Mike writes:
Boo
Mike | 03.19.08 - 2:04 pm | #

Marcus Aurelius writes:
Bet they can't Dodge this bullet.

Oy.
Marcus Aurelius | 03.19.08 - 2:06 pm | #

Jack Staub writes:
Take it to the Fed, they'll pay $1.00! ;)
Jack Staub | 03.19.08 - 2:06 pm | #

Elvis writes:
If only Chrysler still had the K-car, things would be different.
Elvis | 03.19.08 - 2:11 pm | #

donna writes:
Market seems unhappy again - guess the rush didn't last very long.....
donna | Homepage | 03.19.08 - 2:15 pm | #

Anonymous writes:
Aren't PIPEs usually the beginning of a death spiral?
Anonymous | 03.19.08 - 2:15 pm | #

Mark writes:
Their debt is rated PT, as in "Pretty Terrible Cruiser".
Mark | 03.19.08 - 2:16 pm | #

Crispy&Cole writes:
Cerberus we hardly knew you...
Crispy&Cole | Homepage | 03.19.08 - 2:20 pm | #

wally writes:
Ha ha ha... It comes out one day after announcing earnings ("beating" greatly reduced expectations).
Pretty cynical.
wally | 03.19.08 - 2:20 pm | #

homedad43 writes:
So what's the long-term effect of this?

The IB manage to clean up the balance sheet somewhat, albeit taking a hit. And what happens to the private equity firms who begin to take on the still-stressed debt instruments? If that goes on their balance sheets and continues to deteriorate, doesn't that also raise the risk of being unable to meet margin calls - a la Carlyle - due to illiquid assets?
homedad43 | 03.19.08 - 2:21 pm | #

Elvis writes:
I thought PT as is "PT Barnum" --"There is a sucker born every minute."
Elvis | 03.19.08 - 2:21 pm | #

REBear writes:
Merrill Files Suit Against SCA Unit to Maintain CDO Insurance


http://www.bloomberg.com/apps/ne...hbjk& refer=home
REBear | 03.19.08 - 2:31 pm | #

Anthony writes:
OT What's this about? Thornberg going under? I thought that the FED had solved the crisis and everyone was starting the party again?

http:// business.timesonline.co.u...icle3584547.ece
Anthony | 03.19.08 - 2:33 pm | #

--Andrew writes:
This is interesting, folks getting antsy over insurance coverage.. From Bloomberg - "Merrill Files Suit Against SCA Unit to Maintain CDO Insurance"

http://www.bloomberg.com/apps/ne...hbjk& refer=home

" March 19 (Bloomberg) -- Merrill Lynch & Co. sued XL Capital Assurance Inc. over default protection on $3 billion of collateralized debt obligations that the bond-insurance unit of Security Capital Assurance Ltd. is seeking to void.

``We filed suit to make clear that XL Capital Assurance Inc. is required to meet its contractual obligations for credit default swaps it agreed to,'' Mark Herr, a Merrill Lynch spokesman in New York, said in a statement sent by e-mail today."
--Andrew | 03.19.08 - 2:33 pm | #

Abe, NYC writes:
Daimler sure knew what they were doing. Cerberus, Goldman and Lehman sure didn't.
Abe, NYC | 03.19.08 - 2:33 pm | #

--Andrew writes:
Whoops, REBear beat me to it.
--Andrew | 03.19.08 - 2:33 pm | #

Noble writes:
The loans are ofcourse in USD. Selling at the 80 cents "on the dollar" doesnt really mean a loss if they've already made a counter bet on the Euro in the meantime. USD has depreciated by that much since then.
Noble | 03.19.08 - 2:35 pm | #

MarkS writes:
Did the banks buy the debt from Cerberus at par?
MarkS | 03.19.08 - 2:38 pm | #

Elvis writes:
When was the last time you ever heard somebody say, "I'm going to go buy a new Chrysler!"...well, outside of the Midwest, anyway?
Elvis | 03.19.08 - 2:39 pm | #

SC writes:
Could we expect anything less form these people that do start liquidating their leveraged loan abortions after their conference calls. Lock these guys up!

I'm sure Uncle Ben is going to start accepting Lev Loans at the window soon, and then equities after that. Then pencils, and scrap paper... Does he secretly own IB shares?
SC | 03.19.08 - 2:39 pm | #

Bob_in_MA writes:
March 19 (Bloomberg) -- JWM Partners LLC, the investment firm run by ex-Long-Term Capital Management LP chief John Meriwether, lost 24 percent in its $1 billion fixed-income hedge fund this year through March 14, according to two people with knowledge of the matter.

Well, it's the third time that's the charm, right?
Bob_in_MA | 03.19.08 - 2:42 pm | #

Elvis writes:
SC,
If I wrote "Bill owes me $50,000,000.00" in crayon on the back of a coaster and I was an IB, do you think the Fed would accept that?
Elvis | 03.19.08 - 2:42 pm | #

Nemo writes:
MERde!
Nemo | Homepage | 03.19.08 - 2:42 pm | #

saul writes:
nemo

uyou bet.
saul | 03.19.08 - 2:43 pm | #

Crispy&Cole writes:
"Then pencils, and scrap paper"


LMFAO!!!!!
Crispy&Cole | Homepage | 03.19.08 - 2:43 pm | #

Ross writes:
Chrysler made Sherman tanks in WWII. Mercedes made Panzers.

