ac writes:

Can we plot these predictions on a graph, fit a curve to it, and predict what we'll be predicting in, say, a month from now?

ac | 03.25.08 - 3:07 pm | #

SC writes:
We are half way through in my estimation. The bullishness in financials in the past two weeks belies an unfounded optimism. Look at the economic numbers of the past two weeks. Recessions really hurt banks, remember 2001? We're just beginning the effects of this recession on financials. Yes, I said just beginning...
SC | 03.25.08 - 3:10 pm | #

chickenlittle writes:
The Chicken Predicts $12 Trillion when it is all said and done(not including asset depreciation)

There simply too much debt at the municipal, corporate, and individual levels to be supported by current cash flow.

CASH FLOW is declining as credit contracts. No more borrowing on HELOCS to pay credit cards. As cash flow contracts, more debt will default. As more debt defaults, credit will be tightened.

Can anyone say Negative Feedback Loop.
chickenlittle | 03.25.08 - 3:12 pm | #

REBear writes:
http://www.nytimes.com/reuters/b...it- goldman.html

Goldman Sees $1.2 Trillion Global Credit Loss
REBear | 03.25.08 - 3:15 pm | #

anonymous writes:
No but we can say positive feedback loop.
anonymous | 03.25.08 - 3:15 pm | #

Nemo writes:
No need to worry; the losses are being shifted to the Fed as we speak.
Nemo | Homepage | 03.25.08 - 3:16 pm | #

anonymous writes:
PS I think that the most basic data is there to show that the system is toast, but in that basic data the obvious is being overlooked.
anonymous | 03.25.08 - 3:17 pm | #

Neal writes:
1.2 trillion this year, more next.


How many balls can the Fed juggle, given that this administration has ony a couple of people that they trust?

Harriet Meyers for economic czar?
Neal | 03.25.08 - 3:19 pm | #

Red Pill writes:
No but we can say positive feedback loop.
anonymous | 03.25.08 - 3:15 pm | #

lol! Yes, it will be a positive feedback loop, but it will be a negative positive feedback loop.
Red Pill | 03.25.08 - 3:20 pm | #

Troy writes:
Japan's LTCB bank lost what, $20 billion? 20 to 25 x the damage, whoah.
Troy | 03.25.08 - 3:22 pm | #

Jim writes:
Allan Meltzer: inflation danger in 2009/2010. Might require drastic rise in interest rates and another consequent recession. Perhaps a continuation of this one.

http://money.cnn.com/2008/02/05/...rtune/ index.htm

Stock market still very expensive.
Jim | 03.25.08 - 3:22 pm | #

Yalt writes:
Most of the write-offs to date relate to residential mortgages, so here we may be halfway through the process, perhaps even a bit further.

I have no idea how the phrase after "so" in this sentence follows from the one before it.
Yalt | 03.25.08 - 3:22 pm | #

wally writes:
The 20 percent of the total losses they are attributing to 'commercial mortgages' has to be a pretty wild guess at this point.
wally | 03.25.08 - 3:26 pm | #

michael schumacher writes:
GS totally underestimates the write-offs because it can then call yet another bottom in the coming weeks as Q1 "results" are announced....

This has about 20x more to go based on what they say......

As already mentioned......Japan had how much of a loss??? Does anyone REALLY know???

But continue to buy stocks so that we can benefit from yet another bottom call.

We need to build bigger jails for all these bankers.

Ciao
MS
michael schumacher | 03.25.08 - 3:26 pm | #

byzantine_ruins writes:
Don't forget subprime sovereign lending.
byzantine_ruins | Homepage | 03.25.08 - 3:28 pm | #

Pondering the Mess writes:
Ah, a half-trillion in losses - so that's why the market keeps going up!

I assume Goldman Sucks sold these "losses to be" to their customers and then shorted them, thus making a fortune? Or, maybe the Fed will bail them out?
Pondering the Mess | 03.25.08 - 3:29 pm | #

idoc writes:
had dinner with my family at Ruth's Chris Easter nite and the place was only half filled unlike btwn Christmas and New Yrs when it was filled. lots of personal attention from 2 waiters. valet parking attendants were nowhere in sight which was strange.
idoc | 03.25.08 - 3:31 pm | #

Interesting Times writes:
It's hard to tell the actual losses to date, because hedge funds will probably not announce losses, and some losses are actually gains for other institutions.

Thank god for SRS....
Interesting Times | 03.25.08 - 3:31 pm | #

Anon writes:
Yalt, perhaps the here refers to residential mortgages. Otherwise, it should read "about 1/4 of the damage" imho.
Anon | 03.25.08 - 3:31 pm | #

crispy&cole writes:
Didn't GS say they were not going to have any writedowns?

Then they announce a few billion and no one calls them on it?
crispy&cole | Homepage | 03.25.08 - 3:33 pm | #

Barley writes:
Alls I can say is thank God these folks have risk mgmt teams or the losses might be a lost "worser"
Barley | 03.25.08 - 3:34 pm | #

Average Joe writes:
So let me get this straight,

lending to homebuyers, homebuilders, commercial builders, corporations, and consumers over the last several years, as the Fed kept rates at 1%, as asset prices were rising, and the economy was growing, actually leads to huge losses as opposed to the income gains they originally thought?

So getting lending standards back to normal means that the losses can continue?

Now we are moving into an environment of falling asset prices, oversupply of housing and commercial realestate, a contracting economy, and frightened consumer, absense of MEW, etc, and so now financials are at bottom?

