Mother Merrill.
UBS and Shitti are in there somewhere too.
When I talked to my parents last night, most of it was about Bear Sterns too. Well…we got through the cute stories about my niece and the on-going health sagas first. Mom absolutely insisted that the buy out was for $20 a share, not $2. Nothing that I said about the NY Times articles would change her mind. Evidently, Bob Brinker read his news wire wrong over the air. Mom insisted that I read too much on “your blogs” and that it is making me depressed. So I finally had to tell them that I have been mostly out of the market since early August (actually, I’m pretty well hedged - my retirement accounts made $8 overall on Friday).
The funny thing is that my Dad was starting to really listen. Last week he was talking about not locking in their losses. This week he was asking me whether I expected more losses.
Fortunately they are old enough to not be holding too much in equities. I’m not worried that they are going to be eating dog food. But Bob Brinker is a menace but not because of his advice. Lots of people give advice. He is a menace because he makes people who have no knowledge of the market think they understand it. Because he took people out before the last crash, I bet a lot of his listeners assumed that there couldn’t be a down turn without him warning them first. He may not recommend agressive market positions for older folks, but he can’t keep them from doing it based on his declarations that a big down turn isn’t coming.
“Mom insisted that I read too much on “your blogs” and that it is making me depressed.”
To me it seems that having a source that has constantly predicted the declines before they happened, and has explained what is going on the Street without the political/media noise, is the only way to avoid depression. Anyone that followed at least some of the advice given by those that have proved their reliability on this site would have saved lots of money, and will continue to save much more. When playing the market, ignorance is not bliss.
What he said.
Give the man a gold star.
Mom is nothing if not persistant in her beliefs. I’m a methodical person. I like my major life upheavals to come one at a time if I can arrange it. So, I finished my LLM and once that was done, started to look around for something to buy. Very quickly, I realized that for $400K, I couldn’t even get a generous 2 bedroom within a doable commute from DC (less than an hour door to door on public transportation). And I didn’t even think that I could afford $400K, despite the 3 minute on-line pre-approval from USAA. I was, for a little while, down about it. I remember very earnestly telling my parents that “I can’t save my way out of this.” At the time I already had a generous 15% downpayment plus closing costs saved. This would have been January or so of last year.
Then I started doing some real research. Then I found this blog. Then I wasn’t down anymore, just resigned to a bit of a wait. And I saved my retirement nest egg as well. Not very depressing, but I am worried about my friends who still work in the legal world in NYC. I’m out of that mess, but a lot of them aren’t.
“If I am not for myself then who will be for me? But if I am only for myself then what am I?”
Please note that this quote should not apply to government officials planning bailouts.
Good job, Polly. You have a good brain garnished with common sense. Too bad about your parents’ stocks. After my dad passed last summer, my mom took the IRA out of Morgan Stanley and I helped her put it in 5%-yielding CDs. She’s sitting pretty now with no worries.
We are rapidly heading to that “save who we can” kind of econmic point.
About the best you can do is keep yourself out of trouble.
So your 15% down will likely be a 30% down with a much smaller principle on top of that, while most other people won’t have enough for 5% down or good credit score even if they had the cash.
“Mom insisted that I read too much on “your blogs” and that it is making me depressed.”
My brother told me to stop talking about housing and markets because people would think I’m an anarchist.
Thanks Ben.
Good for you, Polly.
It can be depressing at times, waiting for all this idiocy to play out while hoping that not too many innocent people get crushed in the process. I was originally looking at housing way back in 2003, and something didn’t seem right then: everything was grossly expensive, even for somebody like myself who makes decent money and saves a lot of it, and prices kept going up. It was around 2005 when I found this blog and everything started to make sense.
It is satisfying to see that what was predicted is now finally coming true, but it is all such a waste - none of this Housing/Debt Bubble was neccessary, but here we are stuck with the aftermath.
See, I save my admiration for people like you, Pondering, and others around here who have been thinking about buying and looking for the right opportunity for years and years. It didn’t even occur to me to think about it until I had a job I liked, had been there for over 2 years, etc. You know, old school rules. By the time I started looking, I only had a few months to wait for the problems to start. Not long at all.
And I had the advantage of having worked in securitization deals in an NYC law firm, so it was fairly easy to understand the lingo. HBB made dealing with all this much easier of course….
I tried to subscribe to BB’s audio shows and listen to them just to get a polar-opposite grounding to my belief systems (both financial and political). Then late last year he had his little rant on “The Bears Were Wrong!!1!”.
I unsubscribed from his show then.
Black Monday?
St. Patrick’s Day Massacre?
Where will the DOW close today?
My guess:
DOWN 176
…because the Fed will swoop in with a 100 bps rate cut when the markets start to really fall.
Yeah, yeah, yeah, it only goes up, we know.
Options expiration this Thu not Fri (thanks to Good Friday) plus Fed meeting on Tues.
Gonna be one hell of a crazy week.
Wonder if blasting Götterdämmerung at 7am will get me classified as one of the crazies.
My little brother always preferred the storm scene from Otello, at 7 AM, the Sunday morning after our inconsiderate neighbors spent all night Saturday night getting drunk and yelling in their porch about 20 feet from his window. He was 12. Good kid.
Nothing, and I mean NOTHING beats Minnie Ripperton’s, “Lovin’ You” at 5:30 am.
My teeth grate just contemplating it….
LOL
MInniiiiiiiiiiiiieeeeee ooooooooouuuuuuuuuu
You win the award!! And, for the second time in a row, most obscure cultural reference is German:
German Mythology. the destruction of the gods and of all things in a final battle with evil powers: erroneous modern translation of the Old Icelandic Ragnarǫk, meaning “fate of the gods,” misunderstood as Ragnarökkr, meaning “twilight of the gods.”
From Bloomberg.com: “Banks and brokerages may fall by half because Bear Stearns Cos.’s sale to JPMorgan Chase & Co. for $2 a share will create a “major negative revaluation” of financial shares, Oppenheimer & Co.’s Meredith Whitney said…Bear Stearns dropped 88 percent to $3.50 as of 7 a.m. in New York. Lehman Brothers Holdings Inc. retreated 17 percent to $32.50. JPMorgan fell 1.6 percent to $35.94. Goldman Sachs Group Inc. slumped 7.9 percent to $144.50.”
And yet, somehow, someway, there will be huge bonuses in the executive suites at the end of the quarter.
The better question might be, where will the Dow end up in two years? This is getting ugly to watch and I’m a cash person.
I’m trying to figure out if we’re in April of 2000 or July of 2002.
Just so it’s not March 1933.
Today seems to be shaping up to be all of the above.
I’m looking to add to long index call positions. I can easily see how things could rally from here.
I’m looking to add to long index call positions.
You’ve got bigger cohones than me.
Maybe you’re hoping the fed meeting to inject some optimism tomorrow? Might be a good call.
Market bottomed in March of last year and topped in March of 2000. This seems like a good place to buy cheap upside plays with defined risk. No way I’d sell puts though unless I had a lot more $$$ than I do.
“I’m trying to figure out if we’re in April of 2000 or July of 2002.”
Based on the status of the factor driving all this - why would you think the latter?
Specifically -
- Though finally decreasing a lot, home prices are still *way* above historical norms
- Inventory is increasing by leaps and bounds. Not so much “for sale” inventory, but inventory of unoccupied homes.
- Due to the rates of foreclosure, neither of the above two factors are showing signs of slowing down. They will continue to feed on each other until we get to a “normal” homeownership rate, and probably overshoot.
IMO the meltdown is only gaining momentum, not losing it. The tugboat is still pushing the ship towards the rocks - it has yet to move off the ship or to go to the front and push back.
The view from this layman, at least.
take care driving with the rear-view mirror.
Me too. I am totally out, sitting and cash.
Anyone around here know of a good Gambler’s Annonymous meeting. This market is Las Vegas without the free drinks, Iit’s 4AM in the casino, and you are still playing?
Hard Eight! Hard ‘08!
RE:This is getting ugly to watch and I’m a cash person.
Bear Sterns from $170.00 per share to $2.00.
Even Stephen King couldnt’ dream this horror story up.
I predict up 50. These days are PPT heaven.
stock market will be up by the end of the day. Mortgage rates will go down and all will be fine…
We may have a winner..!
Just The End Of Your Way Of Life…
http://www.321gold.com/editorials/harris/harris031408.html
“Fascism is capitalism in decay.” -Vladimir Lenin
“”Fascism is capitalism in decay.” -Vladimir Lenin”
Good article, thanks
iceberg sighted:
March 17 (Bloomberg) — U.S. stock index futures, Asian and European equities and the dollar tumbled after the Federal Reserve cut its discount interest rate at an emergency meeting and JPMorgan Chase & Co. agreed to buy Bear Stearns Cos. for $2 a share. Bonds, gold and crude oil climbed.
http://tinyurl.com/32cr9q
Strange, ain’t it, that Asian and European equities would fall with da Bear. I thunk we was all decoupled now?
The part of the iceberg you see above water is only 1/6th of the total sum.
A Stake Through the Heart. Dallas money manager has the biggest sake in BS. Now that is funny.
http://online.wsj.com/article/SB120571021671940207.html
Scream, Dracula, scream.
B.S. is/was B.S.
The $ is now at 96.3 Yen, so i guess there will be some panic unwinding of carry trades this morning. But does anyone have a feel for how large this trade still is? Surely the smart money has switched to the US$ carry trade, no? Borrow US$ and buy Aus$.
in 1976 I was stationed in okinawa in the USMC and i remember vividly that the exchange rate was 306 yen to the dollar. Oh, how the mighty have fallen.
I remember 360 in 1967.
I remember 79 in the mid-1990’s
I was in Okinawa in 1974-1976-ish, too!
But I was a kid at the time.
I think the steering wheel just broke off in the fed’s hands.
With no steering wheel, it could get very difficult to drive while looking out the rear view mirror.
At least you didnt mention driving into a ditch. If I hear one more GD politician use that line . . .
This is one of the trains losing brakes coming over the Cajon Pass into the San Fernando Valley.
Not just one train, but a short time later, after “they ” thought it was all fixed… another train lost brakes.
At least the first train wiped out the town at the bottom of the curve first, no more houses to wipe out.
True story.
True except for the fact that Cajon Pass doesn’t connect to the San Fernando Valley.
It’s the Cajon Pass. Named after the CEO of Coutnryslide. Angelo Mozillo. Legend has it the pass was carved by his big brass ones on day a long time ago when he went to Las Vegas after selling his first CDO.
Just get it over with, Ben Bernanke, drop the rate a full 300 bps.
Video of Jim Rogers; he’s outraged:
http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vpsp3dpnTUuA.asf
Thank God someone is willing to be honest.
I want Paul Volcker back!
Excellent video, everyone should watch that. Thanks. Rogers seems genuinely despondent and angry.
Do the Volcker!
Wow
Ron Paul for President, Jimmy Rogers for Treasury Secretary and do away with the Federal Reserve and get us back on a Gold/Silver standard.
Us Immortals can dream.
Uncle Buck = Heath Ledger
March 17 (Bloomberg) — The dollar fell below 96 yen for the first time in 12 years after the Federal Reserve’s emergency weekend cut in its discount interest rate and the sale of Bear Stearns Cos. to JPMorgan Chase & Co.
The dollar dropped to a record low against the euro and the Swiss franc as the Fed made its first weekend change in borrowing costs since 1979 and Bear Stearns was acquired for less than a 10th of its March 14 value. Traders increased bets the Fed will slash its benchmark target rate by 1 percentage point tomorrow to stem a slump in confidence in financial markets.
“The dollar is facing a credibility crisis,” said Koji Fukaya, a senior currency strategist at Deutsche Securities, the Tokyo unit of Deutsche Bank AG, the world’s largest currency trader. “All the markets are entering a vicious cycle.”
http://tinyurl.com/2mt7jx
OK, you guys were right all along. Is it too late to buy the shiny yellow metal today?
There is always room for one more gold-hoarding seditionist.
Are you suggesting that patriots only buy Wall Street shares? What’s good for Wall Street is good for the U.S. of A.
Power to the people
Right on!
Speaking of sedition, John Adams on HBO was really good last night. I know a bunch of people around here don’t have cable, but this would be worth going to a friend’s house to watch. Seriously.
Is it a biography of John Adams? Based on McCullough’s book? I really liked that one. If all American families were as down-to-earth and hard working as the Adamses, we wouldn’t be in this mess now. Imagine keeping a farm and household going with no modern conveniences, while simultaneously keeping yourself educated and helping to build a nation.
Of course, the Sedition Act is the negative part of Adams’ legacy. Nobody’s perfect!