I going to rethunk who won that war.
Ross | Homepage | 03.19.08 - 2:44 pm | #

Journeyman writes:
How many years will it be before we see LBOs at the level of 2006?
Journeyman | 03.19.08 - 2:45 pm | #

Angry Saver writes:
I've got a AAA membership card with an eight digit membership number on it. Does this mean I'm rich?
Angry Saver | 03.19.08 - 2:45 pm | #

Elvis writes:
Journeyman writes:
How many years will it be before we see LBOs at the level of 2006?

9. Did I win?
Elvis | 03.19.08 - 2:46 pm | #

SC writes:
And the VISA IPO...

The smartest guys know when to sell:
Zell out of CRE last year...
FIG, Och-Ziff hedge fund IPOs last yr...
Blackstone IPO on private equity...

and now the Consumer with VISA (last yr with Mastercard).

The consumer drives this economy with services, pseudo luxury buying of Coach bags and Harleys (HOG reports tomorrow - stay tunded) and housing. It is so over. Look out below.
SC | 03.19.08 - 2:47 pm | #

--Andrew writes:
Hedged or not, they are probably trying to get them off their balance sheet to free up capital - cash is king in a falling market, you'll need it to pick up bargains and to buy a seat at the table.

They are also trying to diversify in not unlikely case these things go "piff" in the cascading failures of this crisis. In times of financial panic, "return-on-investment" of these instruments quickly gets tossed the trash heap and replaced by "return-of-capital".
--Andrew | 03.19.08 - 2:47 pm | #

Elvis writes:
Quit calling Zell so smart for selling when he got an insane, can't pass-up offer. He might be smart for buying earlier than most, but not for selling when he did. Sam Zell just bought the Tribune or something, right?
Elvis | 03.19.08 - 2:49 pm | #

REBear writes:
Merril must be desperate to sue a broken monoline.
REBear | 03.19.08 - 2:54 pm | #

dee writes:
I saw Volker on Charlie Rose last night and I was amazed by his sheepish chuckling as he admitted that it was well and widely known that credit was too low for two long, that this was widely known to be unsustainable, but nobody acted because it was too prosperous. He continued to state that this period of austerity and contraction to sustainable levels, including the reliance of US exports will put the good ol' US of A back on a sustainable path of growth.

In other words, we knew we were raping the future, but it was so good, no one wanted to stop it. So now that we've relocated the nations wealth to secure off-shore accounts and trusts in the names of the heirs of the elite, we are going to need all of you serfs for generations to come to tighten up your belts, forget about those unrealistic unsustainable lifestyles to which you've grown so accustomed, and get to work in these factories that we're going to have to build to recreate our industrial base to try to fix this mess. I swear he was laughing because he know he wouldn't be around much longer anyway.

Please, somebody give me another take on what he was saying - I know I'm looking through a negative lens - I know it's not groundbreaking news, it's just that he's so candid about widespread culpability - the new trend is that if you admit to wrong-doing before you get accused of it - you absolve yourself of responsiblity and culpability?
dee | 03.19.08 - 2:55 pm | #

Bob Dobbs writes:
OT:

Just heard Christopher Thornburg, ex-UCLA economics guru, on the local news radio. He's calling the bottom for housing -- in 2009.

Much different than the happy talk from his former colleagues.
Bob Dobbs | Homepage | 03.19.08 - 2:55 pm | #

dee writes:
REbear

http://www.bloomberg.com/apps/ne...hbjk& refer=home
dee | 03.19.08 - 2:57 pm | #

Elvis writes:
Bob,
Is it the bottom for starts or prices or both. My guess is about first or second quarter of 2010 for price. Starts maybe 2nd quarter 2009.
Elvis | 03.19.08 - 2:58 pm | #

JLR writes:
How is a Euro bet a hedge on the Chrysler LBO loan?
JLR | 03.19.08 - 2:59 pm | #

Anonymous writes:
http://quotes.ino.com/chart/?s=N...NYBOT_CI& v=dmax

The low rider drives a little slower
Low rider, is a real goer

Hey

Low rider knows every street, yeah
Low rider, is the one to meet, yeah

Low rider don't use no gas now
The low rider don't drive too fast

Take a little trip, take a little trip
Take a little trip and see
Take a little trip, take a little trip
Take a little trip with me
Anonymous | 03.19.08 - 3:01 pm | #

david_in_ct writes:
point of interest, the FCX / copper ratio is near the lows back at the january panic.
david_in_ct | 03.19.08 - 3:01 pm | #

Larry Yun writes:
As one of the top economic forecasters in the US (so says USA Today), I believe that Chrysler will see growth of 8-10% in 2008 and should show significant improvement in 2009.

I'm also going long Indymac and Wells, FWIW.

-L. Yun
Larry Yun | 03.19.08 - 3:02 pm | #

Sebastian writes:
I suppose it's just more bullish nonsense to point out that, although it was at a discount, the securities traded.

And the "credit crunch" and "lack of liquidity" didn't seem to faze the Visa IPO.