We have just learned that they not only didn't earn anything over the last 5 years, but actual lost money in the most favorable environment in decades.....and they are now supposed to be able to do what they haven't done in a pending admittedly worse environment.
Average Joe | 03.25.08 - 3:37 pm | #

horatius writes:

Can anyone say Negative Feedback Loop.
chickenlittle


It's positive feedback loop, but in the wrong direction. A negative feedback loop describes a hyper-stable system.
horatius | 03.25.08 - 3:38 pm | #

12th Percentile writes:
Barley,

with all the layoffs they probably won't have risk management teams soon.
12th Percentile | 03.25.08 - 3:38 pm | #

Yalt writes:
Anon writes:
Yalt, perhaps the here refers to residential mortgages. Otherwise, it should read "about 1/4 of the damage" imho.

I'm sure that's what "here" refers to--I just can't figure out how you can deduce anything about the total % of the residential losses we're already through merely from the fact that they haven't started writing the other stuff down yet.

It kind of looks like they started with an estimate for the total losses and they're working their way backwards to the particulars (reminds me of how we used to budget at a particularly dysfunctional corp I used to work for).
Yalt | 03.25.08 - 3:39 pm | #

iceman writes:
John McCain: “It is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.”

I wished he had followed up that statement by saying, "... and Ben B., for bailing out Bear Stearns, get your bags packing."
iceman | 03.25.08 - 3:39 pm | #

Dan writes:
And the market drums on...
Dan | 03.25.08 - 3:39 pm | #

Lawrence Yun writes:
And yet they continue to manage and profit from OPM (investors AND taxpayers).

At this point, anyone who believes these guys are solvent, or that they aren't shoveling money into their private accounts, is a tool.
Lawrence Yun | 03.25.08 - 3:40 pm | #

crispy&cole writes:
iceman-

All this McCain love is driving me nuts!

He is just parroting what Bush said. Meanwhile, BSC bond and preferreds (and eventually common) holders get BAILED OUT!
crispy&cole | Homepage | 03.25.08 - 3:41 pm | #

Barley writes:
"global credit losses stemming from the current market turmoil will reach $1.2 trillion, with Wall Street accounting for nearly 40 percent of the losses"

lets finish this sentence, shall we

"and the US tax payer making up the other 60% by way of the Feds backstop financing. Goldman went on to say that while there will be layoffs in the current circumstances, executive pay, options of stock, and bonuses should remain healthy as the global economy rests on our shoulders. We stand firm in our resolve to help make money by buying and selling paper generated by others sweat. Good night and God Bless all of you!"
Barley | 03.25.08 - 3:41 pm | #

Marcus Aurelius writes:
DJIA 20,000 by the end of the month.
Marcus Aurelius | 03.25.08 - 3:43 pm | #

ac writes:

John McCain: “It is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.”

I wished he had followed up that statement by saying, "... and Ben B., for bailing out Bear Stearns, get your bags packing."

Again, I'm speculating that this means the polling data shows enough negative sentiment about the bailouts that it could be made into an election issue that seems to fit better into the red bucket of immutable truths rather than the blue bucket of immutable truths.

ac | 03.25.08 - 3:48 pm | #

Kp writes:
No one has even the slightest idea just how far we have come in this mess(cause the requires knowing the end point)or have far we are going to go from here in this crisis.

Anyone that tells you different...especially tells you even a very rounded number...is full of something and it ain't the holy spirit.
Kp | 03.25.08 - 3:48 pm | #

Rob Dawg writes:
Residential mortgage losses will represent about half the damage, with another 15%-20% coming from commercial mortgages. Credit card loans, auto loans, commercial and industrial lending, and nonfinancial corporate bonds make up the remainder.
Pray tell ye gods of the financial statement. What exactly is a nonfinancial corporate bond or commercial and industrial lending such that any real estate is not part of the equation? Likewise credit cards sans real estate? How do they determine that the debtor is paying their mortage and not their credit card? Or vice versa?
Rob Dawg | Homepage | 03.25.08 - 3:50 pm | #

crispy&cole writes:
Market holding up today - over at naked capitalism is a report on the fed buying S&P etf's to prop up the market...I am cyncial, but come on..
crispy&cole | Homepage | 03.25.08 - 3:51 pm | #

Kp writes:
Has anyone of the candidates taken a position on bailouts for banks/non-banks/ teachers_with_huge_mortgages_who_want_ponies?

I haven't heard anything...from anyone.
Kp | 03.25.08 - 3:51 pm | #

Yalt writes:
Well, Wells Fargo is looking for a "fixer upper", and I suppose CFC would be worth a lot more if the Federal Reserve would be willing to take on $39B of the losses, and no doubt Mozilo has a lot of underwater options....

From the DJ newswire, after a mention of the heavy activity today in CFC $7.50 calls:

JP Morgan's deal for Bear Stearns "potentially opens a can of worms," said Rebecca Engmann Darst, an equity options strategist for Interactive Brokers. "What's a fair price for the companies at the epicenter of the subprime meltdown?"

...

Countrywide shareholders have balked at the price, and JP Morgan's decision to raise its offer for Bear Stearns to about $10 a share from $2 could encourage them to press harder for a higher price from Bank of America, Darst said.

What's more, the Federal Reserve's decision to take control of $30 billion of troubled Bear Stearns assets could also embolden another buyer for Countrywide to emerge.

Gonna be a hell of a hangover in the morning....
Yalt | 03.25.08 - 3:52 pm | #

BearChase writes:
Goldman translation: We are really short the market, and to help it come down we have done some reaseach and deicded that there's gonna be 460Bazillion in losses.
BearChase | 03.25.08 - 3:52 pm | #

ac writes:

Market holding up today - over at naked capitalism is a report on the fed buying S&P etf's to prop up the market...I am cyncial, but come on..