I’ll be hanging out for a spell today, in one of the biggest retail dealers of physical metals, in the city of angles…
Should be an interesting day to be a fly on the wall.
LMAO, maybe it is time for the International Gold Bullion Exchange to get cranked up in Florida again. Gold painted wooden bars, anyone?
CNI? Do they buy with cash?
At CNI in Inglewood there (in LA) you can walk in the shop there and buy with cash (keep it under $10,000) and you can sell for cash. I know for a fact.
Gold is in a massive speculative bubble, as is crude. Time to sell, IMO. Better early than late. Looks like crude is crashing today-off more than 4 bucks so far.
“Gold is in a massive speculative bubble”
You go ahead and keep thinking that.
“You go ahead and keep thinking that.”
I will.
No kidding. Really sick of this. These people will never sell either, they’ll carry it all the way back down and whine about manipulation.
Well, they’re not just going to give their gold away!
Your comment leads me to believe that you have never studied the history of the United States from a monetary perspective. I recommend you read “The Monetary Powers and Disabilities of the U.S. Constitution” or other works by Edwin Viera. Here is a PDF sample of his work:
What is a Dollar?
If you have any quibbles with Viera’s explanation of what a “dollar” is, let’s hear them.
Gold is what it is, no more no less. It’s not a panacea to our problems, but it’s definitely preferable to putting one’s trust in a piece of paper that can be multiplied to infinity electronically.
I’m sure it’s upsetting to chartists and technicians because the fundamentals are trumping the technicals, at this point in time. The technicals told you at 950 that gold was way overbought, and it was. But on a fundamental basis, gold is still way undervalued, in comparison to the number of “dollars” in circulation electronically around the world.
The time to sell gold will be when sound money policies are put in place. That hasn’t occurred yet.
I have some physical gold, some purchases going back to 1976.
I just don’t think it will cure cancer like some of you do.
Sorry — not very interested in religion (I just play along as much as necessary to stay happily married…).
No, it’s not too late, because you can still buy gold with “dollars”.
Housing Crunch Flattens More Companies
Souring Economy Spreads Its Tentacles, Causing Business Insolvencies to Rise
As the housing and credit markets continue to spiral downward, business casualties are rising rapidly in bankruptcy courts across the Washington region.
The number of corporations that have filed for Chapter 11 protection to reorganize so far this year in Maryland, Eastern Virginia and the District has more than doubled, compared with the same time period last year, court records show. The number of mostly smaller firms filing to liquidate under Chapter 7 increased far faster during that time frame, growing more than 12-fold.
http://tinyurl.com/384xwx
“Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it becomes, marked: ‘Account overdrawn.’”
Francisco d’Anconia
A most excellent and timely post.
Second that. Folks, at least give your useless elected officials a call today if you can. Let ‘em know how you feel.
No point in calling them. Waste of time. Just elect radically different people next time you have a chance.
Gotta agree with Neil. My so-called representatives are so opposite of me that I’d be better off peeing into the wind.
Blano,
Don’t forget to duck.
Yeah, I never understood that “peeing into the wind” comment.
Personally, prefer “peeing in front of the Niagara Falls, and saying mine is bigger.”
Much better metaphor, IMHO.
Lol - tough to do when you’re over 6 feet tall.
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
Ludwig von Mises
Yep, that quote was never more apposite.
Trash collection down in the Phoenix area:
http://www.azcentral.com/community/mesa/articles/0317garbage0317.html
I noticed this in my travels to the former Soviet states shortly after the wall came down. On trash day everyone stood on the sidewalk with their trash, it was a social event. I as an American, found it almost humorous, as rarely did anyone’s household trash exceed anything more than the size of American’s bathroom’s waste basket.
Let me to an interesting observation: Only rich people have trash.
In America, only poor people have alot of trash. They buy cheap disposable everything, and lots of packaging too. They see dollar store stuff as cheap because it is big. Rich folks sit on hand me down furniture and buy their daughter one American Girl doll. How often do you see a bag of last season’s clothes poking out of an affluent person’s garbage, nope, its living its second life as thrift store clothing sent to South America. I know it’s counter intuative, but the only bulky stuff rich folks buy that often are PCs from Dell. It always amazed me how much clutter landlords would haul out to the curb on evection day (after less than one year) when I lived in a rental/student community.
Scroll down a bit for a very funny picture
http://www.minyanville.com/articles/index.php?a=16288
Awesomeness!!!
Love those knees baby
Holy crap that is hilarious.
Not really crazy about the positioning of the “champion” slot tho.
Eew, that just dampened my enthusiasm for the tournament.
no confidence:
March 17 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke may be facing something worse than a loss of personal credibility on Wall Street and in Washington: waning faith in the ability of the institution he leads to turn around the economy and the financial markets anytime soon.
http://tinyurl.com/388jds
How could anyone take a man who believes that “inflation is ALWAYS possible” without a capital crisis seriously?
And how can you take a profession seriously where not a single academic was willing to call his BS?
Even a mediocre capitalist understands these things.
I mean, really! You’re telling me that this is the best that MIT can produce?
I gotta say, watch the JIm Rogers video clip. ” Ben wasn’t elected, he was just picked and he …has no knowledge of the big picture (mywords)”
Jim Rogers really voiced what many on Fake news channels, fake journalists etc should be saying Out Loud.Often. can’t we just get this guy outa here now, and “Pick” someone else furcrissakes.
“As products of the split between man’s soul and body, there are two kinds of teachers of the Morality of Death: the mystics of spirit and the mystics of muscle, whom you call the spiritualists and the materialists, those who believe in consciousness without existence and those who believe in existence without consciousness. Both demand the surrender of your mind, one to their revelation, the other to their reflexes. No matter how loudly they posture in the roles of irreconcilable antagonists, their moral codes are alike, and so are their aims: in matter—the enslavement of man’s body, in spirit—the destruction of his mind.”
John Galt
Another excellant post. I have a copy of A.S. right here to the left of my notebook, BTW.
Whac A Mole anyone
http://www.bloomberg.com/apps/news?pid=20601109&sid=aLKjRvxDFICQ&refer=home
“Greenspan said March 5 that home prices need to stop falling to help alleviate the turmoil in financial markets by providing a bottom for the value of mortgage-backed securities.”
LMAO! Just whatta you gonna do about it, Asshat Al? Notice his concern is about the securities.
The BSC sale suggests the market is doing a fine job of hunting for a bottom in the value of MBS. No home price appreciation is necessary.
Well Mr. Magoo if you think home prices need to stop falling why don’t you take all that money from your speaking fees and buy some.
Put your money where your mouth is.
It might not be a bad thing that Greenspan lowered rates so quickly. That threw gasoline on the fire of the already beginning-to-stampede real estate market. That probably hastened the “innovation” in the industry. And that likely sped up the runup in the market, and the eventual destruction of the market.
Had Greenspan not lowered rates so precipitously, this drama may have been spread out over a much longer period of time.
You must be kidding. With higher rates, the affordability barrier would have been reached at much lower prices and the bubble would have been smaller and shorter lived.
Should be a fun day. I holding onto my position in Cash, SLV, and GLD.
Sorry for that mistake. I meant to say: “…I am holding …”
Good thing you corrected that Bostonian. With the quick minds and wicked wits on this blog, well you know where it could go…
My thoughts exactly!
More rate cuts on the way this week?
“It is highly probable that the market is assuming that something is very wrong when the Fed feels that it is necessary to cut the discount rate just one day ahead of a scheduled FOMC meeting,” wrote economists at Jyske Bank.
Heard just now on NPR: “If the Fed is doing all this, it must know something that we don’t know…”
Ummm… yeah, these are the same bright minds that started out with “it’s all contained”, then brought out the TAF, the TSLF, and the PDCF.
They are also the same bright minds that think that “inflation is always possible” without having a “capital crisis”.
Along with the Treasury who brought a SIV, a Super-SIV, the MLEC and an “intervention for a strong dollar”.
How many more acronyms do we have to endure?
“How many more acronyms do we have to endure?” > FDIC, FEMA, MRE’s?
I’m waiting for the PBGC explosion myself.
OK, I’ll bite. What’s the PBGC?
Pension Benefit Guaranty Corporation.
The Pension Benefit Guaranty Corporation.
the PBGC, which has been charging corporations shamefully low premiums to insure the value of employee pensions is so underfunded it, makes hedge fund derivative contracts look healthy.
It has the same aleged backing of Gov’t bailout as the other shell games out there.
Pretty soon we are going to undergo an acronym shortage if these guys don’t slow down…
Ben, you need to create a GOAT!!
Glossary Of Acronyms and Terms
so we have a reference to look them up in.
So…when I called my MIL yesterday to tell her about BSC, she said, “yes, but did you see they also cut rates a quarter point. That should set us up for a nice rally!” Why waste my time trying to tell her that a 1/4 pt rate cut in the *discount rate* — on a Sunday — is NOT good news…
I love her, but her optimism about houses, mortgage companies, the economy, etc. gets old after a while. This, after she fought with me for years because I was “keeping her son from being a home owner,” after selling to rent in 2004. Buffed off my advice to sell all things “mortgage.” You can guess what happened there.
Tell her you married the only non-moron in the family. That oughta do the trick.
I tell my husband that I married the only person in his family worth hanging out with for any significant amount of time.
Lets see, 2.8 billion lost by share holders in Bear over the weekend…just think of the margin calls this am…oh well, I’ve just raised the rent on my tenth floor window..expecting quite alot of jumping volume today and this week. Wasn’t it a guy by the name of Armstrong that predicted the 22nd of march as doomsday on Wall street?
I wonder how many Bankruptcy Lawyers are going to get new business today from BS shareholders who can never repay a margin call?
Inquiring Minds want to know!
You mean people who speculated in it on Friday? Otherwise, I can’t see that stock as one that would be a favorite of the margin monkeys.
TX……How many people still own it on margin from say $50-60 a share and They weren’t sold out on Friday…
I would highly suggest that those of you in NYC, keep an eye to the sky for falling brokers, bankers and cranes.
Math can be fun!
Number of BSC shares outstanding = 136 million.
Friday’s closing price = $30.00
Buyout offer for BSC = $2.00
Loss to shareholders per share = $28.00
Total amount of money BSC shareholder money destined to go “poof” = $3.748 billion.
Pales by comparison to my back-o-the-envelope estimate of SD home equity losses since the bubble top (~$100 bn, give or take a few $10 bns).
I heard they’re now having under-the-line tournaments in the greater Fleet Enema city limits…
LOL
The value of Bear Stearns is negative, aside from the value of the building it occupies.
Read this last night….is it true that the total buyout price is less than the value of the BS building??
Yes, I have it on good authority. The building is valued at $1.2 billion.
And remember, the $240 million price also includes a big risk/subsidy by the Federal Reserve.
But I think the message is: There is some huge liability missing from the balance sheet. Everyone in the negotiating room had to know that BSC’s Manhattan real estate was worth more than $200M.
But the deal still got done at $200M. So the question that needs asking: What is the unnamed liability?
Maybe the HELOC’d the building a while back…
LOL that one killed me
Your illustration gets a bit more interesting if you start at BSC’s peak price last year ($176 in Jan 07?).
Show me the math.
If a loss of $28/share totals $3Billion, why is the purchase of all shares at $2 = $28Billion?
A moment of silence please for more Money going to Money Heaven. Now, wait until oil crashes. LOL.
Roidy
P.S. If the capitulation is actually here, I’m back in the market. I’ve been out for over a year now.
Me too. But we need to wait a lot longer for the bottom. The PPT includes every powerful person in the world, so it’s taking forever.
The acquisition is a stock swap. BSC owners get 1 share of MorganChase for every 18 shares of BSC. A drop in the market price of MorganChase lowers the value of the BSC shares, pre-merger, even more.
NPR news folk are puzzling over how BSC could have fallen from $176 to $2 a share since just last year. This reminds me of my FIL’s supposedly-rich uncle. When the uncle passed away, my FIL became the executor of his estate. It was at that point in time that uncle’s drinking habit came to light. The estate was liquidated at a net loss.
Long term T-bond yields gone wild…
I don’t know how to read that chart. Which direction are they going? Interesting for the inflation/dollar crash vs. deflation debate.
They show cumulative percentage change in l-t T-bond yields. The recent trend is down, but they are bucking the trend like a wild bronco (esp. the 30-yr).
Bonds were screaming higher early this morning. Are they now starting to price in nationalization of the banks?
Some of the folks at Yahoo’s BSC message board are smug because they have stop losses entered at prices way above $2.00.
Boy, are they in for a surprise when BSC opens!
I’m confused as to why premarket isn’t at $2. My screen showing 3.30. Normally this is arb territory, but somebody doesn’t think the deal will close?