S.
Sebastian | 03.19.08 - 3:03 pm | #

--Andrew writes:
Dee, Volker had very little to do with the current mess. He was just ruefully shaking his head and telling it straight because, as a long ago retired Fed Chair, he could do so finally and no one could accuse him of trying to spin the markets. The only real sin you can pin on him IMHO is that he followed the long time tradition of former Fed Chairs and said nothing of the policies of his successor or the Administration when they ignored prudent interest rate and regulation steps as the credit bubble, shadow banking industry, and Hedgies grew huge, all in the name of deregulation and lassiez faire capitalism.
--Andrew | 03.19.08 - 3:04 pm | #

E F writes:
CR,
Not sure how much capital this will free up! I don't know the specifics of how loans like this are risk weighted - but let's assume that banks are required to hold 10% capital against a leveraged buy-out loan exposure. Then $100 of leveraged loan is backed by $10 of capital. If you sell the leveraged loan for $80 then the hit to your capital is -$20. The hit to the capital taken through the P+L exceeds the amount of capital you previously had 'backing' the loan. No capital is freed up.

Only if you assume that banks risk weight LBO loans by more than 20% does writing down the loan by 20% free up capital. I bet the risk weighting isn't that high.
E F | 03.19.08 - 3:05 pm | #

nades writes:
Seb, Blackstone had no problem getting cash either and look where that took the share holders... To the cleaners...
nades | 03.19.08 - 3:05 pm | #

Lionel writes:
"Chrysler will see growth of 8-10% in 2008 and should show significant improvement in 2009."

The PPT Cruiser?
Lionel | 03.19.08 - 3:07 pm | #

sdtfs writes:
Sebastian writes:
I suppose it's just more bullish nonsense to point out that, although it was at a discount, the securities traded.



Sebastian- although I appreciate your point of view, this seems analogous to saying, "I had five twenty dollar bills and the wind blew four of them away. Hey, I still have twenty dollars!"
sdtfs | 03.19.08 - 3:08 pm | #

nades writes:
Lionel it was a joke much like Larry Yun. (Hes the head of the NAR, and only comments on this blog under the name O-Joe) That wasnt him...
nades | 03.19.08 - 3:09 pm | #

Sebastian writes:
nades said: "Seb, Blackstone had no problem getting cash either and look where that took the share holders... To the cleaners..."

I wasn't commenting on whether it was a good investment or not, just that there's obviously plenty of money floating around out there...even enough to throw away.:)


S.
Sebastian | 03.19.08 - 3:09 pm | #

nades writes:
Good point... As they say: A fool and his money....
nades | 03.19.08 - 3:10 pm | #

Rob Dawg writes:
"E F" has a point. Disposing of the debt may force them to take losses totaling some significant portion of the capital freed up. Normally taking $100 of debt off means you can make $100 in new deals but I don't think it work out that way this time.

On the meta-level I have to wonder who is buying this debt at 80¢. It can only be with the intention of holding for a short period and reselling. Didn't anyone learn anything from the fact that these are already pier loans?
Rob Dawg | Homepage | 03.19.08 - 3:11 pm | #

sdtfs writes:
Oooops, flip the one and the four. Nevertheless, I wouldn't be happy.

Maybe the purchasers are looking for a "tax" write-off somehow. Or could they be planning to take them to the FED? I know the hyperbole concerning the quality of stuff the FED takes is extreme, but still,...
sdtfs | 03.19.08 - 3:13 pm | #

Sebastian writes:
sdtfs said: "Sebastian- although I appreciate your point of view, this seems analogous to saying, "I had five twenty dollar bills and the wind blew four of them away. Hey, I still have twenty dollars!"

Well, first, in order to make the analogy correct, you need to nearly reverse that ratio.:)

Then you need to consider how far we've come. Imagine that before, you were dying of thirst, would have been willing to pay the entire $100 for a bottle of water, but nobody would sell you any.:)


S.
Sebastian | 03.19.08 - 3:15 pm | #

Bob Dobbs writes:
"Bob,
Is it the bottom for starts or prices or both. My guess is about first or second quarter of 2010 for price. Starts maybe 2nd quarter 2009."

He was talking about prices. Starts didn't come up.
Bob Dobbs | Homepage | 03.19.08 - 3:15 pm | #

Allen C writes:
Does anyone have any idea the extent the IBs can arb the Fed?
Allen C | 03.19.08 - 3:24 pm | #

dee writes:
http://www.cnbc.com/id/15840232?...88809994& play=1
dee | 03.19.08 - 3:31 pm | #

SC writes:
Allen C: HUGE! AAA MBS worth 80 post at haircut of 10, so get lift on cheap financing so go out and fund some loans to HF margin or even retail margin. It is a f'ng joke!
SC | 03.19.08 - 3:32 pm | #

dee writes:
If this doesnt scream out RECESSION nothing does..........

http://www.cnbc.com/id/15840232?...88809994& play=1

I never thought I would see this day
dee | 03.19.08 - 3:34 pm | #

Ministry of Truth writes:
Does anyone have the scoop on how to start a bank so I can buy this stuff at 80 cents and sell it off to the fed for 100 cents, pay myself out and close down the bank?
Ministry of Truth | 03.19.08 - 3:35 pm | #

Ralph Cramdown writes:
It's worth noting that those bonds pay at LIBOR+400, so it really isn't surprising that they're trading at 70-80 cents. What interest rate would you lend the owner of Chrysler and GMAC money at?
Ralph Cramdown | 03.19.08 - 3:35 pm | #

awgee writes:
Is it true that Goldman and Lehman went to the discount window? And if so, does anybody have a guess as to why they didn't use the Chrysler bonds as collateral? They may have been able to get 90 cents on the dollar from the fed. Or maybe not.
awgee | 03.19.08 - 3:36 pm | #

mock turtle writes:
lets see now...hummm..., if you walk into any cardiac care unit you can probably find more than a few patients who, when given a long long white line, they will dance energetically around the room for a few minutes...