Funny how the Fed has been borrowing in Yen the past few days, to prop up the markets, isn't it?

They must be all out of dollars.

ac | 03.25.08 - 3:55 pm | #

sam writes:
Marcus Aurelius

leave out one zero
sam | 03.25.08 - 3:57 pm | #

ZackAttack writes:
Of course the Fed manipulates the market.

What else could you possibly make of the timing of that first emergency rate cut - before the open on a triple-witch day.

Plainly, it was engineered to flush out shorts.

The Fed would probably say it's in the public interest because rising equity prices would give undercapitalized banks an opportunity to reliquify with a secondary offering.

I can't count the number of times I've seen an extra-large repo done in the morning, followed by mysterious futures-led buying in the afternoon, precisely at, or slightly below and important support level.

Of course they manipulate markets. To assume otherwise would be naive.
ZackAttack | 03.25.08 - 4:01 pm | #

chickenlittle writes:
Negative feedback feeds part of a system's output, inverted, into the system's input; generally with the result that fluctuations are attenuated. Many real-world systems have one or several points around which the system gravitates. In response to a perturbation, a negative feedback system with such point(s) will tend to re-establish equilibrium.

In many physical and biological systems, qualitatively different influences can oppose each other. For example, in biochemistry, one set of chemicals drives the system in a given direction, whereas another set of chemicals drives it in an opposing direction. If one, or both of these opposing influences are non-linear, an equilibrium point(s) results.

In Biology, this process (generally biochemical) is often referred to as Homeostasis; whereas in Mechanics, the more common term is equilibrium.

In Engineering, Mathematics and the Physical and Biological Sciences, common terms for the points around which the system gravitates include: attractors, stable states, eigenstates/eigenfunctions, equilibrium points, and setpoints.

'Negative' refers to the sign of the multiplier in mathematical models for feedback. In delta notation, -Δoutput is added to or mixed into the input. In multivariate systems, vectors help to illustrate how several influences can both partially compliment and partially oppose each other.

In contrast, positive feedback is a feedback in which the system responds in the same direction as the perturbation, resulting in amplification of the original signal instead of stabilizing the signal. Both positive and negative feedback require a feedback loop to operate, as opposed to feedforward, which does not rely on a feedback loop for its control of the system.

Examples of the use of negative feedback to control its system are: thermostat control, phase-locked loop, hormonal regulation, and temperature regulation in animals.

A simple and practical example is a thermostat. When the temperature in a heated room reaches a certain upper limit the room heating is switched off so that the temperature begins to fall. When the temperature drops to a lower limit, the heating is switched on again. Provided the limits are close to each other, a steady room temperature is maintained. The same applies to a cooling system, such as an air conditioner, a refrigerator, or a freezer.

Some biological systems exhibit negative feedback such as the baroreflex in blood pressure regulation and erythropoiesis. Many biological process (e.g., in the human anatomy) use negative feedback. Examples of this are numerous, from the regulating of body temperature, to the regulating of blood glucose levels. The disruption of negative feedback can lead to undesirable results: in the case of blood glucose levels, if negative feedback fails, the glucose levels in the blood may begin to rise dramatically, thus resulting in diabetes.

FIRST IT WILL ACT AS A NEGATIVE FEEDBACK AND THAN MORPH INTO A NEW NEGATIVE POSITIVE FEEDBACK HENCE BEING POSITIVE AT FIRST FOR THE ECONOOMY THAN BECOMING NEGATIVE. WHEW!!!
chickenlittle | 03.25.08 - 4:01 pm | #

Kurtyboy writes:
So, refresh my economic memory.

Is $460,000,000,000 a lot? If not, what about $1,200,000,000,000?

Just curious...
Kurtyboy | 03.25.08 - 4:02 pm | #

dc1000 writes:
Someone will call me a troll for this but here goes:

Yeah capital markets are tough right now and so is home building. But you'd never guess what happened to me this week.

Our group obtained a $33MM commitment to continue land development projects on a 601 lot development in NoVa. Each of the 601 lots are presold to national builders.

Everyone is moving ahead full steam.

The houses are priced in the 300-400 range and are 4-5 BR with a yard on a lake. Not too bad.

But the loans are there, the builders are there and the buyers are there too.

What a weird twist.

Even if New Homes Sales drop to 400k - thats 400k right?
dc1000 | 03.25.08 - 4:04 pm | #

Hawkeye writes:
They keep referring to the Bank losses, how about all the middle america small investors that were sold all these crappy "income" mutual funds that have lost huge amounts???That has to be billions too, how are they counted??
Hawkeye | 03.25.08 - 4:05 pm | #

jd writes:
I got to tell you folks. I enjoy reading your posts, but this is like chinese water torture. Is this supposeded to be an ordely destruction of our financial system? Why not just do it in one fell swoop. Lets take the whole darn world with us and see what happens at the end. This is utter madness. The teeth are diseased, pull them out already. Every day a little more torture. Bush really wants the rapture to come on his watch. Well so be it. I bought my ticket to heaven on the rapture express on Ebay for 500 dollars. I have an aisle seat. I will be the one with the vodka. DO it George, just go ahead and do it. Bomb Iran while you are at it. Thank you kindly everyone for letting me rant.
jd | 03.25.08 - 4:06 pm | #

dunham writes:
dc,

was it a new loan, or did you get taken out by your existing lender?
dunham | 03.25.08 - 4:10 pm | #

crispy&cole writes:
"presold to national builders"

Did they pay for these lots? A local guy sold $40 million to a national builder and a WS group and they walked away from their multi million dollar deposit. He is now going bankrupt...
crispy&cole | Homepage | 03.25.08 - 4:11 pm | #

dc1000 writes:
tripled the old loan. took out the old the one and made it much much bigger to push the development onward
dc1000 | 03.25.08 - 4:11 pm | #

Angry Saver writes:
Soylent Green is people
Angry Saver | 03.25.08 - 4:11 pm | #

ac writes:

Someone will call me a troll for this but here goes:

Hey, the economy contracts a bit, but doesn't stop.