PS. I love the MarketWatch headline writers. They’ve dubbed the deal: Two-buck chuck.
Lots of people don’t. I covered mine. I think if I really saw $2, I’d try buying a little.
Another possibility: Arbs think the JPM to BSC ratio is high, so short JPM and buy BSC.
This would make sense if you think BSC has been fairly priced and JPM has some adjusting to do.
Come to think of it: The market-neutral players are probably taking up positions like this, with others besides JPM. Probably a smart move.
Right, doubt this game is over yet.
OK, I’m not an active trader and even I know that you aren’t guaranteed the price that you put your stop loss at. That price or below only triggers the trade. Right? These guys think they are going to get $15 when the stock is set to open at
It becomes a market order when your stop is triggered. In this case it will gap under their stop so hello $3 or whatever.
That’s brutal.
the rest of that post should have been:
less than $4?
Morons.
Thanks for confirming my suspicions, chick
$2 a Share
http://stockmania.com/?q=node/4076
Seven Star Suzie. I love it!
Shotgun marriage
“Fed’s bailout of Bear Stearns via Bear’s shotgun marriage to J.P. Morgan at $2 a share isn’t being viewed particularly well.” That was a bailout the way hanging,drawing & quartering is a natural death.
The government guaranteed JPMorgan wont take a hit in exchange for JPMorgan guaranteeing Bear’s obligations, so it wouldnt result in a domino effect collapse for Bear’s creditors, clients and counterparties. That is the bailout part. No one gives a cht about Bear. They are worried about the whole system collapsing (well besides Bear who wants to exploit the credit/liquidity crisis to regain traction).
Last Bear should have been JPM
You think? I dont think JPM has anything to gain here directly other than Bear’s business book, which is risk free. They will probably get something else in exchange, plus Bear was aggressively going after JPM’s business.
I havent seen Bear’s books, but $2 is well below any estimate I have seen thrown around as to what the actual value was. Plus they get indemnification from the feds. I think they got a good deal, but will their own troubles prevent them from staying around long enough to benefit?
I misunderstood you.
My point was that the front-end entity typically gets very little from this deal other than good graces of the power to be (at least that what I saw in a couple of deals). Risk-free, Bear’s book should be highly valuable.
Grr.. “front-end entity typically gets very little from the deal other than whatever is in the announcement and the good graces of the power to be”.
It will be interesting going forward to find out if BSC was an isolated case or the first in a chain of fallout for banks that threw good money away on bad mortgage loans. I am currently leaning towards the former hypothesis; rumors are circulating that BSC was cut loose for failing to play ball during the LTCM crisis in 1998.
Just like Spitzer was probably done in by someone he prosecuted.
Naw, not being able to keep his zipper closed was Spitzer’s undoing.
Kristen’s former pimp…ahem, I mean friend has been doing a lot of yakking on various television spots. He’s confirmed Spitzer is hardly the only high level official who’s, shall we say, supported his business ventures.
Spitzer should have known stirring things up would result in his dirt getting spilled. He just got sloppy.
I’ve wondered why none of the MSM is asking who the other 9 clients were - they had to be pretty high on some food chain.
I was thinking the same thing about LTCM. Make an example of those that do not tow the line 100% of the time.
Message sent out that the most loyal get to enjoy having their heads attached to their necks the longest time possible. 17 billion walked out the door of BSC on Friday. Where did that cash go? Follow the money to the most loyal to the party line, I bet it leads.
Not sure. Do you know what the real value of BSC’s shares are? (There is no reason a company’s shares cannot have a negative real value…)
Nope and don’t care either. If I see 2 bux or less, I’ll take a crack at it.
http://tinyurl.com/38dpzc
“Alan Greenspan’s latest rationalization.
“We will never be able to anticipate all discontinuities in financial markets. Discontinuities are, of necessity, a surprise. Anticipated events are arbitraged away.”
“In the current crisis, as in past crises, we can learn much, and policy in the future will be informed by these lessons. But we cannot hope to anticipate the specifics of future crises with any degree of confidence.”
He has no comprehension how these kinds of distributed systems work.
But he says in the same report that we should let the free market regulate itself (probably after all the bailouts):
Greenspan said that he hoped the fallout would not take away the finance industry’s ability to regulate itself. Market flexibility and free competition are the most reliable safeguards against economic trouble…”
Does he still think that if he has a degree and writes/speaks in a convoluted manner ppl will just assume he is brilliant genius. Too late. That cat’s out of the bag. Double speak gibberish from a guilty mind.
You know, I was just thinking the same. His vague mumbo-jumbo never sounded intelligent.
I see it all the time in the legal profession. Ppl will try to throw around big words and speak total gibberish in the hopes that they wont be questioned because their audience is too scared of being viewed as ignorant. Took me about two years to find out that if something does sound right, question it and hold them to the fire until you get a straight intelligible answer. You will be right more times than not.
Absolutely.
Same thing happens in academia and high tech. If the person can’t explain themselves clearly to a layman, chances are they’re full of hooey.
Same in finance and economics.
You should be able to explain the idea to a layperson perhaps with a diagram or two.
Speaking so as to confuse people is a status thing in most learned professions. “If you can’t dazzle them with brilliance, baffle them with B.S.”
Hey media. When are you going to stop printing this guy’s babble speak as though he is an objective observer? He is a paid mouthpiece.
“In the current crisis, as in past crises, we can learn much, and policy in the future will be informed by these lessons. But we cannot hope to anticipate the specifics of future crises with any degree of confidence.”
What a bunch of horsesh!t. I am so tired of the corruption that I can’t stand it anymore. I just listened to Paulson and the lies are just sickening. He talks of the importance of “orderliness of financial markets” as well as a “strong dollar policy”, but his actions speak differently. This whole entire problem could have been avoided years ago had there been regulation and a “strong dollar policy”.
Now the DOW is shooting up as the government bails out the rich. Sure, the Bear Stearns shareholders got burned, but they aren’t the “rich” I’m talking about. It’s the corporate fat cats who walked away with the billions. This isn’t a free market. This whole fookin thing is rotten to the core. “Where are all the customers yachts?”
A talk show host on a local radio station is telling his listeners that the US is heading for a depression.
we are headed for something.
We are heading for a vast decline in people’s personal standard of living via inflation, higher taxes and lost access to credit.
A vast decline in people’s wealth due to falling asset prices.
And a vast decline in people’s communal quality of life due to collapsing public services and benefits http://www.nytimes.com/2008/03/17/us/17fiscal.html?hp .
If you are used to living modestly and being happy with that, have a paid off house, have lots of money in cash (even more cash) you are insulated from the first two. But not the third.
WT Economist . Got to say thanks for your well thought out posts .
The reduction in services is the area that will really hurt and cause a lot of complaints .
I think even if we do enter into something of a depression that the word ‘depression’ will not be used again. ‘prolonged recession’ it might be called. i think the images of the great depression from back when are just to strong…panic would take over.
Agree 100%
Who do you listen to? I’m in Bay Area too, I listen to Rob Black in the mornings.
http://www.solari.com/blog/?cat=4
As of March 31 2007, the New York State and Local Retirement System owned 453,385 shares of Bear Stearns stock at a cost of $34,443,043 or $75.97 and a valuation at that date of $68,850,650 or $145.24 per share.
JP Morgan has just announced that they are going to buy Bear Stearns at $2 per share. Bear Stearns stock closed at $30 per share on Friday and at $57 per share on Thursday. Which means JP Morgan is not paying a premium to market. Rather, they are paying a 93% discount to market.
This means that the New York teachers and public employees invested $59 million in Bear Stearns and their investment is now worth $1.9MM, a loss of $57 million. If you look at their opportunity cost, the New York pension plans could have sold in June 2007 before reality hit mortgage market valuations at $151 per share. From that point of view, they have lost $149 per share, or $141 million.
“New York teachers and public employees invested $59 million.”
They invested nothing. Their pensions are guaranteed by the New York State constitution. Tax increases and service cuts will make up the difference.
“If you look at their opportunity cost.”
They have no cost. Based on the assumption that BSC and everything else would go up 8 percent per year, Mayor Bloomberg cut a deal with the teacher’s union allowing all teachers to retire at 55 instead of 62 after working 25 years instead of 30.
“Their pensions are guaranteed by the New York State constitution. Tax increases and service cuts will make up the difference.”
Agree that tax increases and service cuts are coming, but this idea that public pensions will be paid no matter what is an idea that has yet to be tested by fire. Cali and lots of other states are in the same underfunded boat. Watch for these “constitutional” promises to be modified or unwound.
Watch for these “constitutional” promises to be modified or unwound.
Agreed. Noone has to make choices right now. When the choice is cut the last 1 or 10 policeman making depressed wages or paying someone who hasn’t worked for a decade, guess who gets cut? (Especially with a potentially angry mob at your door..)
BS aside. Many folks who think they are “safe” in this whole financial debacle, rather calamity, are going to be caught like dear in the headlights.
deer…
Agreed.
We are staring at “capital flight” here, and from there on into the abyss.
Which leads us to Capital Controls…….
Countries with a “capital account deficit” can’t put in “capital controls”.
Thanks for playing though!
LOL
Er, maybe the countries that have been lending to the US are going to be bringing in “capital controls”.
I hope so. Just this past weekend, I’ve heard 3 different couples talk about their big BS retirement plans at age 55. These were couples in their late 40’s. There was lots of real-tard speak. I mentioned the events on Wall St and the unwinding of the fixed income markets and they looked at me like I was speaking chinese. There is loads of cluelessness and BS talk on Main Street. It’s hilarious to listen too. Then I heard this dumb half witted dingbat of 24 years old tell a group how she and her boyfriend are going to build a hotel on an island somewhere in the south pacific. One doesn’t have a job and the other is a $20/hr wage slave. I’m dying laughing while listening to this BS.
If people don’t listen to news radio, or read the paper, or listen to some radio station with a heavy news bias, they have no idea about what’s happening on Wall Street, or in the housing market.
If someone just listens to FM music, and watches American Idol at night, they are blissfully ignorant. The primary way information gets to them is via personal experience, or the experience of those in their social network.
HAHA……….This is the first thing i teach a newbie dj….find the AM news station and set a button on your car radio.and tell me where the traffic tie ups are..none of them can do this.
What good is a dj who is clueless about directions. Imagine being late to a wedding or to a surprise birthday party….
———————————–
If people don’t listen to news radio
I’d like to take this time to blame everything on those rowdy spring breakers on Wall Street.
Question,
what did banks do to prevent runs on themselves before there was a FED or FIDC?
Where they just a lot more transparent so depositors didn’t have to wonder what they were doing with their money?
Spook
No, some were and others weren’t. There isn’t a catch-all answer to your question.
Depositors periodically lost it all.
The Midwestern distrust of East-Coast bankers derives from this. You can see it quite clearly in the Wizard of Oz — don’t need no one to tell you what the “Wicked Witch of the East” and “Emerald City” actually symbolized. Oh, and Dorothy’s slippers were originally silver (not ruby) as she walked down the gold path. No points for guessing the meaning of that allegory either.
Question for those who were around in the workforce in the 80’s. I was still in school then, so didn’t really have a good feel for macroeconomic things (not that I’m an expert now).
In the early stages of the 90-92 recession, as the S&L thing unfolded - how would you say that compares with the way things are unfolding now?
My impression is that this time is much worse - perhaps on the scale of 1929 even. Since my only true “recession” experience is the tech bust, which IMO pales in comparison to what we’re seeing right now, I’m curious of the accuracy of that impression, at least relative to the last good-sized recession. Maybe this one isn’t so bad as I think, on a historic scale.
For that matter how does this compare even the 70’s - early-80’s recessions? Those seem to be different though, as it was really a series of building recessions, rather than one big pop after a boom period like we have this time, and like the early 90’s recession.
This is bigger than 1929. Look at the derivatives’ market.
Except we are not on a gold standard. This has both plusses and minuses.
Actually, the Economist had a great take on this roughly two years ago. (When do they NOT have a great take?)
In 1929, the problem was roughly 100% of US GDP. The Nasdaq bubble overvaluation was 60% of US GDP.
The current bubble is larger than the sum total of the GDP of all industrialized nations put together.
Got a link to that article perchance?
Those recessions were a function of liquidity; Assets were recognized as being there but they couldn’t be cheaply converted into cash because money was tight and/or expensive.
This recession goes beyond being a liquidity issue; this recession is a solvency issue. Liquidity is not there because the assets are deemed as not being there. Money may be cheap to borrow but since the quality of the assets needed to back loans is questionable nobody will loan out the money. Thus the economy freezes up.
All my opinion, of course. I’m sure we will hear other views.
I don’t know if this is a universal experience.