then call in the crash cart.

dow down 178.62 after a recent 400 point run up?

yeah that's a confidence builder.

so all this after 100 basis points of cowbell since sunday and tslf, and primary brokers can come to the window now too!!!

i'm sorry but that proves to me it's gonna take way more of the white powder than the patient can handle without expiration.

i pity the poor #$%&^^ that wants to be prez..they're gonna have their hands full...i'll pray for 'em...whom ever he or she is.
mock turtle | 03.19.08 - 3:37 pm | #

SC writes:
They went to the window to "test it and get familiar with the the operations aspect of using it" accoridng to the Lehman CFO. Don't need it right now, but sure want to be ready!
SC | 03.19.08 - 3:38 pm | #

Anonymous writes:
I got a fever . . . and the only prescription for it, is more cowbell!
Anonymous | 03.19.08 - 3:40 pm | #

Ministry of Truth writes:
Lehman takes 2 billion, what did Goldman take?
Ministry of Truth | 03.19.08 - 3:40 pm | #

dee writes:
http://www.youtube.com/watch? v=w...ref=patrick.net
dee | 03.19.08 - 3:42 pm | #

Keep It Simple, I'm Stupid writes:
Didn't I read that a lot of the LBO debt was being bought up by the original issuers? If so, doesn't that change the picture of who has cash floating around freely?
Keep It Simple, I'm Stupid | Homepage | 03.19.08 - 3:44 pm | #

ac writes:

Been out today. Is the commodity bubble popping?

Also looks like the dollar anti-bubble is taking a hit too.

Interesting.

ac | 03.19.08 - 3:50 pm | #

saul writes:
DOW down 250. I thought everything was fine yeterday, back to normal. I must be dreaming
saul | 03.19.08 - 3:52 pm | #

jg writes:
I thought that Banker said that Golden Schmucks skirts all the bad goings-on, always?

Breaks my heart.
jg | 03.19.08 - 3:52 pm | #

Puzzled writes:
Some 400 million Bear Stears shares have traded in the last three days for about $5, knowing well that it is worth $2, apparently for voting purposes by entities with a vested interest in increasing the odds of making the Bear-JPM deal happen. That is $1.2 billion. The deal must be worth a lot more for those entities. Does this not prove that the Fed is bailing out/giving away massive amounts of money? If the deal is so good, Fed should have charged a similar "fee". I am not Jas, but does this not look like a "smoking gun" for the Fed corruption?
Puzzled | 03.19.08 - 3:52 pm | #

george bush writes:
The banks go marching two by two, hurrah, hurrah! Hmmm...so is there a buddy system now in place? Every few days a couple of IBs access the window for a couple of billion. A pattern is established...ho hum, nothing to see here, move along.
george bush | 03.19.08 - 3:54 pm | #

Sebastian'sWorld writes:
the bullish view holds no water when the long bond acts as it is.
Sebastian'sWorld | 03.19.08 - 3:55 pm | #

dick cheney writes:
shut up George you idiot
dick cheney | 03.19.08 - 3:55 pm | #

andiron writes:
...Elvis writes:
Bob,
Is it the bottom for starts or prices or both. My guess is about first or second quarter of 2010 for price. Starts maybe 2nd quarter 2009....

i think CR wanted to do some work on START bottom vs price bottom correlation (perhaps in early 90s)..haven't seen anything on it..
andiron | 03.19.08 - 3:56 pm | #

sam writes:
the dicount window in a few months

http://www.spiegel.de/politik/au...- 537431,00.html
sam | 03.19.08 - 3:57 pm | #

jg writes:
Darn PPT/I-banking cabal: I was trying to get a lot more SDS on margin, when this darn downturn comes, bringing up the price of SDS.

C'mon, schmucks and shysters, keep things even keeled until next Tuesday. Thereafter, permission granted to dive.

It is getting tough for the I-banking cabal, with lawsuits against insurers, carry trade unwinding, discounts on pier loans, more counterparty risk.

Breaks my heart.
jg | 03.19.08 - 3:58 pm | #

Kicker writes:
On the meta-level I have to wonder who is buying this debt at 80¢. It can only be with the intention of holding for a short period and reselling.

These are probably long term investors.

Chrysler goes bankrupt and you end up owning it after restructuring through bankruptcy. Falling dollar and a clean slate and you've got a chunk of a (much smaller) but profitable company.

And if it happens to survive, then the yields are pretty good.
Kicker | 03.19.08 - 3:59 pm | #

Crispy&Cole writes:
Ca bank taken out and shot today. Big writedown, missed sec filing date, sounds like things are bottoming out for these guys...to zero!

http://finance.yahoo.com/q?s=CCOW
Crispy&Cole | Homepage | 03.19.08 - 4:04 pm | #

sam writes:
dow down 295..... whhhaaatttt happened.

I thought everything was fixed yesterday
sam | 03.19.08 - 4:05 pm | #

Anonymous writes:
Maybe Sebastian can explain how more debt will save his economy.
Anonymous | 03.19.08 - 4:07 pm | #

Kicker writes:
Does anyone have the scoop on how to start a bank so I can buy this stuff at 80 cents and sell it off to the fed for 100 cents, pay myself out and close down the bank?

Banks are regulated, to do that you'd need to be a primary dealer.
Kicker | 03.19.08 - 4:08 pm | #

JS writes:
Oh no, the DOW went down today, time for another emergency rate cut.
JS | 03.19.08 - 4:08 pm | #

Marcus Aurelius writes:
What part did the Visa IPO play in today's market, if any?