Didn't 75% of people keep their jobs during the Great Depression?

Doesn't sound so great that way does it!

ac | 03.25.08 - 4:11 pm | #

Angry Saver writes:
dc1000,

300-400K for a 4 or 5 bedroom house with a yard on a lake! Sounds too good to be true.
Angry Saver | 03.25.08 - 4:14 pm | #

It is me from Europe writes:
Please read what I am about to say carefully. Note that I am comparing economies, not political systems and even less the society at large.

Looking at the US economy currently, as an economic historian, I see a striking resemblance with a surprising regime. The US economy is highly dependent on foreign raw materials and products, in paricular oil,has an overextended emphasis on military industry, the relationship between big business and central government is cozy to a degree of corporate welfare, a war that is costing excessively is being waged without end in sight (read the new book by Stiglitz), stock market is covertly managed by the authorities, large dependency on foreign (though obviously not forced) labor, unwilligness to cut down private consumption to a degree necessary to maintain the war ...yup...Nazi Germany in circa 1942. Before flaming, please read my disclaimers again. Am not making other observations beyond comparing some aspects of the economic system. That is all.
It is me from Europe | 03.25.08 - 4:14 pm | #

Ralph Cramdown writes:
dc1000: Congratulations. We won't call you a troll. There was a guy in here a week or two ago who got funded and we were all happy for him. Local conditions outweigh national averages, most deals can be made to make sense if the price is right, etcetera.

We may all be subprime, but we're not all below average.
Ralph Cramdown | 03.25.08 - 4:15 pm | #

Sebastian writes:
Dan said: "And the market drums on..."

Corrections of -17% don't come along very often, and discount quite a bit of pessmism when they do.

If there's a shadowy plunge protection team propping-up this market, they've deputized a lot of serious investors with deep pockets to help them out.:)


Sebastian
Sebastian | 03.25.08 - 4:15 pm | #

michael schumacher writes:
zack-

I can't be the only one who is seething at this current pump and dump. The question is what can we plebs. do about it????

I would love to do something about the MASSIVE manipulation..other than try to game it for my own personal benefit I am at a loss (no pun intended) as to what to do about it.

I KNOW this will end in tears so I am just a little upset that we continue down the road of creating ourselves in the image of the PRI in Mexico...

The question remains:

What can WE do about the hijacking of the market????????

Ciao
MS
michael schumacher | 03.25.08 - 4:16 pm | #

Angry Saver writes:
Hawkeye,

Check out SWYSX or VSLAX. Lots of losers in the yield chasing game.
Angry Saver | 03.25.08 - 4:16 pm | #

penny may fabrications writes:
Right on, get those low ball estimates and guesses out there where we can see them (week after week)!
penny may fabrications | 03.25.08 - 4:16 pm | #

Interesting Times writes:
It is me from Europe - Are Muslims the new Jews ?
Interesting Times | 03.25.08 - 4:17 pm | #

Gary writes:
And speaking of trolls . . .
Gary | 03.25.08 - 4:17 pm | #

penny may fabrications writes:
michael schumacher .

Vote with your pension, mutual funds, money markets, bank accounts. Dont support fraud!
penny may fabrications | 03.25.08 - 4:17 pm | #

crispy&cole writes:
Private Equity is crumbling - CCU deal is DONE!! Shares down big...
crispy&cole | Homepage | 03.25.08 - 4:22 pm | #

Alan Greenspend writes:
It is me from Europe.

There are many similarities to that and earlier times. Same dumb choices -


"The national budget must be balanced. The public debt must be reduced; the arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced, if the nation doesn't want to go bankrupt."

Cicero (106 BC - 43 BC), 55 BC
Alan Greenspend | Homepage | 03.25.08 - 4:23 pm | #

crispy&cole writes:
http://www.reuters.com/article/m...20080325? rpc=44
crispy&cole | Homepage | 03.25.08 - 4:23 pm | #

REBear writes:
Analyst: JPMorgan Will Pay About $65 per Share for Bear Stearns

http://www.foxbusiness.com/ marke...s_530376_9.html
REBear | 03.25.08 - 4:24 pm | #

cd writes:
Clear Channel says show me the money!

Clear Channel $19 bln privatization near collapse via marketwatch

more market rallying fodder...
cd | 03.25.08 - 4:24 pm | #

crispy&cole writes:
Fed announcement: "they will subsidize the CCU deal..." All is well again.
crispy&cole | Homepage | 03.25.08 - 4:25 pm | #

Drew writes:
C&C:

Of course announced 10 minutes after close.

RIP LBO's
Drew | Homepage | 03.25.08 - 4:25 pm | #

iceman writes:
re: Clear Channel.

Wasn't it just a year ago that the private equity guys were lauded as the savviest businessmen in the world?

While everyone assured us that the problems in subprime were contained?