I hit the work force in ‘84 and was humming along w/my career in ‘92. Both times I felt in my situation like one simply had to be careful for a bit and endure a little less spending until it was over.
This has the feeling of a long-term turn in the fortunes of America. Maye its just knowing more of the intricate details thanks to the Internet. But I never, in any downturn, had the feeling of dread I do now. It’s not about the banking or the liquidity. It’s about the recognition that we’ve abandoned our workforce and our infrastructure and it won’t be back in any state of strength for a very long time.
It’s also based on being quite certain that my children will have it much harder than I did.
Agree, CarrieAnn.
Combotechie;
I was around (in the labor force) in the early 80s (ok, maybe not the real workforce since I joined the Air Force right out of high school in 82). From what I remember, unemployment was really high in the early 80s (79-83 or so). In fact, the govmt changed the unemployment rate calculation so that it included people in the military which “reduced” the reported number by a percentage point or so. I think (ok, you are really straining my 44 year old brain now) that the unemployment rate was north of 10% back then. When I got out of the AF in 85, I had no problem finding work (in the electronics field- which I was trained in). Also went back to College and completed a B.S. Engineering degree.
Went to work in 89 for a large durable goods manufacturer (industrial process control systems and instrumentation). Company grew during the 90-91 recession, albeit at a slightly slower rate then originally forecast. Unemployment did increase, I seem to recall it was in the 7%-8% range. No way did it (the recession) seem as severe as the 79-83 timeframe.
Interviewed someone for a open Product Manager position in my group this past week… informed me that the job market is really “hot” now (judging by the number of recruiters calling with open positions they are trying to fill since December, I would have to agree, at least for the Minneapolis-St. Paul region).
Wonder if this is due to the deflating dollar, since it is becoming so much less expensive to manfacture in the U.S. and export to Europe now. Seems to be an early trend here. Might this also help stabilize part of the economy?
I don’t see how this would help all the FB’s however. Too bad all those realtirds don’t have any “marketable” skills (I don’t count exotic dancing, call girl/escorts, pole dancing, sign twirling, etc.) as “marketable” skills that will help you obtain gainful employment that pays more than $10-$20 per hour.
We are having trouble finding experienced engineering people for our Process Automation & Control company; i.e. people with specific skills adaptable to our business. However, that has been the case for the last 5-6 years, but entry level applicants (very good ones) have been reasonably available.
What kind of salaries are we talking about? I ask because we too “can’t fill” openings. What I found out (via an accidentally leaked memo) was that we were able to find candidates. The problem is that ourt salaries are too low. Our management expects senior people to jump ship and join us for their current salary.
Southwest Central Florida
New hires:
Entry (with BSEE or BSME) - 48-50k
Experienced, non-degreed, specific skill set - 52-60k
Experienced, degreed, specific skill set - 55-65k
Tenured, long term, vested technical employees get closer together (degreed or not) as we have a relatively horizontal organization and cull stragglers early
These individuals - 80-100k
2-3 top tech types w/some management responsibilities up to 110k
We have full family health insurance, long term disability, no sick days, max 3 weeks vacation, most high scale people have vehicles plus expense, and an excellent company pension/profit sharing plan (in business 23 years, 20 years at 15%, 2 years at 13%, 1 year at 11%, not in that order). Employee has 401k available for individual contribution in addition to company contributions listed. Self directed plan, online access, wide array of choices including (for you HBBers) a US Treasury Fund (no gold though).
Thanks for that Product Manager story tgun.
A light of hope out there!
That’s awesome news, all! Thank you for a glimmer of hope in the darkness that surrounds our economy.
Cayne wasn’t very able, as things turned out.
If Bear Stearns was number 7(I think it was) on the list of financial firms with exposure, is $2 buck chuckification likely for the 6 of one, 1/2 a dozen of the others?
Client No. 7
Bush to speak in 10 minutes. This should be good.
He’ll have to pull his pants down to do it. That oughta be a REAL treat.
Boxers or briefs? Whoops, wrong president.
Shrub probably doesn’t even wear underwear.
Commando-in-Chief?
Lisa, there’s nothing like an “unfurnished basement”, for pure comfort!
heh heh, I believe the entire wall street and bush administration are now required to wear diapers….
“Well Camus can do, but Sartre is smartre!”
“Bush to speak in 10 minutes.”
Q: “Mr. President, why are commodities are up and the dollar falling?”
A: “This administration has a strong dollar policy. God bless America!”
Sound like Pravda?
Imagine being ’ssshrubery?
Easily the most hated leader outside of his country(incountry as well), since adolf
It has very little to do with Bush, and very much to do with the U.S.A. Reagan and Nixon were easily as hated as Bush. Lots of foreign leaders have been more hated in country than Bush is the U.S. If the U.S. is at war or the economy is in trouble the western world hates the U.S. Most everybody in NZ and Canada and other secondary countries are always going to stick their nose in the air and pretend that if they had 305 million people and all the power of the U.S. that they would be so much better. The pride of small countries which comes from building yourself up by knocking somebody else down doesn’t impress me.
Dude…
The entire world despises the man and judges us largely, based upon him.
Don’t try to rationalize it by making up reasons why the world sees it for what it is. Gone are the days when others were envious, you are so 90’s.
Alad - cut the dude crap - that’s the sly insult on this blog. Your assertion is wrong, especially with the word “easily,” and I explained why.
Max - no rationalization going on.
Relax dude relax.
“Easily the most hated leader outside of his country(incountry as well), since adolf”
No question. HIs incomptence and misrepresentation of the facts are what did him in.
Steve Forbes is calling for suspension of “Mark to Market” on mortgage backed securities. Losses would be written off when actually taken. I am expecting government intervention soon on this issue, otherwise, most financial institutions in this country are technically Bk.
F Steve Forbes! He has been cheerleading forever on his stupid fox show
I saw him predict oil would be $50/barrel like 18 months ago…
This is what happened in Japan, and we all know how that turned out. It doesn’t change the fact that the banks are insolvent. By now, everybody knows that’s the case. Assets will still deflate apace.
Precisely.
Give this man (or woman) a gold star.
that is a potential catalyst for a trading rally
Not saying it’s right! Just that it may happen!
Great time to reload on shorts if so!
While Forbes was saying this, did he also mention letting those welfare freeloaders starve before they breed more?
The welfare freeloaders of the world will be paying taxes and getting less indefinately to pay for any bailout of the Steve Forbes of the world.
Steve Forbes believes that is fair and balanced …
remember the time when he was the spokesperson for the flat tax. he got an even better deal, that is why he suddenly shut up.
We should suspend gravity too. People could fall and break a hip.
csx announcing 3B share buyback and div increase. they think they are immune to the coming slowdown?
Part of this is a bet on Port of Jacksonville increasing market share.
they are actually gaining ground for efficiency reasons, as compared to trucks.
So BSC really did stand for “Black Swan Coming” like I suspected a few months back
Good call!
Think this crisis will put a dent in spring selling season? While real estate may be local (big maybe), credit is global. I imagine the RE brokers in NYC are sweating.
Almost as if the media is reading our posts. Lehman next in line.
http://finance.yahoo.com/tech-ticker/article/7143/Lehman-Too-Big-to-Fail?tickers=bsc,leh
What is Rule 48? It was just invoked.
They did that on the Societe Generale day too in January.
Bidding for Nasdaq calls. That’s where I think the biggest rally will come from.
No indication required at market open.
Highly volatile day, PTB wants immediate price discovery.
briefly here:
This was only approved by the SEC on December 6, and was only used once–on December 12, 2007. The rule suspends the requirement to disseminate price indications at the open. This makes it easier and faster to open stocks.
from
http://www.cnbc.com/id/22781946
wonder why we can’t seem to get price discovery in houses
annoying
Probably similar to Order 66, except the targets will be: the dollar and savers.
Oops,
Just answered my own question.
Decoupling?
BULLETIN
U.S. INDUSTRIAL PRODUCTION FALLS IN FEBRUARY
U.S. Feb. industrial production falls 0.5%
By Robert Schroeder
Last update: 9:15 a.m. EDT March 17, 2008
LEH looks like a yo yo on the charts.
You silly bunker monkeys…and the best the HBB doom & gloomers could come up with was: “catching a falling knife”
“I think M&A is too difficult now. This is about catching a falling chainsaw. It’s not just about cutting yourself if you get it wrong, it’s about losing a limb,” a London banker said.
I think today is starting off as “A First Day”
Bear Stearns takeover sparks fresh financials rout
http://www.reuters.com/article/newsOne/idUSN1650564120080317?pageNumber=3&virtualBrandChannel=0
The stock market has dipped a bit today, but I am not convinced it is a good time to buy. My thinking is that it might make sense to first see whether the Fed can come through with another big FFR cut in the face of a dollar selloff. Any thoughts?
No signs of panic — perhaps they stopped it.
Good time to buy? Not for a buy and holder like me. Even if the credit crisis passes, the purported earnings estimates indicate the market has not priced in a recession, let alone a financial disaster.
The stock market had a resilient return to the opening bell level, but now it is trying to go back down, and I mean straight.
REVIEW & OUTLOOK
The Buck Stops Where?
March 17, 2008
In the credit market panic that began in August, we have now reached the point of maximum danger: A global run on the dollar that could become a rout. As the Federal Reserve’s Open Market Committee prepares to meet tomorrow, this should be its major concern.
One of the cheapest markets today is Mexico. Has not run like other Latin America economies, growth is strong and consistent, and has one of the most diversified economies in the world. Not to mention the currency, being somewhat aligned with the dollar, is likely undervalued.
You can buy Berkshire for a 70% premium to NAV. Many people think that’s a brilliant thing to do. Or, you could buy MXF at about a 16% discount to NAV.
Mexico behaves too much like a failed state for my taste. Sure, in Mexico City Felipe Calderon looks like he’s in charge, but the reality is that the NarcLords control half the country.
On yahoo finance right now they have a 1 year target estimate for BSC of $94.50.
I’m all in then.
American Sovereignty is past. We should be raising hell with the Chinese about Tibet. We aren’t, won’t, and can’t, because they own us.
Roidy
’ssshrubery’s aligning himself with the lama and dissing China in the process, is par for the course…
Fore!closure
Roidy, I am on the same page with you. China is disgusting. I admire the Tibetans so much. We should withdraw from their Olympics, I’m ready to puke over the fact that we’d even consider participating, let alone go there.
I recently saw one of those cars (I believe it was an old Volvo)plastered with bumper stickers - one said “Free Tibet” and almost right next to it was one that said “Peace.”
I thought, man, you need to get your head out of the clouds. You can’t have it both ways.
Two words: South Africa
More than two words: Chechnya, Bosnia, Kosovo, Transdinestria, Confederate States of America, East Timor, Chiapas, Northern Ireland.
Third-grade question-of-the-day: Why is Tibet more like these than South Africa?
The West never made an issue with Tibet when China was a dirt-poor country, why should the West now?
Lou,
Uh because times have changed. We need to make up for a lot. We won’t because China owns us now.
Roidy
Tibet was only recently not part of China (similar to HK). China is just asserting its control over Tibet again. It’s as if we lost Maine to the Canadians due to some political/economic turmoil and then took it back later.
CAREERS
Hiring Plans Soften Across Industries
Only education, transportation and public utilities show an uptick.
By ANDREA COOMBES
MarketWatch
“Only education, transportation and public utilities show an uptick.”
Given the drastic cuts on the table in municipalities’ budgets - that’s about to change.
There are big cuts in public school education out here in Cali. Not sure about the rest of the country. (My daughter’s teacher just got a pink slip…)
California is laying off 20,000 teachers. Airlines will start more layoffs once travel slows.
And one bag only on coach will be SOP within a few months. Charge for extra bag will go from a nominal $5 to $10 up to $25 and then $50 and eventually to $100 or more. Makes total sense to me: why should airlines operate as free freight forwarder?
As a side note - a co-worker just got back from India. On the way there, the airline charged $50 per overweight bag. Before her return flight they changed the policy to be 50 Euro per bag. Ouch.
Nice touch. This is how you lose “reserve currency” status.
Once again, any economy is a sum total of private decision-making not public ones. Also, in India, the black market is beginning to quote prices in euros ’cause that’s what they wanna be holding.
Ben Bernanke, you haven’t a freakin’ clue!
You think you are rescuing the financial system but you are actually destroyin’ it.
The overall picture for public/government jobs has to be grim too because of the impending restraints on government budgets…
Shanghai is now down 40% from peak. This is typical of all bubble markets - clueless individuals hear there is no way you can lose. Fundamentally, market is still rich relative to ROW on P/E basis. Reiterate call for 2500 in SCE by Olympics, another 35% down from here.