Sounds like a test question, but it ain't.
Marcus Aurelius | 03.19.08 - 4:09 pm | #

iceman writes:
on second thought, Ben, we needed that extra 25bps.
iceman | 03.19.08 - 4:10 pm | #

ron writes:
Margin calls keep hitting!
ron | Homepage | 03.19.08 - 4:12 pm | #

elkal writes:
Banks are regulated, to do that you'd need to be a primary dealer.
Kicker

...Does anyone have the scoop on how to be a primary dealer?
elkal | 03.19.08 - 4:12 pm | #

Crispy&Cole writes:
Emergency rate cut announced and FNM can now purchase loans up to $3 million - per Ben B
Crispy&Cole | Homepage | 03.19.08 - 4:13 pm | #

ac writes:

the bullish view holds no water when the long bond acts as it is.

Long bond prices exploding, commodities collapsing. Bad day to be an inflationist. =(

ac | 03.19.08 - 4:13 pm | #

Anonymous writes:
Goldman sells subprime auto loans...BOO! Look it up, these crooks already sold Grandma and The Kitchen Sink, and IMHO, they have rented The Fed's Balance Sheet on the cheap! BOO!
Anonymous | 03.19.08 - 4:13 pm | #

Taos writes:
Thornburg's Mortgage Backed BOMBS and INSECURITIES

look out below!!!
Taos | 03.19.08 - 4:14 pm | #

Anonymous writes:
Subprime auto lender Triad Financial Corp., partly owned by Goldman Sachs (GS.N: Quote, Profile, Research), plans to cut 124 jobs in California next month, according to a notice filed with that state's department of labor.

The filing with California said the job cuts would take effect Sept. 17. Triad's holding company is owned by Hunter's Glen Ford Ltd., Goldman Sachs and GTCR Golder Rauner LLC.

Boo Goldman, NO More Subprime Auto Loans!!
Anonymous | 03.19.08 - 4:15 pm | #

sam writes:
TAOS...

http://www.thetruthaboutmortgage...e-not-so-sweet/
sam | 03.19.08 - 4:16 pm | #

Crispy&Cole writes:
NIKE halted!
Crispy&Cole | Homepage | 03.19.08 - 4:17 pm | #

Marcus Aurelius writes:
Long bond prices exploding, commodities collapsing. Bad day to be an inflationist. =(

ac | 03.19.08 - 4:13 pm

___

But, is it here to stay? I'm long PMs and cash, and I want to know which way this thing is gonna fall (falling is a foregone conclusion, in my book).
Marcus Aurelius | 03.19.08 - 4:17 pm | #

Bruce writes:
Dow down 293, short term treasuries down....

BB, next time I want the pink pony. This regular pony shite doesn't hold for more than a couple of days. We need pink........

Given the trillions in subprime MBS's and the balance sheet of the Fed at less than 1 trillion, I think only a pink pony will do...
Bruce | 03.19.08 - 4:20 pm | #

Anonymous writes:
**


If you work in the kitchen, you don’t eat the food,
Anonymous | 03.19.08 - 4:20 pm | #

Eastside writes:
Puzzled

Is it possible there is an effort to drive up the price of Bear Stearns in order to get the deal to fail? Who wins big if the deal goes under?
Eastside | 03.19.08 - 4:20 pm | #

micronin127 writes:
Goldman must have considered this to be their best way out. The risk for the IB's that stubbornly hold on to the LBO debt because they won't take a bid this low is the possibility that Chrysler defaults on them.

Goldman probably made a killing today on the Visa IPO and took a bath here offloading their Chrysler debt.

Hopefully the two wash out and their balance sheet is one step closer to being repaired instead of impaired.
micronin127 | 03.19.08 - 4:20 pm | #

tutterfrut writes:
Eastside, some say they're buying a majority to APPROVE the deal
tutterfrut | 03.19.08 - 4:22 pm | #

barely writes:
By the looks of how the market is decaying I would be surprised if this isn't the result of hedgies getting margin calls and selling what the can with both hands.

Gold Oil... all commodities getting crushed in a desperate cash grab. Those trailing stops got taken out...
barely | 03.19.08 - 4:23 pm | #

REBear writes:
NIKE halted
As someone said, everyone needs shoes!
REBear | 03.19.08 - 4:23 pm | #

we are all screwed writes:
Seb if you think the Visa IPO is bullish I don't know what to tell you.

Why would a private cash cow company go public?

You don't think maybe the owners, who see the books and know the business, might think it is a good time to get some money.

The credit card crash is going to be epic!
we are all screwed | 03.19.08 - 4:23 pm | #

Crispy&Cole writes:
You guys please, Seb is a troll.
Crispy&Cole | Homepage | 03.19.08 - 4:25 pm | #

eric writes:
No way is the next rate cut only going to be 1/2 point.
eric | 03.19.08 - 4:25 pm | #

Rob Dawg writes:
we are all screwed writes:
Seb if you think...

Do not feed the troll.
Rob Dawg | Homepage | 03.19.08 - 4:26 pm | #

Taos writes:
Sam

When does Thornburg's stock go to .01 then?
Taos | 03.19.08 - 4:30 pm | #

Bob Dobbs writes:
"Long bond prices exploding, commodities collapsing. Bad day to be an inflationist. =(

ac | 03.19.08 - 4:13 pm

___

But, is it here to stay? I'm long PMs and cash, and I want to know which way this thing is gonna fall (falling is a foregone conclusion, in my book)."