Things sure do change in 12 months.
iceman | 03.25.08 - 4:25 pm | #

crispy&cole writes:
iceman - the stock tanked in the last 20 minutes of trading, the insiders got the news before everyone else.
crispy&cole | Homepage | 03.25.08 - 4:26 pm | #

cd writes:
c&c-beat me to it,u were all over it - Like Cooper on Bird in the finals.
cd | 03.25.08 - 4:26 pm | #

crispy&cole writes:
*I mean drew
crispy&cole | Homepage | 03.25.08 - 4:26 pm | #

crispy&cole writes:
"Cooper on Bird" the glory days of the NBA!
crispy&cole | Homepage | 03.25.08 - 4:28 pm | #

It is me from Europe writes:
Alan Greenspend, nice Cicero quote. By the way, a wartime economy should feel like a wartime economy = private consumption reduced for the sake of greater common good. History is ripe with examples showing that you cannot have your cake and eat it too. Either you wage a war or you set new records for private consumption. But not both simultaneously as has been the case lately.
It is me from Europe | 03.25.08 - 4:30 pm | #

4822 writes:
Ford is selling Jaguar and Land Rover lines to Tata Motors of India

"The deal will also see Ford pay about 300 million pounds ($598 million) into Jaguar and Land Rovers' pension funds, according to unions. "
4822 | 03.25.08 - 4:31 pm | #

Ralph Cramdown writes:
michael schumacher wrote: I can't be the only one who is seething at this current pump and dump. [...] What can WE do about the hijacking of the market?

Me, I'm of the view that the market is a little too big compared to the sizes of the capital pools out there to be manipulated as much as some are suggesting, but...

* buy quality earnings
* don't pay significantly more than book
* do your own research
* invest over a long time horizon

Nobody's forcing you to play. If your investment style isn't suited to this market, don't trade. If you're almighty convinced that certain companies are making a killing at the expense of the little guy, buy those companies.
Ralph Cramdown | 03.25.08 - 4:31 pm | #

cd writes:
c&c-yes it was! The best games-2 great teams-Drama/rivalry/fights
unbelievable talent on both sides-both winners

things have changed....
cd | 03.25.08 - 4:34 pm | #

Sebastian writes:
michael schumacher said: "I would love to do something about the MASSIVE manipulation..other than try to game it for my own personal benefit I am at a loss (no pun intended) as to what to do about it."

Well, the first step is to consider the possibility that the recent rise isn't manipulated at all, but based on factors that are genuinely positive.

Like that it's coming after a significant correction has already occurred.

Or that the earnings yield on stocks is high at +6% (using TTM peak earnings) and the 10-year Treasury yield (symbol ^TNX at Yahoo!) is low at 3.49%. This means that stocks are a major value play over bonds.

Or maybe that in January there was a major one-day spike in new 52-week lows on the NYSE, 1100. That's an indication of a major investor shake-out, a panic, climax low.

And like that.


Sebastian
Sebastian | 03.25.08 - 4:34 pm | #

dc1000 writes:
crispy, yeah pre sold but you know they can always default. they put down enough of a deposit that if they default we're happy.
dc1000 | 03.25.08 - 4:34 pm | #

michael schumacher writes:
Sorry fellas it's not that simple.....we are looking at a systemic failure caused by a handful of people.

Caveat Emptor should not be the watchwords for investing.....that it has become that is part of the entire problem.

The market has been taken out of any sane hands. The system is designed and set up for appreciation only. THAT is the problem that needs to be solved, cured or mitigated.

Simply stating that you should invest soundly does NOTHING to address the problem that affects ALL of us.

Seriously what can we do as a group instead of clinging to the very belief system that allowed this mess to grow.....the belief system of "I've got mine so screw the rest of you"..

Our country has been dismantled and all people can say is buyer beware???

Wow I guess I underestimated people's level of frustration...

Ciao
MS
michael schumacher | 03.25.08 - 4:40 pm | #

michael schumacher writes:
Sebastian-

Try again....your hopelessly optimistic prose won't work on me......I actually look at and embrace reality.

Enough has been said about your consistent ignorance of reality. You, of all people, should remain silent on this issue.

What is currently transpiring in what we call "our markets" is so far from any reality even you can see that....or maybe you don't.

Ignore those at your peril.

Ciao
MS
michael schumacher | 03.25.08 - 4:44 pm | #

Fair Economist writes:
Allan Meltzer: inflation danger in 2009/2010. Might require drastic rise in interest rates and another consequent recession. Perhaps a continuation of this one.

This one will drag on for a while. Countercyclical monetary policy softens recessions, but it stretches them out by holding up the value of income-producing assets at the beginning of the recession. Eventually rates must come back up, and the asset values decline, weighing down the economy.

This was very noticeable in both of the last two recessions. The official recessions were short and mild, but afterwards the recovery was weak and slow. By other measures, like employment/population ratio, the recessions went on for years. Since this recession is IMO going to be bigger, I think that the "slow growth" part of the recession will largely be tagged "recession" even by the conservative official figures.
Fair Economist | 03.25.08 - 4:46 pm | #

Angry Saver writes:
Fair Economist,

That's what my I see coming. Inflation and an extended period of weak growth. Likely fake growth.
Angry Saver | 03.25.08 - 4:54 pm | #

FFDIC writes:
AP - FDIC Plans Staff Boost in Dallas to handle Bank Failures
http://ap.google.com/article/ ALe...pRkzOAD8VKISLO1
FFDIC | 03.25.08 - 4:55 pm | #

ron writes:
John McCain: “It is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.”