But the real estate bubble is going strong. Actually the number of people investing in the stock market is very limited by US standards. Given that most of the economy is based either on government or government mediated companies, or totally unlisted ones, the huge stock market movements aren’t really a big deal as compared to the USA.
That’s true - this is more like what happened in Thailand in the early 90s. Market is small and natives are unable to buy outside their own country, and thus bid stock market way up. Some foreigners come in and piggyback on the top of ADRs and ETFs. Eventually the thing crumbles and overshoots on the downside.
Subprime is contained…
The economy is strong…
Buy now or get priced out forever…
Heckuva job, Brownie…
Now is a good time to BUY, BUY, BUY…
Thanks Dubya, Paulson, Heli Ben, Greenscam, Orangzillo and Suzaaaaaanne for destroying the country without shedding a single drop of blood.
The USA is now a third-world banana republic, run by monkeys.
Have fun, y’all! The party is just getting started.
No spin, no obsfuscation….. just the straight DOPE.
Well said Ex-Cal…..
Reminds me of some guy everyone called Bob.
And George, and Ronald, and Herbert.
Don’t forget Franklin, John, Lyndon, Jimmy and William. I know I won’t.
I agree. The prosperity your list brought is unforgettable.
Its times like this that I am so happy to be packing up and moving to another country in a couple months. No place is immune to the sickness in the global economy, but I hope my new home (Australia) is going to fare better than the good old U.S. of A.
After spending the last month and a half down there, I know that they have a pretty heavy real estate problem as well, loads of forclosures, high prices and interest rate issues, but at least they don’t throw more fuel on the fire by dropping rates. I am rather shocked that the US > AUS exchange rate is still in the US favor, just barely…
Good luck everyone…
back to lurking (2 yrs +)
I’m posting here just to fill up space.
Go HBB, it might be a RECORD DAY!
You can tell this crisis is serious, as it takes a big one to make it to the front page of the SD Union Tribune.
It was front page of the Houston Chronicle as well.
So funny you mention that. This story was buried among other national & world stories on the Syracuse Post Std online. I had to follow the “more stories” link to find it. The paper did however have a headline of a Van Buren man competing on Deal or No Deal tonight.
testing again quit eating my posts!
http://tinyurl.com/3xyxay
“The problem is bigger than the Fed,” said Meredith A. Whitney, an Oppenheimer financial services analyst. “Trillions of dollars of securities were underwritten on the false assumption house prices could never go down on a national basis. That falsehood has put the entire financial system in a tailspin.”
Where was this guy in 2004?
That was no guy.
Oh crap! Things seemed to stabilze and then Bush made a “mission accomplished” statement.
Things always ’stabilize’ when he mumbles. Then they get a lot worse the next day. It’s only PPT manipulation; the trend remains the same.
Tomorrow we get a big fat rate cut, and the game goes on. Note the commodity smackdown the day before rate cuts. It’s regular as clockwork.
This smackdown?
Commodities retreat as confidence crumbles
By Chris Flood
Published: March 17 2008 11:45 | Last updated: March 17 2008 14:10
“Oh crap! Things seemed to stabilze and then Bush made a “mission accomplished” statement.”
Perhaps he can do something similar this time: Don a bright yellow realtor jacket and give a thumbs-up in the front yard of a McMansion. Then everyone will know everything is OK.
More fitting would be to plant a “for sale by owner” sign in the White House lawn…
Sorry, the Chinese already bought it.
LOL! I would love that.
“Gold jacket, green jacket, who gives a s**t.”
What no Starmucks?
(ps, in my local market, I see that they have raised their coffee prices to $9.99 a bag…that’ll help sales…I’m certain);-)
Yahoo Community Sentiment:
Bearish:
Krispy Kreme Doughnuts Inc. (KKD)
Morgan Stanley (MS)
Harley-Davidson, Inc. (HOG)
gosh. $12/bag here.
i always defended SBUX coffee. since i had it last a couple years ago, i have only bought premium coffee of the non SBUX variety. i bought a bag of SBUX on sale for $7 or $8. Made it today. It tastes like Folger’s, no joke. It is bad. I’m just going to give it to some friend who is used to Folger’s anyways.
I like Folgers; never found anything at Starbucks I would drink.
The 12oz bags of Starbucks have gone up in local stores, but the 40oz bags in Sam’s have gone down. There is no accounting for tastes.
I just blogged about this new Fed bailout, which is pushing their bailout dollars into the hundreds of billions already. I’m against all government intervention, but isn’t it amazing that the Fed needs to do this when there are other options on the table?
1. If the banks need money, let them offer high interest rates for deposits. Instead of Citibank selling shares to private firms for 12% interest, why not offer 11% interest on a savings account? They’d have billions, overnight.
2. If banks are collapsing due to not having reserves to cover deposits after those reserves went into bad loans, instead of giving the banks MORE money to shore up reserves, why not give money to people upside down on the loans? They pay down the loans, the banks dissolve the loans (money basically disappears back to the Fed), and the problem is reduced. Of course I’d hate a bailout of anyone, but isn’t it “more fair” to bail out the borrowers than the lenders if bailing out the borrowers ends up bailing out the lenders? By bailing out the lenders, the borrowers are still on the hook, and the lender has more reserves to loan out more money to more FBs.
It’s unbelievable that no one in the MSM is talking about these things.
If a bank needs money, they should increase savings rates. To offset the interest rates they pay, they should raise loan interest rates. Problem solved.
“It’s unbelievable that no one in the MSM is talking about these things.”
They’d be talking over nearly everyone’s head.
For item 1 to work you actually need depositors with cash to save. American’s don’t have any saved. (except for the few, the proud, the HBBers) They won’t have any cash from here on to save even if they do cut back on spending. If they cut back in masse. The ripple effect will drive up prices of the staples they still need.
problem with #2 is that the fed does not have enough money to satisfy everyone who will want to join the party.
We have moved past catching falling knives
—-
http://news.yahoo.com/s/nm/20080317/bs_nm/bearstearns_fed_dc
“I think M&A is too difficult now. This is about catching a falling chainsaw. It’s not just about cutting yourself if you get it wrong, it’s about losing a limb,” a London banker said.
One of the best quotes. Much better than the falling knife! LOL
“Lying can never save us from another lie.”
Vaclav Havel
Cayne fiddled while Bear Stearns burned.
http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=asNEEfktF32o
Very busy day. LOL
Bear Stearns (anagram for ‘barren asset’) is trading at $3 and change, it has 2 choices accept $2/sh or BK. This is free moneys.
So then why is it at $4.35 at this moment??
There is no cure for stupidity.
another illusion shattered.
http://www.nypost.com/seven/03162008/news/regionalnews/eliots_gal_a_shared_asset_102203.htm
“She is one of many young ladies I have spent time with around town…”
Mr. John Chanos
“Ful weel she soong the service dyvyne,
Entuned in hir nose ful semely,
And Frenssh she spak ful faire and fetisly,
After the scole of Stratford atte Bowe,
For Frenssh of Parys was to hire unknowe.”
Geoffrey Chaucer
“Met her at a nightclub several years ago”…….
That would make her, what, around 15 or so???
You betcha. And I’ve made some free money both long and short today.
Isn’t this bear stearns? So why would the price be going up? Aren’t they now out of business since JPM owns them? Won’t these people only get $2 for each share? Please explain
There’s always this kind of wild action on a shocking move like this or a bankruptcy. Speculating, daytrading, short covering, etc. It should calm down in the next few weeks but will probably have rumor driven spikes ala CFC until the deal actually closes.
forgot the link http://finance.yahoo.com/q?s=BSC-PE
There is a question of “Is the company worth more declaring BK.”
The price is not $2.00, the price is 0.05473 shares of JPM for each share of Bear.
A few individuals believe that the company is worth more declaring BK. It would be worth more to the debtor in possession, not to the share holders or bondholders. These few individuals stand to lose $2B+ on the takeunder, they wish for BK and to be the DIP.
Isn’t it grand to be talking about this stuff again? The telecom bankruptcies really didn’t last long enough
Will they sue to block the deal? Rumor has it ncc is a takeover candidate with jpm being kicked around as a possible buyer. Aren’t there size regulations about to kick in?
Stay with facts and away from rumors - particularly that somebody is going to rescue a piece of crap.
Bids finally hit.
SMH too.
Definitely not looking to buy. Picked up some puts on jpm, might be wrong. I wonder why they were the buyers as they aren’t teflon coated.
“I wonder why they were the buyers …”
Herb Greenberg believes a shotgun may have been involved (funny that I had exactly the same image in mind when I first read of the deal this morning…).
“While we believe BSC’s case is unique, what will not be unique, in our view, is a resulting major negative revalution of financials. For this reason, we provide a detailed examination and explanation of why we believe financial stocks have further downside of as much as 50% based upon 1990/1991 multiples of tangible book values.”
Meredith Whitney
March 17, 2008
A 100% overvalue in the financials. A large drop, this is just the beginning.
Kind of like the price discovery in telecom stocks.
The Bidu looks like it’s on sale
I’m staying away from that now. Don’t like all the China bashing.
Grabbed some for an afternoon bounce. S#%$s and giggles type stuff.
SMH up on the day. I’m thinking a rotation into tech now as the “safe haven.”
Countdown to Growth (John Mauldin)
http://www.minyanville.com/articles/GS-Credit-fnm-economy-housing-muddle/index/a/16294
http://www.usatoday.com/money/economy/2008-03-16-top-economist_N.htm
5. Lawrence Yun
Chief economist, National Association of Realtors
Fed rate 2008 low 2.25%
Recession in 2008? No
8. David Seiders
Chief economist, National Association of Home Builders
Fed rate 2008 low 1.75%
Recession in 2008? No
Among 10 economists, 6 predict recession in 2008, 3 say no recession an 1 is undecided.
It is funny to see that both NAR and NHB economists do not predict any recession. Both belong to industries that have been pounded badly for at least a year. Their industries (realtors, home builders) are in severe depression, but being a cheerleader is a hard habit to kick. No recession, sure, it is a good time to buy, NOT.
Very nice! That article is a keeper…thanks Bombo
I have an off-topic question for the smart people on this board. I have a semi-solid offer (need to go for final interview) with a company in Dubai. Would I avoid some of the mess I fear is coming by choosing this option? The money isn’t wonderful, though they do provide transportation allowance and a 3-bedroom apartment. I guess it is also tax-free? Is it a good idea to be abroad now? Is this job more likely to survive than my state government job here? I can’t decide how to think about this, I feel like I don’t have enough information, or don’t know enough about the questions involved to know what to be weighing. I would love some advice.
If you have a US or European passport you’re probably ok. If you have one from the 3rd world, don’t even think about it.
Come to China.
If you are a female, you might research the laws regarding females(and foreigners) in Dubai.
My 24 yr old son was offered a job in Dubai, incl apartment $100K+ US/yr. 3 months paid vacation/yr. He turned it down. I like Dubai. He could not stand it. (He did think that some of the most beautiful women in the world were in Dubai.)
Non citizens in countries like Dubai are treated like 3rd class servants if you are lucky…slaves otherwise.
I know folks who have worked in Kuwait and Saudi Arabia. The guys seem to feel it was fine. The ladies did not like it. Too many cultural constraints.
Also note, if you have ever traveled to Israel and they stamped your passport it could be a problem getting into a Muslim country. If you ask Israeli passport control will give you a separate sheet with the stamp on it.
Double check the “tax free” aspect of income earned overseas. I believe they have changed things lately.
As for whether taking the job will help of hinder I am as confused as you today. One one hand getting paid by a company not in the US may be a good thing. Heck getting paid at all may put you on top of many if this gets as bad as it seems it could. On the other hand any increase in chaos may lead to political instabilities and I would rather be on my native turf than elsewhere if it really hits the fan. I hope you get better advice from others here though because I am just taking a swag at it.
Only a portion is tax free. You may even have to pay US income tax on a portion of the house/rent value.
If you are under 34-ish, single, childless, and even vaguely adventurous, GO! A once-in-a-lifetime chance to be in Business in a happening economy…Woo HOO! Fun times!
Make sure you have enough for an emergency ticket home on short notice in immediately accessible funds. Leave your presumptions at the boarding gate. Keep us posted!
Too many short range missiles in Dubai’s vicinity for my liking. You might live & return richer, you might not, you makes your decisions & you takes your chances, just like the rest of us.
Travelling abroad is almost always a good idea - you get unique experience and perspective on things. Dubai is a pretty safe city, but they have draconian laws regarding vices, watch out.
If you go, please keep us posted!
A British citizen was jailed there for “possession” of poppy seeds - found 3 on his clothing from a bagel he’d picked up at Heathrow. I’d think twice.
