patrick.net

DinOR,

I've spend some hours wrangling with the Bells. Often, they have capacity issues when new subs come on line, and they will *kill* existing lines temporarily to light up the new subs only to let some other poor sob deal with the capacity issues. From my experience, something to do with the installation contractors getting paid on completed jobs.

I've no idea if this is your issue, not enough information....

But I get infuriated just hearing about it. Bad memories.

I'd say we are getting uncomfortably close to a real banking crisis. Confidence is evaporating, margin is calling, and fear is propagating.

Banking Holiday! :-) WOOOOHOOOOO!

Commodities are getting killed.

What they're guessing is that my phone service may have been moved to my new office prematurely? Looks like they'll get it straightened out but a rough way to start the week.

Compared to being a Bear Sterns employee, well right now I have no problems. The rank and file people were definitely fed a bunch of cr@p. This will be tough times b/c everyone else is looking to shutter their MBS ops. too.

Risk is really just a concept. When it materializes, it ceases to be risk. It becomes HARM.

Me as the physical embodiment of risk? I like it! :-)

@thenuttyneutron, TOB, etc.: Guys, ease off the 'P' a little, ok? I don't agree with him 100% of the time either, and yes, he's *very* Libertarian. But let's keep a little perspective here --it's not like he's Greenspan or Hitler. I've met him and found him to be a very pleasant and reasonable guy.

justme

your math is correct. either jpm has a lot of 'up' left to go over the next few months until the deal closes (I believe SP called it a screaming buy!), or some major bsc shareholder is playing chicken trying to get a better deal out of them?

NVR
I’d say we are getting uncomfortably close to a real banking crisis. Confidence is evaporating, margin is calling, and fear is propagating.

I am a natural optimist BUT if one of these days I turn into a pessimist, I'm blaming you.

BAI

My apologies sir, please take my nonsense with a grain or two of salt. I'd suggest a nice green beer or few as a start.

Happy St Patricks Day to all :-) May your blessings outnumber the shamrocks that grow, and may trouble avoid you wherever you go. :-)

Read and weep, or read and laugh, or do both or do neither.

http://news.yahoo.com/s/nm/20080317/bs_nm/dollar_dc_1

The U.S. dollar's value is dropping so fast against the euro that small currency outlets in Amsterdam are turning away tourists seeking to sell their dollars for local money while on vacation in the Netherlands.

That's because the smaller currency exchanges -- despite buy/sell spreads that make it easier for them to make money by exchanging small amounts of currency -- don't want to be caught holding dollars that could be worth less by the time they can sell them.

BTW–errr—I bought a house–am moving next week. It was 33% off the peak–I know I caught a falling knife but I am happy.

Happiness is all important. Who cares about falling knives. A house is a house.

We'll need to come up with a new term for what's transpiring here. How many of you were worried this would unfold as early as 2004-5? How do we describe this situation?

Somehow to say "Achilles Heel" just doesn't go far enough? Nor does "sowing the seeds of it's own destruction".

What are the earliest known references to the MBS/CDS meltdown we are now seeing. Seems to me SP and a few others made comment on it during late 2004 if memory serves. I know of no existing term to describe this.

What is putting pressure on gold price? I know it is one of the most manipulated markets, but who is depressing it?

The CNBC stuff on Bear employees is frightening foreshadowing as to what will soon come.

They actually had a realtor shill on, first I've seen around in awhile. She indicated that the Bear thing was GOOD for NYC regional real markets, as folks would want to INVEST in SOLID assets, like a home. Not that fluffy paper stuff, but real assets for the long term. She was some RE firms #1 NYC area salesgirl last year.

Egads.

That's a massive job loss and massive economic job loss to the area, and creates another crisis of confidence. One must believe listings will soar, and all the financials employees have to be looking over their shoulder now. Major hit to NYC real estate. I'm not sure the Euros, Arabs, or Asians are even interested in Manhattan after this week.

Good luck with that guys.

She indicated that the Bear thing was GOOD for NYC regional real markets, as folks would want to INVEST in SOLID assets, like a home.

Solid? How about some shiny yellow metal? ;)

Not investment advice.

PPT is starting to work early today. There is so much manipulation in the market that it is getting disgusting. Why will someone pay more than $2 for BSC if a benchmark deal paid $2 in stock for the same darn thing?