Or whatever the poll tells me that's what I believe!
ron | Homepage | 03.25.08 - 5:03 pm | #

Red Pill writes:
Regarding the stock market, the bearish views of this board are still a minority (an intelligent minority though ;)). Sure a bunch of analysts are bearish and the business news is getting more bearish BUT the majority of Americans have only the vaguest idea what is going on. Most people I talk to (including scientists, physicians, lawyers, police, etc. )do not have time nor the inclination to keep up with these events. Most have not adjusted the allocations on their 401ks etc. There is a vague nervousness and most are very unhappy with the current leadership, but have trouble articulating exactly why.

Most people are struggling with their own careers and lives and have not had time to develop fact based opinions on the economy. That is changing a little bit as things worsen. When some suggest the views on this board represent an irrational majority it makes me chuckle.
Red Pill | 03.25.08 - 5:06 pm | #

penny may fabrications writes:
How do I become a troll?
penny may fabrications | 03.25.08 - 5:08 pm | #

michael schumacher writes:
I guess I should have realized that acumen of the avg. american consists of categorizing Bear Stearns as a department store....or something along those lines of a post I read yesterday.

At the point of "realization" for these people it will be far too late and the criminals will have moved on......or on to Paraguay...

Ciao
MS
michael schumacher | 03.25.08 - 5:09 pm | #

penny may fabrications writes:
Re: John McCain: “It is not the duty of government to bail out and reward those who act irresponsibly..... like all my lobby friends and financial friends on wall street and in DC
penny may fabrications | 03.25.08 - 5:11 pm | #

penny may fabrications writes:
dc1000

Your not a troll, just a shitbag
penny may fabrications | 03.25.08 - 5:13 pm | #

Barley writes:
FFDIC writes:
AP - FDIC Plans Staff Boost in Dallas to handle Bank Failures

FFDIC - new job listings @ Office of Thrift Supervision, too.
Barley | 03.25.08 - 5:28 pm | #

patriotless writes:
It is me from Europe,

I already knew this last year.

Very scary stuff. There are many more parallels that you have not even touched upon.



.
patriotless | 03.25.08 - 5:32 pm | #

Xregul8r writes:
FFDIC writes:
AP - FDIC Plans Staff Boost in Dallas to handle Bank Failures

Sources inside my former employer indicate that some compliance examiners may be drafted into the safety and soundness examiner ranks this year.

The fun is only beginning in the world of bank regulation.
Xregul8r | 03.25.08 - 5:42 pm | #

FFDIC writes:
Xregul8r - is that your old FDIC password?
FFDIC | 03.25.08 - 5:45 pm | #

Xregul8r writes:
FFDIC writes:
Xregul8r - is that your old FDIC password?

Nope. Not the FDIC. You have 12 guesses as to my former federal bank regulatory agency employer.

However, I still use my old network ID as a logon to some websites.
Xregul8r | 03.25.08 - 5:53 pm | #

anon writes:
You worked for the Comptroller of the Currency.
anon | 03.25.08 - 5:58 pm | #

Mortage Pig writes:
Am I upside-down yet?

Inverted Curve
Mortage Pig | Homepage | 03.25.08 - 5:58 pm | #

anon writes:
Xregul8r

I used to work for the FDIC on Park Avenue NY. My territory was Ny, Nj, Puerto Rico and the Virgin Islands. My per diem for the Carrribean payed for alot of Rum. Those were the good old days
anon | 03.25.08 - 6:00 pm | #

Xregul8r writes:
@ anon:

Nope, not the OCC, either. My territory was nowhere near as exotic as yours. I didn't worry too much about the per diem, as we'd just go out to dinner and then lock ourselves in our motel rooms and watch cable. Not good to be out and about after dark and hear, "You got a pretty mouth..."
Xregul8r | 03.25.08 - 6:03 pm | #

Xregul8r writes:
On the other hand, ritual visits to the Waffle House and Chinese buffets were an absolute requirement for a successful examination.
Xregul8r | 03.25.08 - 6:05 pm | #

anon writes:
Xregul8r

National Credit Union Administration or the Fed Reserve or office or the OTS. if it isnt one of those, then you flew to work in black helicopters
anon | 03.25.08 - 6:07 pm | #

anon writes:
Waffle House? That means you worked down south. has to be the NCUA..
anon | 03.25.08 - 6:08 pm | #

Raging Bulls Unite!!! writes:
Xregul8r


Is that your waste size or IQ?
Raging Bulls Unite!!! | 03.25.08 - 6:10 pm | #

Xregul8r writes:
@ anon:

There ya go, #2 on your list. If only we had some black helicopters. As it was, we had to ride around in Grand Caravans.

One last bit of examiner lore: it is critical to learn to live off the land, and by that I mean going to the Super Wal-Mart and buying the chicken fingers dinner. Fills you to bursting for very little $$$. Plus, an added bonus of soaking up the local culture in Wal-Mart in the evening.

Oh, the memories!
Xregul8r | 03.25.08 - 6:11 pm | #

Xregul8r writes:
anon writes:
Waffle House? That means you worked down south.

Much of the time. Good eatin', though, if you like home cooking. (Not referring to Waffle House, of course). Sticks to your ribs, and your arteries.
Xregul8r | 03.25.08 - 6:15 pm | #

anon writes:
Xregul8r
when I worked Puerto Rico I would eat only at burger kings or Mcdonalds and keep the hefty per diem. It added up quickly having spent a few years on and off down there. But, I got to tell you. The loneliness wasnt worth it. I still cringe when I see the inside of a Holiday Inn and most the examiners I worked with turned into alcoholics. The state used to send in their examiners to do a joint examination and boy were some of them STOOOOOOPID. I left the FDIC after contracting some rare disease while hiking through the rain forests in Puerto Rico. I t took me down for a good year. Thought I was going to die. The trials and tribulations of the bank examiner.
anon | 03.25.08 - 6:38 pm | #

anon writes:
Xregul8r
The FDIC is calling back alot of the old timers and offering damn good pay up to 180k to work on the sh&T load of banks that will be failing in the near future. I wont call them back. My friends are all leaving now and taking jobs with the banks they examined. Thats how the game works. If you are looking for work call the FDIC. With your background I bet they would go for you.
anon | 03.25.08 - 6:42 pm | #

Anonymous writes:
Mortage Pig-
LOL!
Anonymous | 03.25.08 - 6:55 pm | #

burnside writes:
You in Europe,

You had broad pickins for historic parallels - the Johnson and Nixon years, England rather than Germany in '42, Cicero (yes!), possibly even the Dreyfuss case.