Gold just bumped up ten bucks. May have stabilized for now.

And yes, we all want to know "which way," and no one can tell us.


I'm sticking with gold for now, because I have leeway.
Bob Dobbs | Homepage | 03.19.08 - 4:30 pm | #

Anonymous writes:
Right from the start, the Fed has been part of panic in the markets - both fed from it and added to it ... The Fed is not, was never on top of the situation

Did anyone ever look up how many emergency rate cuts Greenspan used? Where is Warsh?
Anonymous | 03.19.08 - 4:31 pm | #

Jack writes:
I don't see why so many are so hard on Sebastian. I like reading his posts. If you think he is a troll, then you have no idea what a real troll is.
Jack | Homepage | 03.19.08 - 4:31 pm | #

sam writes:
we are all screwed

the banks own visa. The banks made a fortune today. visa doesnt carry the debt. it just charges a fee to use it.
sam | 03.19.08 - 4:32 pm | #

ac writes:

But, is it here to stay? I'm long PMs and cash, and I want to know which way this thing is gonna fall (falling is a foregone conclusion, in my book).

I think if the Fed just sat back and did nothing it would be here to stay. But that ain't gonna happen. Who knows what they'll ultimately try or what effect it will have.

ac | 03.19.08 - 4:32 pm | #

Anonymous writes:
Under Greenspan's stewardship, the Fed cut the federal funds rate at an emergency meeting in 1998 as a result of the Asian financial crisis and also lowered rates at two unplanned meetings in early 2001 due to an economic slump and again that year after the Sept. 11 terrorist attacks.


Helicopter Ben has 7 Emergency Rate Cuts in a row and his plan is to print more money....very nice!
Anonymous | 03.19.08 - 4:36 pm | #

awgee writes:
ac - My opinion, the hedgies are unloading some profitable trades to grab cash they need to unwind their yen carry. Just a guess. It will be over in a day or so. Has B-52 Ben stopped printing?
awgee | 03.19.08 - 4:37 pm | #

ipodius writes:
I don't see why so many are so hard on Sebastian.

Same here. People are hard on him, but when someone posts something about Visa and credit card losses (as if Visa somehow has exposure to that), it doesn't meet with sarcasm about not knowing anything. Does troll suddenly mean that someone disagrees with your philosophy/uber-bearish outlook?
ipodius | 03.19.08 - 4:38 pm | #

david_in_ct writes:
ac:"Long bond prices exploding, commodities collapsing. Bad day to be an inflationist. =("

The last three days have seen about the biggest rally in stocks relative to gold since the beginning of this wave back in the summer of 2005. We have come from it taking about 3 ounces of gold to buy one s&p down to a low just under 1.3 to todays level of about 1.38 Given the relative sentiment extremes coming into this week for the two assets this may be a very significant turning point. I think it is pretty important to keep an eye on this even as the nominal price levels of each asset bounce around, because it could signal a major regime change.
david_in_ct | 03.19.08 - 4:39 pm | #

Eastside writes:
tutterfrut

That make sense from LEH's side, but it seems that when everybody knows what you want the market will make it really difficult to get.
Eastside | 03.19.08 - 4:40 pm | #

Bruce writes:
Ben had to re-fuel. He hope to be back in the air shortly....The delay stemmed from Ben's lack of Euro's needed to buy fuel. Apparently the delivery truck driver won't take USD. He muttered something about his Saudi boss being pissed.....
Bruce | 03.19.08 - 4:41 pm | #

Marcus Aurelius writes:
The Visa IPO is a cash-out, too. People will walk on CC debt faster than you can say "jingle mail."

We're going to see the same problems with "proving" ownership of debt as we have in the mortgage industry, only this time, the debtor will also be saying, "prove that's me. Show me my signature on a credit application. Show where I signed for that flat-panel TV."

The number of CC debtors dwarfs the number of mortgage debtors. Once the debtors say, "F**k it, what will you do to me?", things will get really ugly. Sure there are new BK laws that will supposedly help the creditors collect, but lack of political will to enforce those laws, coupled with the sheer number of defaults, will make the mortgage debacle look like good times.

Maybe.
Marcus Aurelius | 03.19.08 - 4:42 pm | #

Sebastian'sWorld writes:
want to understand Seb?

go to X-files re-runs.... Pusher episode.
Sebastian'sWorld | 03.19.08 - 4:43 pm | #

ron writes:
barely writes:
By the looks of how the market is decaying I would be surprised if this isn't the result of hedgies getting margin calls and selling what the can with both hands

Of course, just the impact of the BSC must be intense. the tip off today was the big unwind in the Mexico, Brazil and Canadian stocks early on, the exits are very crowded and many of the those emerging markets have a very small buyer pool and getting smaller by the hour.

I wonder how long they can keep up the Freddie and Fannie stock?
ron | Homepage | 03.19.08 - 4:45 pm | #

ipodius writes:
The Visa IPO is a cash-out, too.

Visa has nothing to do with the debt, except that to get at the credit you have to use a piece of plastic that has the logo on it, or as a merchant you put your transactions through its system.

The only way Visa loses is if people stop using things with the Visa logo on it to AMEX or MC. Now, what was your point again?
ipodius | 03.19.08 - 4:45 pm | #

Sebastian writes:
Jack said: "If you think he is a troll, then you have no idea what a real troll is."