“If the banks need money, let them offer high interest rates for deposits. Instead of Citibank selling shares to private firms for 12% interest, why not offer 11% interest on a savings account? They’d have billions, overnight.”
How much of this crunch is just the unwillingness to accept that savings are in short supply, borrowing is in heavy demand, and rates will have to adjust upward to balance the two?
” … savings are in short supply, borrowing is in heavy demand, and rates will have to adjust upward to balance the two?”
Which makes cash the king.
Are you sure? Comments like this make me wonder if gold is not the king…
QUOTE OF THE DAY
‘Financial markets are as close to collapse as I’ve seen in my career.’
— Chris Rupkey, chief economist, Bank of Tokyo Mitsubishi
If markets freeze up, if people who think they have money in accounts really don’t, or if people who really do have money can’t draw it out, then those who have cash or have access to cash will dictate prices to those who don’t.
It’s not all that complicated.
USD is the ultimate bubble. Buy it all the way down…
I don’t think my CD rates are going to go back up regardless of demand as long as BB doesn’t want them to go up. Apparently, he has become the defacto leader of the free world, able to devote billions in a single stroke, leap large bankruptcies in a single day. All for truth, justice, and the American (WS style) way!
3 month T-Bill:
ZERO POINT 9 PERCENT
yes, thats correct: We are under 1% on the 3 month.
This is it, crash helmet on, fully diversified, whatever the hell that means, expecting disaster, anyone blinking?
The interest rate you mentioned makes no sense at all. This morning 3 month T-bills CUSIP 912795E98 were auctioned off at 1.118 % A new issue is auctioned every week. Who needs to buy them on the secondary market? Can anyone enlighten me?
this is a floating rate published on Bloomberg, check it anytime…..not for the faint of heart.
zero point nine percent looks like this: 0.9%
The interest rate does make sense, in fact it went as low as 0.6% today, last time in the 1958, coming out of a recession. Remember the defltion happens right before the inflation.
The deflation is about to end, and the inflation is coming…you just dont know it yet. M1 goes higher.
that is all.
Also, now that a primary dealer has gone down, there is an empty chair at the Auction…..you should go.
I’ve bid noncompetitively in those auctions many times through Treasury Direct. Allowed the last of my regular Tbills to mature a couple of months ago. I do have a small chunk of retirement funds in 3% TIPS maturing in 2012, they were up 12% August-February, so someone else must be buying the TIPS bonds with negative rates, they’ve been very positive for me. Why, I don’t know.
It does not make sense, I agree….but its been on the Bloomberg ALL DAY.
Treasuries Rise; 3-Month Bill Rates Fall to Lowest Since 1950s
By Sandra Hernandez and Daniel Kruger
March 17 (Bloomberg) — Treasuries rose and the three-month bill rate plunged to the lowest since the 1950s as the Federal Reserve cut the discount rate at an emergency weekend meeting and backed JPMorgan Chase & Co.’s deal to buy Bear Stearns Cos.
Gains in two-year securities drove yields to the lowest level in almost five years as the Fed reduced the rate on direct loans to banks by a quarter-percentage point to 3.25 percent. Futures contracts on the Chicago Board of Trade show traders are betting the central bank will slash its target interest rate by at least 1 percentage point tomorrow from 3 percent.
“It’s very easy to see it’s a flight to quality,” said Daniel Fuss, 74, the Boston-based vice chairman at Loomis Sayles & Co., who oversees $22 billion and whose firm’s Bond Fund has returned 11 percent annually over the past five years, beating 99 percent of its peers, according to Bloomberg data. “We’re in new territory now. Even Alan Greenspan hasn’t seen this.”
The two-year note’s yield fell 13 basis points, or 0.13 percentage point, to 1.35 percent at 4:33 p.m. in New York, according to bond broker Cantor Fitzgerald LP. It touched 1.24 percent, the lowest level since July 2003. The price of the 2 percent security due in February 2010 rose 1/4, or $2.50 per $1,000 face amount, to 101 1/4.
Investor demand for the relative safety of short-term government debt sent the three-month bill rate down 16 basis points to 1 percent, according to Bloomberg’s market average. It touched 0.652 percent, the lowest level since May 1958, when the U.S. was emerging from a recession. The yield on the benchmark 10-year note dropped 15 basis points to 3.32 percent.
`Sheer Terror’
There’s more money on the sidelines looking for a home than most people know. The banks could shore up their reserve problem by offering even 5% interest rates at this point. That would cause a flood of money to leave the stock market and go into savings accounts. Now that we are on the path to ZIRP, the pain will be spread out over a number of years like Japan.
A majority of the sideline money is held by the top tiers. I doubt they will sink that into a banking system that is for all intents and purposes, insolvent. I venture to guess that safe deposit boxes have more liquid assets than the wall street right now.
KB homes pulling out of Albuquerque leaving neighborhoods ‘unfinished’ I don’t understand why so many people here bought into these when there are nice homes in established areas.
http://www.dukecityfix.com/profiles/blog/show?id=1233957%3ABlogPost%3A63092
So, with the fall of Bear Stearns, how long until SOMEBODY in charge admits that we are in a Recession - or worse? How many banks must fail before the “Goldilocks economy” is given up and people admit that it is NOT “contained.”
Unreal… and the stock market will probably close up for the day, knowing how things work!
how long until SOMEBODY in charge admits that we are in a Recession - or worse?
Probably not until GDP for 1st quarter is announced, a month from now.
Not until George is out of office and Cheney is finished spouting, ‘things have never been better’…
Just so they won’t have it said ON THEIR WATCH.
How to Keep your Investments Safe
9:15:00 AM March 17th, 2008 Permalink | Comments (20)
I don’t want to add to the panic, but one thing that is getting little in the way of attention here is the question of whether investors should have investments in their name or street name. Many brokerage accounts are automatically opened as margin accounts, or with margin features, which means if a brokerage runs into trouble, you become just another creditor.
Keeping stock in street name also lets the brokerage firm lend your shares to short sellers without your knowledge and without paying you.
Sshhhhh! I hate being a naked short, I have to borrow the stock from somebody!
Going down with “Supertanker America.” She survived the tech bust but not this.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBivITiDHG9g&refer=home
“Abby Joseph Cohen, the most bullish investment strategist on Wall Street this year, will stop making Standard & Poor’s 500 Index forecasts for Goldman Sachs Group Inc. She was succeeded in the role by David Kostin, Goldman’s U.S. investment strategist, spokesman Ed Canaday said in a telephone interview. Kostin today predicted the S&P 500 may fall 10 percent to 1,160 before rebounding to 1,380 by year’s end. Cohen, as chief investment strategist, last predicted the benchmark for American equities would end 2008 at 1,675, representing a 32 percent rally from its current level.”
That’s one bull that gets repeatedly gored.
Wow, now THERE is a contrary indicator~!
Good riddance!
Anyone see the LA News last night, had an actual RE Auction on film and asked one woman her thoughts, she isn’t pleased,her home bought at $379(ish) and the one down a few houses sold for $250(ish). I was surprised to see the auction caught on film.
Has anyone seen Captain Contagion?
The next domino:
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=mf&sid=0&o_symb=mf
MF Global, Ltd. operates as a broker of exchange-listed futures and options worldwide. It provides execution and clearing services for exchange-traded and over-the-counter derivative products, as well as for non-derivative foreign exchange products and securities in the cash market. The company offers trade execution and clearing services for derivative and cash products across a range of trading markets, including interest rates, equities, currencies, energy, and metals, as well as agricultural and other commodities. MF Global serves approximately 130,000 active client accounts, including institutions, hedge funds, other asset managers, professional traders, and private clients. It markets and sells its products through three primary distribution channels, such as employee brokers, introducing brokers, and online platforms. The company is based in Hamilton, Bermuda with additional offices in London, Chicago, Paris, Mumbai, Singapore, Sydney, Toronto, Tokyo, Hong Kong, Taipei, and Dubai
The trader in the Reuters photo on the FT home page appears to be looking up into the sky in anticipation of falling shoes…
http://www.ft.com/home/us
Dumb questions here from someone unfamiliar with the way the Street thinks:
1) If a 100 bps cut is in the bag, then isn’t it already priced in? How could it actually result in higher stock prices tomorrow if that is the case?
2) How could the Fed cut another 100 bps without throwing poor Uncle Buck under the bus (again)?
THE FED
A major Fed rate cut now seems certain
Reduction of full percentage point would give markets a shot in the arm
By Greg Robb & Laura Mandaro, MarketWatch
Last update: 12:28 p.m. EDT March 17, 2008
Did you know the Yankees paid more for A-Rod than JPM paid for Bear Stearns?
Look at the track record, A-Rod has a much better record than Bear.
A-Rod gets 1 out of three things right, can Bear say the same?
And he can play defensively.
“The Chicago Cubs are worth $606 million, more or less. ”
“…They haven’t won a world series in 100 years, have had only nine winning seasons since 1980, and seem maddeningly prone to bad luck….”
Conde Nast Portfolio
See there are valuable losers.
As Babe Ruth famously said when comparing his salary to the president’s, he had a better year.
I guess that suggests that owning A-Rod is more profitable than owning da Bear?
Not for the Rangers it wasn’t.
heh
Baseball and $2.99 gas is right around the corner - life ain’t all bad.
You are correct; at least 75 bps are baked in, maybe 100. And yes, Uncle Buck is having multiple organ failure. Don’t walk ways frome the USD, run for your life.
Pardon the macabre, but worth contemplating:
BB has always looked to me like he’s only a bad day or two away from heart failure. Would an incapacitated BB be bullish or bearish for the markets and the greenback?
Paul in Jax, I agree, BB looks like he is in serious coronary terrority. That greyish look in his eyes. Watch for it next time he has to speak before congress etc.
Regulations Are at the Root of U.S. Housing
http://www.bloomberg.com/apps/news?pid=20601039&sid=aTGvWJvbonR0&refer=home
When land use is constrained, supply can’t respond to higher prices, forcing prices to climb even higher. This is exactly the impetus that can start a catastrophe like the current episode. “It’s a regular cycle,” O’Toole told me last week. “States adopted land-use regulations, and then their real estate prices skyrocketed and then crashed. Early movers like California have seen the cycle a number of times.”
The problem is, this cycle is no longer confined to California and Hawaii, and the fluctuations can now bring down the whole economy.
“In 2006,” O’Toole reports in his study, “the price of a median home in the 10 states that have passed laws requiring local governments to do growth-management planning was five times the median family income in those states. In contrast, a median home in the 22 states that have no growth-management laws or institutions cost only 2.7 times the median family income.
This is such BS. Regs haven’t changed materially in the last decade or so and prices have gone through the roof. Even in California, which is heavily regulated, there are new housing developments in BFE that have been approved and aren’t being built. While it is true that regs add to the cost of housing (and more than a little I’m sure), they are far from the cause of current prices or the housing crisis.
Close the italic tag.
I read his O’Toole’s book The Best Laid Plans and he was discounted the role of bubbles in house prices. The book was written I think just a little too soon, before this thing burst last year, and apparently was meant to be a Cato screed against growth management planning. The bubble wasn’t convenient to his thesis so he kicked it to the curb. Interesting book though.
kill italics
Hey, I’m bored with all this “intervention” & “life savers” Inc. morning conference meetings with coffee & danish…let’s have a… guess the number of jelly beans in the jar contest.
Which of the following countries will have the most number retail outlets of the following business in 2010?
McDonald’s…Starmucks…Krispy Kreme…Hardley Davidson…Pizza Hut…Hard Rock Cafe
1. Afghanstan
2. Iraq
3. Pakistan
4. Dubai
5. Kuwait
6. Saudi Arabia
7. North Korea
8. Venezuela
9. Yemen
10. Sudan
11. Serbia
12. Stockton, CA
I vote Iraq.
Kuwait has the Harley dealerships.
Question for those more knowledgeable than I in such matters: Is there any chance the rush to manage the IB crisis might supersede various homeowner bailout programs that have been a hot topic of recent discussion in policy circles? I would have to guess that saving Wall Street is a higher priority than saving Main Street, and it may be hard to have one’s cake and eat it, too under the circumstances.
http://www.nytimes.com/2008/03/17/opinion/17krugman.html?_r=1&hp&oref=slogin
Nice summary of various points raised here some time ago (some of which stopped discussing a while back due to heat from various other posters). Was there something new in there that I missed?
Krugman’s article said Bear was “rescued.” It was no rescue but an attempt to avoid a financial system collapse, which if/when it happens will certainly gets everyone’s mind off the housing crisis.