Then you might have been able to skip some of the disclaimers. Consciously or not, however, that wasn't your object. J'Accuse!
burnside | 03.25.08 - 7:08 pm | #

Renterfornow writes:
Listen to that psycho diluter greenspan.

Guy is a complete failure.
Renterfornow | 03.25.08 - 7:38 pm | #

Daniel Nicolas writes:
as a side note, i love that this is labeled "Confessional"!
Daniel Nicolas | Homepage | 03.25.08 - 8:20 pm | #

anon writes:
http://www.bloomberg.com/avp/ avp...5SLFncnzYHc.asf
anon | 03.25.08 - 8:31 pm | #

Topher writes:
What are 13 or fourteen zeros these days?

How much can you afford to pay a month?

Hey I can finance your house for 50 years or your car for 8-10 years.

Just sign right here by the X___________

Come on the Fed will back you up!
Topher | 03.25.08 - 8:32 pm | #

Xregul8r writes:
anon writes:
The loneliness wasnt worth it.

True dat. The road loses its appeal after a while. Great job for those with unhappy marriages, though. My co-workers suffered back problems from schlepping heavy detail bags thru airports and intestinal problems from iffy food. Drinking held a fascination for some. When I started examining the same banks for the third go-around, staying in the same motel in the same crappy town, I was done. Getting promoted a grade wasn't sufficient compensation.

With your background I bet they would go for you.

Perhaps, but I'm a compliance officer now (in an FDIC bank, so I don't see my old pals) where I get to do much more interesting stuff. Definitely don't want to be an examiner again.

If the RTC is restarted, though, that might be interesting. Once the failures really get rolling, there will be opportunities however the workouts are structured.
Xregul8r | 03.25.08 - 8:40 pm | #

sam writes:
Don't miss this interview with Jim Grant of Grant's Interest Rate Observer.

http://www.bloomberg.com/avp/ avp...5SLFncnzYHc.asf
sam | 03.25.08 - 8:42 pm | #

sequoia512 writes:
Didn't some fool named Bovwe jujst say the worst was over?
sequoia512 | 03.25.08 - 9:02 pm | #

Viewing with alarm writes:
CR estimated losses in the trillions last fall and no one else was over $20 billion. Nice to see some of Wall Street wizards starting to catch up.
Viewing with alarm | Homepage | 03.25.08 - 9:07 pm | #

J at Not One Cent writes:
If we have a credit crunch precisely because we do not know who has what on book, then no one can declare "half over" or the final losses--and we did not gain transparency when the Fed started to stash mortgage products on its books.

However, you might enjoy the cartoons by clicking my name link.
J at Not One Cent | Homepage | 03.25.08 - 9:53 pm | #

sam writes:
FDIC Plans Staff Boost for Bank Failures
Tuesday March 25, 2:59 pm ET
By Alan Zibel, AP Business Writer
Federal Deposit Insurance Corp. to Add 140 Workers to Bank-Failure Division As Crisis Deepens


WASHINGTON (AP) -- Anticipating a surge in troubled financial institutions, federal regulators will increase by 60 percent the number of workers who handle bank failures.
The Federal Deposit Insurance Corp. wants to add 140 workers to bring staff levels to 360 workers in the division that handles bank failures, John Bovenzi, the agency's chief operating officer, said Tuesday.

ADVERTISEMENT


"We want to make sure that we're prepared," Bovenzi said, adding that most of the hires will be temporary and based in Dallas.

There have been five bank failures since February 2007 following an uneventful more than two-year stretch. The last time the agency was hit hard with failures was during the 1990-1991 recession, when 502 banks failed in three years.

Analysts see casualties rising, but don't believe they will reach early-1990s levels.

Gerard Cassidy, managing director of bank equity research at RBC Capital Markets, projects 150 bank failures over the next three years, with the highest concentration coming from states such as California and Florida where an overheated real estate market is in a fast freeze.

To cushion against losses from bad loans, banks likely will raise additional capital and cut dividends this year, said Tony Davis, a senior bank analyst with Stifel Nicolaus & Co. Inc. However, he said, "we're not looking at a massive number of bank failures."

The FDIC provides insurance for deposits up to $100,000. While depositors typically have quick access to their bank accounts on the next business day after a bank closure, winding down a failed bank's operations can take years to finish. That process can include selling off real estate, investments and dealing with lawsuits.

There are 76 banks on the FDIC's "problem institutions" list -- which would equate to about 10 expected bank failures this year, though FDIC officials declined to make projections. Historically, about six banks fail per year on average, FDIC officials said.

Since 1981, total failures per year averaged about 13 percent of the number of institutions that started the year on the agency's list of banks with weak financial conditions.

There have been two failures in 2008 -- both of which were small Missouri-based banks. By far the largest recent failure was the September 2007 shutdown of Georgia-based NetBank Inc., an online bank with $2.5 billion in assets. NetBank's insured deposits -- representing more than 100,000 customers -- were assumed by ING Bank, part of Dutch financial giant ING Groep NV.