Or a recession, but I'm having a tough time selling that idea.:)

Thanks.


Sebastian
Sebastian | 03.19.08 - 4:45 pm | #

dilbert dogbert writes:
Ross,
The important statistic in WW2 is how many T34's got built relative to the Tigers.
A few Studabaker trucks along with a lot of radios and aircraft made some difference too.
dilbert dogbert | 03.19.08 - 4:47 pm | #

Bob_in_MA writes:
The last three days have seen about the biggest rally in stocks relative to gold since the beginning of this wave back in the summer of 2005. We have come from it taking about 3 ounces of gold to buy one s&p down to a low just under 1.3 to todays level of about 1.38 Given the relative sentiment extremes coming into this week for the two assets this may be a very significant turning point...
david_in_ct

David,

It isn't clear to me what you mean, or why you think there's some sort of link. If things become deflationary, they may well both sink and that little ratio bear little or no meaning.
Bob_in_MA | 03.19.08 - 4:50 pm | #

Noble writes:
david_in_ct:
Agreed..keeping a close eye on it.

Jim Rogers commenting on Bloomberg that the US stock market rallies this year...due to Fed that has "no clue." bear market paused till next year when it will be worse...
Noble | 03.19.08 - 4:50 pm | #

Bob_in_MA writes:
With both Visa and MC now publicly traded, there is the possibility they will actually start competing. That may send the rates they charge merchants, and profits, down.
Bob_in_MA | 03.19.08 - 4:52 pm | #

Marcus Aurelius writes:
ipodius writes:
The Visa IPO is a cash-out, too.

Visa has nothing to do with the debt, except that to get at the credit you have to use a piece of plastic that has the logo on it, or as a merchant you put your transactions through its system.

The only way Visa loses is if people stop using things with the Visa logo on it to AMEX or MC. Now, what was your point again?
ipodius | 03.19.08 - 4:45 pm

___

Okay. I can see that they sold the rights to collect transaction fees. My point still holds for the banks holding CC debt. And I'm sure the level of defaults will lead to a more restricted use of CCs (as opposed to ATM cards) in the not too distant future. Credit is going to die.
Marcus Aurelius | 03.19.08 - 4:54 pm | #

Anonymous writes:
ipodius, when you have a cash cow, the only reason you take it public is because you see a dimmer future. See, e.g., IBanks, private equity funds, etc.

This isn't a company that needs capital.

Sebastian is a classic troll.
Anonymous | 03.19.08 - 4:54 pm | #

ipodius writes:
If things become deflationary

IF??? Contraction of money and credit is deflation. Asset price reduction is deflation. If you think there is anything inflationary going on at this point...all I can tell you is good luck with your strategy.
ipodius | 03.19.08 - 4:54 pm | #

squeezed writes:
bear market paused till next year when it will be worse...

2009 is going to suck.
squeezed | 03.19.08 - 4:55 pm | #

FFDIC writes:
U.S. Economist, Joseph Stiglitz, who won the Nobel Prize in economics in 2001 calls financial crisis worst since 1930s. "They didn't want Americans to know exactly how bad the war was for the economy so they flooded it with liquidity, they looked the other way with regulations and they deliberately, I think, postponed the problem into the future and now we're paying the price."
http://economictimes.indiatimes....how/ 2881608.cms
FFDIC | 03.19.08 - 4:56 pm | #

ipodius writes:
And I'm sure the level of defaults will lead to a more restricted use of CCs (as opposed to ATM cards) in the not too distant future.

On this I agree with you. And, I might add, that I think it's a good thing in the long run. In the short run, it's going to be very painful.
ipodius | 03.19.08 - 4:56 pm | #

ron writes:
Other bond insurers including MBIA Inc. and Ambac Financial Group Inc. may also seek to cancel $100 billion of contracts on CDOs tied to subprime mortgages that they wrote if they're unable to shore up capital through other means, according to Janet Tavakoli, president of Chicago-based Tavakoli Structured Finance.

``Apparently in light of the current dramatic downturn and deterioration in the credit markets, defendants are having `sellers' remorse,''' Merrill said in the complaint filed today in Manhattan federal court.

Hamilton, Bermuda-based SCA, stripped of its AAA bond insurer ratings this year by the three major ratings companies, said last week it was seeking to void the contracts, responsible for $427.4 million of the new reserves for losses it set aside last quarter. SCA declined to name the counterparty, which Chief Executive Officer Paul Giordano said on a March 14 conference call failed to meet requirements ``in a fundamental way.''
ron | Homepage | 03.19.08 - 4:57 pm | #

Bob Dobbs writes:
"With both Visa and MC now publicly traded, there is the possibility they will actually start competing. That may send the rates they charge merchants, and profits, down."

Competition between two giants who dominate a field...is not competition. AT&T and Comcast compete against one another for consumer broadband services...have you noticed those prices going down?
Bob Dobbs | Homepage | 03.19.08 - 4:57 pm | #

ipodius writes:
This isn't a company that needs capital.

Visa wasn't a company...it was a consortium of banks. And yes, they took the money which will help them at this point. Although I don't think that was the intended strategic plan.
ipodius | 03.19.08 - 4:59 pm | #

franz writes:
Actually, I am surprised that they got 80%. From my friends with Chrysler, the mood in Detriot is horrible with moral.... well basically, moral is dead. Everyone wants to leave Chrysler and Detriot. I am going to hate it when it goes bankrupt and the Chinese pick up the factories on the cheap.
franz | 03.19.08 - 4:59 pm | #

ipodius writes:
the Chinese pick up the factories on the cheap.