IMHO …if the Feds plan to buy this junk paper regardless of what the borrowers do ,than the true intent of saving Wall Street/Banks losses is now exposed .I think the Feds will continue to go for damage control on main street as any party would that is backing a bunch of bad paper would .In fact the government has the ability to create any kind of creative deal they want ,even going back to sub-prime type lending or maybe principal reductions. But what do you do when people just walk and they don’t want to deal ,and that is the biggest problem now in containment on the streets .
I have always felt that Wall Street wanted and needed a outright new bag-holder for their junk paper and it would be the U.S. taxpayers one way or another . Has to be outright bail-outs now because the gamblers are walking in droves ,as anyone with half a brain should of know they would .Buying notes at their original value when they are only worth half or less is a bail-out . In a way no different than Dodds plan for gov. to buy all the foreclosures at their peak price .
foreigners flee SS Titanic:
As feared, foreign bond holders have begun to exercise a collective vote of no confidence in the devaluation policies of the US government. The Federal Reserve faces a potential veto of its rescue measures.
Asian, Mid East and European investors stood aside at last week’s auction of 10-year US Treasury notes. “It was a disaster,” said Ray Attrill from 4castweb. “We may be close to the point where the uglier consequences of benign neglect towards the currency are revealed.”
http://tinyurl.com/2vyoh4
“the uglier consequences of benign neglect towards the currency”
Please pull over to the side of the road…I’ll have to cite you under the Law of Unintended Consequences.
I don’t think it was totally benign neglect…I think that they were hoping that the boost in exports caused by the $ fall would help to goose the economy.
Oh no, not another New Era!
MARKETWATCH FIRST TAKE
The death of risk
Commentary: Bear is swallowed and the Street braces for more
By MarketWatch
Last update: 11:11 p.m. EDT March 16, 2008
NEW YORK (MarketWatch) — The failure of Bear Stearns Cos. ushers in a new era on Wall Street.
“…Oh, and absolutely ignore everyone on TV, no one knows how this is going to play out. If someone is recommending you nibble here, he probably recommending nibbling 300 other times on the way down….”
http://tinyurl.com/3cyc7c
Daily Options
The BSC yahoo board is still quite the hoot.
The Smoking Guns
http://jessescrossroadscafe.blogspot.com/2008/03/bear-stearns-smoking-guns.html
13 trillion in derivitative contracts?????
First reaction: laughter
Second reaction: sinking feeling in the pit of my stomach
Ok, I’m sorry, but I just don’t get it. Joe Lewis lost $1 Billion dollars in this mess. A lot of other people lost a lot, also. This $13Trillion counter party risk that Bear Sterns was in is huge. It is about as big as the yearly GNP of the US. So how did Wall Street not poop it’s pants and actually closed up for the day?
Roidy
Who was the “Half-Time” singer in the Superbowl this year? Tom Petty…his song… “Free Falling”…what didn’t he know…and when didn’t he know it?
Firms on the edge;
Delayed quote data
Citigroup Inc. (C:
Citigroup, Inc
Last: 18.22-1.56-7.89%
1:09pm 03/17/2008
C 18.22, -1.56, -7.9%) ,
Lehman Brothers Holdings Inc. (LEH:
Lehman Brothers Holdings Inc
News, chart, profile, more
Last: 25.01-14.25-36.30%
1:09pm 03/17/2008
LEH 25.01, -14.25, -36.3%) ,
Merrill Lynch & Co. (MER:
Merrill Lynch & Co., Inc
Last: 38.87-4.64-10.66%
1:09pm 03/17/2008
MER 38.87, -4.64, -10.7%) ;
“…must tread cautiously in the days ahead to avoid the confidence freefall that enveloped their competitor.
They only need to look at this failure to see the consequences of a misstep. Bear’s failure is as gruesome as they come. Bear, worth more than $20 billion less than a year ago, had been battered to $4.08 billion at the close Friday, and was valued 5% of that in less than 48 hours after the market had closed.
“It was a freefall aggravated by a stunning sense of hubris. Former CEOs “Ace” Greenberg and Jimmy Cayne stubbornly refused to diversify. They continued to run Bear as a high-stakes trading firm, going all-in in mortgages and one-sided bets with their hedge funds. When trouble erupted last summer, rivals tapped outside sources of capital. Cayne played golf and bridge. He fired lieutenants.”
This weekend was downright frightening for me. I was visiting relatives in Cleveland, and the talk between all the older relatives (72 to 93 years old) was how this no longer looks “like” the depression. They all seem to think we have entered a new depression.
I hate to be the bringer of joy and cheer but to some of us “in the know”, we entered that phase back in 2000.
Your relatives merely “get it” because most of the rust belt in the Midwest has been living through it.
When will economists finally take off their rose colored glasses and get a forecast right?
ECONOMIC REPORT
New York factory activity slows to record low level in March
By Greg Robb, MarketWatch
Last update: 8:46 a.m. EDT March 17, 2008
WASHINGTON (MarketWatch) — Manufacturing activity in the New York area fell to a record low level, the Federal Reserve Bank of New York said Monday.
The bank’s Empire State Manufacturing index fell to a reading of negative 22.2 in March, down from negative 11.7 in February.
Economists had been expecting the index to rebound slightly to a negative 5.0 in March after it plunged in February from 9.0 in January.
“Dude, where’s my ARMA(1,1) model?”
“Where’s your model, dude?”
“DUDE, where’s my ARMA(1,1) model?”
“Where’s your model, dude?”
PB
Economists are well aware of risks. IMHO the problem is not that the risks are not and were no apparent to all, the problem is that economic actions are political. As a result we have had economic policies for 25 years that have been the easy way out. The last firm action by an economic adviser was not Mr. Paul Volker it was Mr. William McChesney Martin, Jr.
Economic policy is a give and take, unfortunately once a course of action is taken, and that action is incorrect, the method to correct the faulty action is more harmful than trying alternative methods. This is a collapse.
Should the Federal Reserve opened the door 2 weeks ago to the street maybe Bear would have survived. But no matter how the Federal Reserve acts, it is setting the stage for the next bubble. The basic policies that got us into this mess are still in place. Until the policies are revisited we will continue to stagger without any real growth in the standard of living.
I have no argument with anything you say (and you might correctly suspect I am the argumentive sort…).
So who’s buying the dip? Come on, fess up.
Cramer said last week that Bear Stearns was “solid”. And Kudlow thinks this Goldilocks Economy is just “amazing”. And Dubya swears this is just a “patch” in the run up to a permanently high plateu.
Plus Heli Ben is cutting 1% tomorrow, at least.
I say the bottom is here and it’s just the best time to BUY, BUY, BUY. I’m buying four houses in CA and FL myself, plus shares in all banks and homebuilders. Otherwise, the terrirists have won!
Sincerly,
Joe Nascar 6pack
(Signed, burped, felched, snotted and fart*d)
former US Federal Reserve chairman Alan Greenspan wrote in The Financial Times that “the current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the Second World War.”
– ‘great’ legacy, ‘maestro’ !
Two possibilities for the commodity pullback today:
1. Hedge funds are doing some margin call liquidations.
2. We are getting primed for a larger than expected rate cut tomorrow. They usually smackdown commodities before cutting.
3. The Fed is not creating money faster than it is being destroyed. Deflation ahead.
It can’t.
Not without being seen, and the dollar having a cow, and the derivatives market implode completely.
Nobody is lending. That’s where money is created.
Deflation ahead.
I’ll believe “nobody is lending” when everyone’s credit cards stop being honored.
Nobody is lending. That’s where money is created.
Yeah right. My friend is buying a REO house in Sacramento for $300K and only 3% down.
Try not to generalize from nonrandom samples of size one.
New twist on things. Not wise.
“Losing your home? Lease ours! Rent $1,375 plus utilites. Pets negotiable. Property website …”
Nice simple graphs at the Humboldt (CA) housing website. Prices are not holding.
http://www.humboldt.edu/~indexhum/realestate/appreciation.GIF
Hopefully Anthony will see this.
Yes, I look at the site often. However, I went to a few open houses over the weekend, and there was plenty of traffic. I spoke to the Realtor (R) at one, who said that sales were picking up with the much anticipated “spring bounce.” Sales actually are higher this spring than any of the last 3 years, according to my “unofficial” stats of looking at pending and completed sales, but prices are still ridiculously high, with values only off 5-10% in most areas. The Realtor (R) did say that interest is high, but most people who want to buy can’t get qualified for a loan! Hah!
The process is just beginning up here. It has been a long time in comin’ but I’m relishing it!
Now why do these darn rent vs. buy calculators not allow one to enter a negative appreciation. Someone should program one. Use Japan’s 20 year curve as a model.
http://www.dinkytown.net/java/MortgageRentvsBuy.html
So, I’m going to get flamed on this one big time, but here goes nothing:
Given where we were on Thursday (ignoring the lack of oversight over the past several years), the Fed did about as good a job as they could have with respect to Bear Stearns.
The alternatives were:
1. Do nothing, Bear goes BK, market is flooded with more illiquid securities, pushing other major banks into BK. Financial chaos results–MAJOR financial chaos.
2. Fully bail out Bear, reward risk takers by saving their hide, no one learns a lesson–we pay a mighty price for the bailout because it won’t be the only bailout as borrower insolvency downstream forces more such bailouts in the future.
3. Let Bear burn in a controlled fire–essentially a wipeout for the risktakers, put some of the cost on the taxpayers ($30B guarantee is far less than the havoc if Bear went BK–and not expected to be a $30B loss, that’s the max…), but the risk takers take notice. If Bear can go down, anyone can go down. All these other guys will look to shore up their balance sheets faster now that they see their stock too can drop 93% in 3 trading days.
I’m not happy about my safe money being inflated away, but I’m going to applaud Ben & Co. for their work brokering the Bear Stearns “bailout”.
I disagree.
I am an engineer not an economist but I say Choice #1 is the path. IMO the results of #2, #3 are going to produce results at the consumer level that will not substantially differ from #1 in overall effect. This shebang is going to take a long time and go a long way down. The end result of killing the dollar is not clearly seen right now, while BB can see the torment in the Fat Cat’s eyes up close and responds.
The difference will only be at the WS , IB, and hedge fund level along with all the hordes of money traffickers in between who reap any benefit. Benefit being defined as a positive compared to what would have happened otherwise.
I think that twenty years from now my grandchildren will be much better off with Door #1.
This is where I disagree with your statement:
“The difference will only be at the WS , IB, and hedge fund level along with all the hordes of money traffickers in between who reap any benefit. Benefit being defined as a positive compared to what would have happened otherwise.”
I think the premise that WS/IB and hedge funds play in their own little world that doesn’t impact the “regular Joes” is faulty.
One simple example:
Pension Fund for Company A is heavily invested in public markets (in real estate, stocks, bonds, etc., where else would it be invested?)–in a post Bear meltdown scenario, there would be major dislocation in credit markets and public markets. So, major unfunded pension liability for Company A. Generally, Company A has debt (like many companies), since it’s operations were reliant upon debt to operate, and can’t get the money from Wall Street in this post-Bear meltdown world. So, Company A goes BK, unable to meet cash flow needs (can’t refinance it’s debt). In BK, pensioners are squeezed (a la Delta Airlines), as the unfunded pension liability is seen as a big one to squeeze down from the judge.
Retiree now has less to spend on vacations, dining out, healthcare (pushing the burden to those who still work–higher taxes, etc., thereby impacting the current worker’s ability to spend $ on discretionary goods), etc.
This WS/IB/hedge fund problem in a pretty short time frame can become a very real problem on main street. Lagged, yes, but very real.
This is already going to happen, but a $30B guarantee (perhaps a $1-5B loss/gain) to help avoid happening quickly, is a wise investment to try to keep credit markets more liquid for longer, hoping to keep more companies solvent for long enough to make them permanently solvent (through reduction in debt loads, etc.).
I would like to agree with you long term, that all else equal, our kids/grandkids are going to be better off 20 years down the road if the Fed allows #1.
However, if you believe (as I do), that a financial market meltdown will eventually spread to main street from Wall Street, in the medium term (think 2-5 years, not 20), a financial collapse will wreak havoc on families. I don’t care where they are in 20 years, that kind of havoc will not be good for our kids/grandkids now.
You confused me with all the detailed details, but the fact remains that the end result at the bottom end won’t be much different no matter the path. Back off from your microscope evaluation and look at the big picture; we are only in the first inning.
Not quite the first inning. I think we’re in at least the third or fourth.
No Fed move would have caused riots in the stands, cutting the game short.
At least now this mess can be played out to its logical conclusion.
I maintain first inning. This is going to get ugly.
Thx to both Rental Watch and Cracker Jim for a civil discussion of a debate which will keep future generations of economic researchers busy, busy, busy…
Except the bailout, buyout, whatever, won’t work. Read the von Mises quote higher in the bits bucket. You can’t avoid the collapse of a credit boom, but you can make it worse by delaying the inevitable. If we had taken our medicine after the dot-com bust we wouldn’t be here today, with an even larger and more dangerous problem. We would have had a recession and moved on instead of facing a systemic collapse.