What are the news that should drive the DOW back up? When eventually the PPT story gets around the world and the US stock market completely loses its credibility, that will be the end of the Wall Street.

I often wonder if the BofA acquisition of Countrywide, and now the JP Morgan acquisition of Bare Sterns, are really just "placeholder" acquisitions neither of which are really planned to close. Both gave the weak party some breathing space since the purchaser had real buying power. Maybe both cases are an example of kicking the can down the street and hoping for a psychological recovery in the markets.

Gold, silver, commodities, AUD, NZD are all casualties of the Yen carry trade. You won't expect the world to look the same when Yen moved up 3% overnight right? Lots of margin calls floating around.

I am ok with commodities taking a beating, because the fundamentals haven't changed a bit, and the last time I checked we are still short on food and homo sapiens still need calorie intake. That's why I discourage people from investing in commodities as a way to beat inflation, because not everyone has a stomach for days like today. But if you know what you are doing, it could be a very lucrative path.

The manipulation of financial stock price, however, has nothing to do with Yen carry trade or SWF carry trade. It is just pure PPT action.

"#1 NYC area salesgirl"

Sounds like Barbara Corcoran?

That sounds consistent with her typically clueless assessment. It's also part of Lawrence Yun's "this is a Wall Street problem".

DinOR,
You forgot the post the link in your post several above. Did you mean this story?
http://biz.yahoo.com/rb/080317/bearstearns_mood.html

A few choice tidbits from todays news....

Egypt today is in a major food crisis, with bread lines. Many of Eqypts 70M population survive solely on subsidized bread. Mubarak today ordered army and police bakeries to distribute to citizen their own supplies. From BBC.

Financial firms face a *New World Order* after Bear collaspse. Via Reuters. Yes, well sure. Yikes.

IMF Chief alarmed at recent events, indicates that crisis will now require a "Global Solution". Via AP

And our leader today, "When need be, we’ll act decisively in a way that continues to bring order to financial markets" commented Bush earlier today. Uh, free markets? Not here, the ministry of markets is on top of it....

I am still waiting for the biggest part of the storm to hit. When the Arabs refuse to take monopoly money USD for oil and demand Euros/ any other currency instead, that will be the start of the real turmoil. When foreign governments/banks start dumping their USD reserves we will know that we are in the worst part of the storm. Don't forget that Citibank is in a bad spot. If the Arabs decide they want their money out of the bank, we will see another bankrun and collapse.

If and when these events do occur, many US assets will be sold for pennies on the dollar and a large amount of American "wealth" will evaporate. If you think we can avoid it by simply not honoring the debts, you are wrong. Our trade partners will simply stop trading with us and we will be stuck with what ever we can make domestically.

Today I am watching my Canadian Oil Sands investments go up in smoke and drop more than 5%. I am not leveraged in this investment and am feeling some heartburn over it. I can only imagine the panic that the banksters are feeling now with their highly leveraged bets.

DennisN,

I hadn't seen that article specifically, so the "$2 bill taped to the window" was funny in a sick kind of way. It's just incredible they put themselves in this situation. We're kicking the can down the street in nearly every regard.

Going forward how will we even know which homedebtors are truly in trouble and which ones are just throwing their hat in the ring? With nearly everyone buying, re-fi'ing, cashing out and buying 2nd homes over the last few years it seems to me nearly everyone will be able to lay some sort of claim?

That’s why I discourage people from investing in commodities as a way to beat inflation, because not everyone has a stomach for days like today. But if you know what you are doing, it could be a very lucrative path.

Today is not so bad for gold and silver, at least when compared to BSC. :lol:

Well, if you look at the YTD gains for all major commodities, you are still at a double-digit gain, some over 20%. Not bad at all even compared to the bankster-manipulated financial stocks.

When the Arabs refuse to take monopoly money USD for oil and demand Euros/ any other currency instead, that will be the start of the real turmoil.

Well we can always go onto the barter system, since they would starve without the food exports of "OFEC". :)

Egypt today is in a major food crisis, with bread lines. Many of Eqypts 70M population survive solely on subsidized bread. Mubarak today ordered army and police bakeries to distribute to citizen their own supplies. From BBC.

Not to be insensitive (but perhaps I am?), Nature has ways to deal with unchecked population growth.