I have no doubt that the three-headed dog had that as an exit strategy all along...minus the BK. Chrystler will be in the hands of a Chinese car manufacturer by next year. Or at least that's the way I always thought it would end.
ipodius | 03.19.08 - 5:03 pm | #

hiker90 writes:
Discretionary income cliff diving or worn out business model? The Starbucks CEO states the following:

"You have an economy that is really in a tailspin," he said, adding that Starbucks would not use that as an excuse.

http://news.yahoo.com/s/nm/20080.../ starbucks_dc_2

Best,
hiker90 | 03.19.08 - 5:04 pm | #

david_in_ct writes:
bob:
"It isn't clear to me what you mean, or why you think there's some sort of link. If things become deflationary, they may well both sink and that little ratio bear little or no meaning."
The inflation/deflation idea is about the nominal price levels of all assets.
The gold/spx ratio or more generally the commodity/spx ratio has great importance in determining where you might want to invest your money. Not so much an either or as if you want to hold commodities and not equities but more about which equities. holding commodities is not investing, it is just a means of capital preservation. if you stick a pile of wheat in your back yard you are not investing. Investing is lending or giving your wheat to someone else so that they can use it to build some productive enterprise. to my own thinking this is a good time to be investing not trying to preserve capital. so within the equity space i think that this may signal a move towards those companies that have been hurt by rising input prices and have been subject to margin pressure. a pretty obvious one is the airline industry where i have parked a good deal of capital in the last little while and hope to leave it there for some time.
david_in_ct | 03.19.08 - 5:05 pm | #

Rob Dawg writes:
Chrystler will be in the hands of a Chinese car manufacturer by next year.

And a month after that all the technology will be in seagoing cargo containers and a month after that unloaded at the brand new factory next to the hydro generating station and along the river from the coal and steel suppliers.
Rob Dawg | Homepage | 03.19.08 - 5:08 pm | #

ipodius writes:
unloaded at the brand new factory next to the hydro generating station and along the river from the coal and steel suppliers.

I'm all choked up...it makes me yearn for the day when soot-covered little urchins used to shovel coal into the furnaces for a daily wage that almost gave them enough to eat for a day.

Oh wait, that describes the employees of Walmart...
ipodius | 03.19.08 - 5:14 pm | #

Bob_in_MA writes:
David,

Well, that was definitely the true contrarian move. I admire your guts, and I'm equally suspicious of the commodity boom (though I hold gold, I sold the Ag stuff a couple weeks ago.)

But it's really hard to see much positive happening for U.S. airlines.

I starting to think China is going to tank, and if that happens, all the commodity countries are toast. And the U.K. almost follows us down, which carries Germany....

It isn't just commodities, I think there is just world-wide over-production in everything from steel to flatscreen TVs.
Bob_in_MA | 03.19.08 - 5:15 pm | #

david_in_ct writes:
Bob:
I've been a pound the table commodity bull ever since the fed started lowering rates after the 2000 nasdaq adventure. its done some pretty good things for my financial life. i don't think the run is over over, i just don't think you can make money at it any more by just tossing a dart out there. all these etf's which have allow the public to dive into the pool have fueled what could be described as the manic phase. at 1000 dollar gold there are an awful lot of mines that will eventually come on board even though the lag times are significant. in the mean time there is a lot of stuff coming out of the woodwork. i dumped my small collection last week.
no matter what happens short term in china and india, the world has definitely changed. i think that the internet and lowering of information cost to near zero has had and will continue to have an incredible effect going forward. I keep talking about 2 billion people coming on line and there is no way that is going to change. Given the current state of knowledge in the world, an individual can produce vastly more than he can consume. This means that in the aggregate the world is getting richer and richer if you measure it by how much effort it takes to have a decent life. unless we blow ourselves up, i see nothing to keep this trend from accelerating.
given that so many people are freaking out all over the place, it would seem to me that you ought to get a premium for investing at a time like this. it certainly looks that way from a balance sheet perspective.
hope this hasn't rambled too far. its hard for me to stop once i start typing.
david_in_ct | 03.19.08 - 5:29 pm | #

burnside writes:
Actually, I'm surprised that they got 80%.

Goldman is selling Chrysler for 'less than 80%'.

I used to confess to my folks that I got home 'after 11pm'. Which was true.
burnside | 03.19.08 - 5:33 pm | #

Anonymous writes:
Is Chrysler going to be bailed out again?
Anonymous | 03.19.08 - 5:39 pm | #

jan sopoci writes:
dilbert dogbert,

If memory serves, the T-34 was Russian armor, (although possibly a Sherman knock off). Throughout WW11, Germany tried to use technical superiority to offset a numerical deficit (i.e the ME-262, first rocket fighter). Post Korean Conflict, some think tank did a study of US air superiority vs. Chicom air forces, and found, that up to a ratio of 5 against 1, US could hold its own...any higher than that, and all bets are off.
jan sopoci | 03.20.08 - 1:37 am | #

Alec writes:
The T-34 was an original design and they nailed it on the 1st try. The Germans tried to copy it but (as always) made it too clever by half.

*Visa IPO is selling the family silver to avoid FC on your house even though you havn't had a job in 6 months and prospects ain't looking good. Meanwhile you're taking half of that and going to Vegas because you know a shady dealer that lets you win(ie The Fed).
Alec | 03.20.08 - 9:49 am | #