We need a detox but the banksters keep shooting up the economy with more and more junk (money). Junkies that don’t quit using die.
With the exception of people who had stock in Bear Sterns and the employees ,in general Wall Street was happy today because it was a bail-out by the Feds (30 billion ). With the interest rate cut coming tomorrow ,I wouldn’t be surprised if Wall Street has a bull day tomorrow.
“in general Wall Street was happy today”
How do you know this? See 16:38:02 post below…
The real cost is yet to be seen. $30B is the max. It’s a guarantee, not a payment. If you believe (as many do) that the impaired value of some of this stuff (apparently $20B of the $30B is commercial RE debt, not residential) is due to needing to sell when there are no buyers regardless of the quality, we could find that the actual cost of the bailout is measured in a few billions, not $30B.
If other IB’s are thinking that this is a bailout and thus will effect their prospects, they didn’t understand what happened. Every IB out there that is in trouble is going to try to shore up their balance sheets on their own, because the alternative is essentially to be out of business and get paid 3 cents on the dollar for their stock.
The US could have unlimited power by connecting turbines to the rotting corpse’s of the founding fathers, all that turning in the grave
should provide plenty of power
LOL!! Good one!
BIL just signed a contract on a $500K+ home along the Wasatch Front. Very timely, given Ben’s Deseret News post yesterday regarding the glutted Wasatch Front luxury home market.
It. off?
A happy St Patrick’s day to you all
If you lived up in this area, this is the biggest boozing of all. We celebrate St. Urho day. He drove the grasshoppers out of Finland,
“The legend says St. Urho chased the grasshoppers out of ancient Finland, thus saving the grape crop and the jobs of Finnish vineyard workers. He did this by uttering the phrase: “Heinäsirkka, heinäsirkka, mene täältä hiiteen” (roughly translated: “Grasshopper, grasshopper, go to Hell!”). His feast is celebrated by wearing the colors Royal Purple and Nile Green. St. Urho is nearly always represented with grapes and grasshoppers as part of the picture.”
I am at awe watching this unfold. For the first time that I can remember I don’t have a clue as to the depths this might go before a solid reversal and rebuilding takes place. I do know that it is way too early as there are still too many people waiting to jump in somewhere to make a quick buck. Until more liquidity is removed, and real fear sets in, we are no where close to a bottom.
Check.
As one not invested in the market and watching from the sidelines your comment “at awe” is maybe a way to describe it.
After watching foriegn banks then us banks tumble.I watch the dow finish Up for the day.I just have this picture of uncle Ben sitting behind a curtain with a Chimp.Every half hour the chimp hits the big button that says “up” and smiles and claps his hands.
The dollar plummits and Uncle Ben tells him no worries its all under control.
With more bad news to come including more foreclosures, job losses, retail slumps , higher gas and food prices there is NO bottom in sight for this mess.
Anyone that thinks the market has hit bottom is dreaming.This meltdown will not happen over night.
The Fed has sold out the dollar and the average citizen.We are going to be a 3rd world type country . Its just a matter of time.
I would second that. I have done really well in this market for the past year, but now it seems like things have moved to different level. Last week my company, which is a well established player in its field, with tons of cash, did its first round of lay offs. It feels like we were a bunch of kids talking about monsters but never quite believing we will see one. But now that we hear heavy footsteps approaching, I wonder how many of us can bear to see what it looks like.
Random thoughts on this most beautiful day (weather wise)
The Federal Reserve adding these TAF and other funds is like trying to fix a flat tractor tire with a single can of fix-a-flat.
By continuing to lower the fed Funds rate, the crisis in the dollar is happening from inside the US. Its not foreign investors buying Euros, its Americans. This will result in a run on the bank.
I have had a most excellent investment year. I would love to be in riskless positions. Anybody know where? I don’t have any idea of a riskless investment for 12 months. Not treasuries or gold, in a normal year there are usually a dozen flight investments available. Not today.
Much as I do not like most Federal reserve actions, I really do like and enjoy reading Mr. Bernanke. I actually sense that he understands much of the problems. It is a shame to be associated with the Federal Reserve at this time. It is a no win situation.
“Not treasuries or gold, in a normal year there are usually a dozen flight investments available.”
There is some comfort in knowing that my personal conundrum is also your conundrum. I think BiM’s diversification strategy is best at times like these, when something could go haywire with any particular “safe” asset class one chose, and whatever monies are still out there may get (forcibly) requisitioned for the ongoing rescue attempt.
Maybe, but his investment strategy(?) is down this year. Not safe. His overweight in financial securities in the US and internationally could wipe out a few years profit.
Safe is being able to go into the BWCA for three months without a phone and have made inflation plus 1% apr after taxes on the profits. If it does not do that, then the risk is to great.
Everything about Ely is special….
I suppose the special part is if you have enough money (or rather none) to engage in backwater self sustaining living for three months, inflation is not an issue.
Im hearing you Hoz…you add much to the discussion.
I hope to go to BWCA before leaving the planet; it may be a while before I am free enough to do so for three months, though!
Everything in Ely is special….
In order to engage a 3 month self sustaining, live off the land trip….inflation is not an issue. You either have too many moneys or none.
How I long for the day of the former, but isnt that the rub…how much is enough, or do I really need any?
We, as Americans, have become a culture of money. A culture of more. A culture of nothing…..a virtual culture. What is so now, will not be so in the future….
what is so?
sorry for the double post, I was pindeing a 200bps cut.
the Henry’s makes me goofy.
5:51PM Thornburg Mortg files a mixed-securities shelf offering in an S-3ASR (TMA) 2.25 -0.03
this stock is buy under 2.00
The new black: asceticism. The ability to maintain and improve personal health while living cheaply will trump all.
Vozworth — Appreciate the sentiment. There is (potentially) much more to life than making as much dough as possible.
Congrats on your investment success. Also a beautiful day here in coastal N. Fla, como de costumbre.
Nothing riskless, but if the Fed goes 100 tomorrow, sailing should be fairly clear for gold.
Last gold bull market, gold went up from $35 to $800, or 2000%. So far, up 300%. Fed is now taking junk paper - this is looking like leading to a full bailout, which could easily lead to a nationalization or quasi-nationalization of banks. Only hiding place in such an environment is gold.
As salinasron says, every dip people are still nibbling (and I also have been guilty at times) - just today Kass and Gartman turned bullish. For non-traders, financial meltdown just looks more likely on fundamentals here than any long-term, meaningful stock market rally.
“Nibble, nibble mousekin,
Who’s nibbling at my housekin?”
The temptation to nibble is tempered by fear that da boyz might be helping the wealthiest on to the liferafts while trying to convince the rest of the passengers not to unduly worry about the minor iceberg collision just experienced.
What held up the blue chips today?
MARKET SNAPSHOT
Stocks mostly bounce back after Bear Stearns fall
By Kate Gibson, MarketWatch
Last update: 5:02 p.m. EDT March 17, 2008
NEW YORK (MarketWatch) — U.S. stocks shook off the bulk of their steep losses on Monday, with J.P. Morgan Chase fronting a blue-chip rise just one day after its heavily discounted bid for Bear Stearns Cos. and the Federal Reserve’s extraordinary discount rate cut, its first weekend move in nearly 30 years.
“This may be the beginning of the end of the crisis; the Fed has made it clear it will do anything to avoid a calamity — just the confidence boost the market needed,” said Jeffrey Kleintop, chief market strategist, LPL Financial.
Tags
fixing manipulation market ppt recession the thrill-ride
What held up the blue chips today?
Pretty simple - JPM
How many times have you heard this in the last 12 months:
“People are going to look back on today 6-12 months from now and realize it was one of the greatest buying opportunities.”
And yet nobody, or virtually nobody, addresses the underlying problem, the topic of this blog. House prices have not properly corrected, and assets based on house prices are not, in toto, fully discounting the proper correction. Until that problem is ended, or at least somewhat close to ended, it will be fits and starts for the stock market, with lower lows and lower highs.
I think the secret plan (hope?) is that somehow, housing price inflation can be restarted and it will all be good again.
As Ben has frequently noted, this will do nothing to thwart the builders from continuing to build until the bubble premium evaporates. How this can happen without lower real prices remains to be seen. (Best guess: Enough inflation eventually happens so the nominal price decline does not look “that” bad, but the real price damage relative to the bubble top is in the bag.)
Monday, March 17, 2008
Will taxpayers pay for Bear XXXXXXX?
I feel compelled to note that a few months ago, the only discussion of XXXXXXXs of which I was aware of took place on this forum. The discussion has cascaded down to the MSM.
That discussion is clearly off limits, and will be knocked down via: Systemic collapse and Global Security.
XXXXXXXXX’s are off the table, as far as you know. we will no longer have “VALUATION DISCOVERING MOMMENTS” in the stock market, or the bond market, or the currency market, or the XXXXXXXXX market.
slow and steady, up and down….known unknowns.
Take home message for the Wall Street finance gang: Always be sure to precipitate a sufficiently massive financial catastrophe to silence any and all critics of XXXXXXXs.
Monday, March 17, 2008
Life is unfair, and so is the XXXXXXX
If the FED lowers by 200 bps,
the yield curve would be more normalized, more so than at any point prior…going back to very early 2000. Similiar to March 2000, but at significantly lower levels….normalization is the objective. But that is some Cheap money….
However the implications of that move, would crush many short positions, and those are tethered positions….so its orderly lowering, or rip the bandaid SHOCK AND AWE SLASHING OFF 200BPS off higher for everything remotely associated with equity (equity lasts forever)
With orderly lowering, target action on the S&P is getting longer at lower levels maybe 1190, next and final step 1024. At 1024 on the S&P…all the way back in. 1024 implies an inflation adjustment to 800 for 5 years.
If the commodities Crash, thats a wrap on deflationary depression…might go global, and in some way save the dollar.
Value of fed easing to the market is looking like tracking 1/x, or maybe even 1/x(squared), where x is the number of easings: rapidly approaching 0.
Cool — a mathematical model for the marginal effect of string pushing!
Ssshhhhh…if you talk too loud, Lehman might tip over:
telegraph.co.uk
Wall Street rallies to aid Lehman
“Wall street’s leading investment banks have rallied around ailing rival Lehman Brothers after the Federal Reserve Bank of New York urged them to support the institution in order to try and preserve financial stability…
…One American banker said: “[We heard] from the top, ‘Do not encourage calls to Lehman clients. We want to run that up the flagpole. We don’t want another run on a bank.’ ”
As a result, it is believed that bankers were told not to solicit Lehman’s clients for business or to give the impression the bank is uncreditworthy.
Lehman’s business model is closest to that of Bear Stearns, and there has been considerable speculation surrounding the state of its balance sheet…”
Sorry OT…
Iraq war costs inspire shock and awe
By Stephen Fidler in London
Published: March 17 2008 17:18 | Last updated: March 17 2008 20:03
Now I finally get the decoupling thingee, as the U.S. stock market saw relatively little impact from the BSC implosion, while meanwhile across the Pacific…
ASIA MARKETS
Shanghai extends fall, leads region lower
By V. Phani Kumar, MarketWatch
Last update: 12:07 a.m. EDT March 18, 2008
DAVID WEIDNER’S WRITING ON THE WALL
A return to regulation
Commentary: Its Wild West era over, Wall Street puts down the gun
By David Weidner, MarketWatch
Last update: 12:01 a.m. EDT March 18, 2008
NEW YORK (MarketWatch) — Remember the good old days when Wall Street’s biggest “problem” was too much regulation?
Those federal watchdogs Wall Street told us were doing everything possible to drive away business are now nursing an industry in critical condition.
Fed’s Actions Are Reminiscent Of Japan in ’90s
By Mark Gongloff
Word Count: 516 | Companies Featured in This Article: Bear Stearns, J.P. Morgan Chase
They took the words right out of my post (from several months back…)
For World’s Bankers, Trust Becomes a Rare Commodity
By Carrick Mollenkamp and Gregory Zuckerman
Plans Would Boost Funds For Mortgages
By Damian Paletta
Word Count: 428 | Companies Featured in This Article: Fannie Mae, Freddie Mac
OMG — the financial situation has spilled over into the Daily Show headline news. There is an interview with correspondent Aasif Mandvi which gives the appearance he has just jumped out of a building and is on the way down. Good footage of W giving reassurances that the economy is on a firm footing.
Professor Bear …In answer to your question from above about how do I know that “in general Wall Street was happy today “.
Doesn’t your post 16:38:02 prove that my statement was right ?