The FDIC's chairman, Sheila Bair, has said that banks that were cautious about their lending should be able to weather the economic downturn, but cautioned that those that weren't so careful won't be so lucky. Analysts warn of lurking weaknesses, especially in smaller banks with a high concentration of real estate construction loans.

FDIC officials said last month they planned to bring back about 25 retirees to the agency and noted those workers will train new hires. Over the next five years, about 50 percent of employees with experience in bank failures, especially those who were at the agency during the savings and loan crisis of the late 1980s and early 1990s, will be eligible for retirement, officials added.
sam | 03.25.08 - 10:25 pm | #

Graffiti Grammarian writes:
Goldman is the biggest bear in the market, and keeps pushing bearish sentiment because it's make loads of money off of it thru short selling.

I'm just saying...everybody has an agenda, and Goldman is probably more aggressive than anybody else at pushing its own agenda......
Graffiti Grammarian | 03.25.08 - 11:11 pm | #

Anonymous writes:
Goldman Sachs forecasts global credit losses stemming from the current market turmoil will reach $1.2 trillion, with Wall Street accounting for nearly 40 percent of the losses.
Anonymous | 03.26.08 - 3:06 am | #

kidbuck writes:
Spoken like a true shill. "300-400K for a 4 or 5 bedroom house with a yard on a lake!" Don't forget we've also had a bubble in "lake" acreage. There used to be a perfectly good word called "ponds" in the old days. I've seen the lakes of Northern Virginia. We used to call them puddles.
kidbuck | 03.26.08 - 5:17 am | #

dc1000 writes:
i suppose. 70 acres is not that big. really.

thing is in nova, there arent even that many ponds.
dc1000 | 03.26.08 - 9:33 am | #

deuces wild writes:
US Daily: Leveraged Losses—Still Out There (Tilton)
(CLEARED FOR EXTERNAL USE)
March 24, 2008

In our work on “Leveraged Losses,” we have estimated that US leveraged financial institutions—banks, broker-dealers, hedge funds, and government-sponsored enterprises—would suffer approximately $460 billion in credit losses, after loan loss provisions. Residential mortgage losses will represent about half the damage, with another 15%-20% coming from commercial mortgages. Credit card loans, auto loans, commercial and industrial lending, and nonfinancial corporate bonds make up the remainder.

The losses to leveraged US financial institutions make up only a part of total credit losses, which we expect to be $1.2 trillion. However, these “leveraged losses” are most important, because they result in a substantial tightening in credit conditions as these institutions pull back on lending to preserve their reduced capital and to maintain statutory capital adequacy ratios. (For a fuller discussion of this process and the methodology behind our estimates, see “More Thoughts on Leveraged Losses” by Jan Hatzius, US Economics Analyst 08/10, March 7, 2008, pp. 4-6.)

Thus far, our banks team has tallied approximately $120 billion in announced writeoffs from US leveraged institutions since the credit crisis began. This includes just under $90 billion of losses on mortgage and other securities, and about $30 billion of loan impairments. Including foreign institutions, but remaining focused on the leveraged sector, total write-offs to date rise to about $175 billion.

The implication of the above analysis: although we have made considerable progress in the residential mortgage area, US leveraged institutions have written off less than half of the losses associated with the bursting of the credit bubble. There is light at the end of the tunnel, but it is still rather dim.

Of course, announced write-offs should not be expected to match up precisely with actual credit losses. Among the factors that can cause a discrepancy:



1. Foreign versus domestic losses. Our analysis focuses on US leveraged financial institutions because this is the most relevant set of firms to the domestic credit environment in the United States. In practice, sorting out losses between domestic and foreign institutions is quite messy, as almost all major firms span national boundaries to some extent.

2. Non-reporting by private firms. Large public financial institutions follow strict regulatory and accounting requirements that force them to promptly disclose losses. However, the leveraged sector includes a modest share of private institutions such as hedge funds, which will be unlikely to recognize credit losses publicly. Other things equal, their presence would mean that write-offs would fall short of the total amount of credit losses.

3. Losses on derivatives contracts. Some of the write-offs include losses on credit derivatives, which necessarily imply a counterparty who booked a corresponding gain. However, these gains are unlikely to be announced and tallied in a similar fashion, so write-offs could in theory exceed the actual underlying credit losses.
Despite these caveats, we believe the exercise of benchmarking announced write-offs versus our expectations of ultimate credit losses offers a useful perspective on the journey still ahead. Most of the write-offs to date relate to residential mortgages, so here we may be halfway through the process, perhaps even a bit further. Elsewhere, though, we suspect significant write-offs remain in store, even after the full set of first-quarter results for financial firms becomes available.

Re-capitalizations from domestic or foreign investors have been an important offset to the capital losses from write-offs and impairments. So far, US leveraged institutions have raised about $100 billion of new capital via recapitalizations or reduced dividend payouts, a sum equal to more than three-quarters of the write-offs to date. Whether US or foreign investors will be willing to continue this pace of investment is highly uncertain, given the disappointing return of many of these investments to date.

Andrew Tilton
deuces wild | 03.26.08 - 12:22 pm | #

It is me from Europe writes:
Burnside, I disagree. UK in 1942 had geared for total war and was sacrificing private consumption for the sake of war, whereas Albert Speer only did the same later in Germany...way too late in fact. Same with Nixon and Johnson years. Wartime economy was not combined with such celebrated consumerism and indebtness.
It is me from Europe | 03.26.08 - 2:11 pm | #