I won't be surprised if world population decreases by 20+% over the next 10 years.

Well, if you look at the YTD gains for all major commodities, you are still at a double-digit gain, some over 20%. Not bad at all even compared to the bankster-manipulated financial stocks.

Yeah, but I went to sleep "knowing" gold was trading at 1025. Anyway... :)

BSC at $4. As I said before, JPM had a sweet deal. btw, I really would like to know the idiots who are buying BSC at $4 right now. Who? Who? Who? Who?

Dinor,

I suspect "The Term" will come to be known as 'fat tail'.

A financial market of very high levereage (traditionally we do not have the entire market at 20-30x), and a national housing loss registering 10% in a year (when we have never had a national negative number) triggered margin calls that would have failed at 5% market loss.

What suprises me is how well equities have held up. Given the massive losses and de-leveraging forced sales, the entire capitalization of the market should have declined more.

The only thing I can figure is there are bigger losses across foreign markets to which I am only peripherally privy - which is probaly a huge mistake. But I am pretty fatigued already, I don't think I can add following all foreign exchanges to my list. So, in the end I am just suprised it is not already worse here.

What people may take as investment advice is this:

I think there should already be bigger losses, and for all of the US lack of transprancy, I think other markets are even more opaque. And when people (money managers locally) give you advice to invest in foreign securities, they are really asking you to cover their positions there because the loss has yet to be revealed.

Wow am I getting cynical or what?

DinOR :

I was first introduced to these "seeds of destruction" by an article by Bill Fleckenstein in early 2005.

I have saved the article and the link still works. All this is common knowledge now, but this was one reason why I decided to join the bubble camp.

Whenever anyone says, "who could have known this", let them know that this article was available on the internet since last 3 years. So many people must have realized it even earlier.

Sorry for the missing closing tag for bold.

Here is the part 2.
http://www.fleckensteincapital.com/hotpotato_pt2.htm

The last part with closing remarks.

Now that we’ve seen how both the subprime and conforming secondary market mortgages work, we can look to the future and ask “Where do we go from here?” and “What’s wrong with this picture?”

It seems to me that if the regulatory environment allowed this all to continue, then we would eventually have to contend with a lot worse than just rising foreclosures in the subprime market, and housing price paranoia for the general public. And when big players push their weight around to hide conflicts of interest, and play games with assumptions we all take for granted, those games suddenly get a lot more serious.

Link for the last part.
http://www.fleckensteincapital.com/hotpotato_pt3.htm

OO, do you think Yen is still a good buy at this price level?

Solid? How about some shiny yellow metal?
I almost went "all in" on IAU today, but held back a little cash so I am not totally bereft in my retirement. OO, keep us updated on when the "idiots" start buying gold... or am I already in good company?
And still, buying "virtual PMs" does not exactly engender warm fuzzies (where exactly are they keeping my gold?). From IAU prospectus:
The custodian [Bank of Nova Scotia] may keep the trust's gold at locations in the vicinity of New York, Toronto, Canda, Montreal, Canada, London, England, or with the consent of the trustee and the sponsor, in other places.

I don't think I like Maria Bartiromo's new haircut. In fact, I'm sure of it.

"triggered margin calls that would have failed at 5% market loss"

Well exactly. Makes you wonder how anyone signed off on this stuff? Btw the coverage on CNBC today has been very strange. There IS... only (1) story today.

Will Bank of Japan attempt to slow the advance of Yen by supporting our Continental 2.0 dollar?

EBGuy,

don't worry, one of the "idiots" I met was still busy finding deals in financial stocks, he bought C all the way down, gold was not even on his radar screen.

Peter P,

I think the resistance level is @80, and BOJ is running without a chief right now, so short-term wise Yen could surprise everyone by shooting that high. But I won't put lots of money into Yen, because I am not completely confident on BOJ's spine.

I think AUD is a good buy today, as Yen carry trade unravels. RBA has proven to be a more disciplined central bank than BOJ, and as long as Yen climbs in the longer term, AUD will climb, because Japan is the biggest export destination of Oz.

Not investment advice.

I am not completely confident on BOJ’s spine.

You think they have cut interest rate? Is it even possible? :)

OO, your analysis on AUD is reasonable.

My only worry is the effects of unwinding Yen-carry trades on high-yield currencies, AUD being one of them.