Mike Mayo initiating coverage on US Banks and hosting a Conference Call TODAY, Mon., Apr. 6 at 11 :00 am
Conference Call Info:
We are hosting a conference call to discuss US banks along with Eric Fishwick, CLSA's Head of Economics Research, and guest accounting expert Bob Willens, who will discuss mark-to-market accounting. The call is today, Monday 6 April at 11am EST.
Phone #: 800 423-9703 (Int: 706 634-5206). ID: 940 387 68.
It was sickening to hear Erin this morning on the financial entertainment channel saying that 98¢ was conservative seeing as these were currently performing loans.
Now they have Maria in a promo spot touting the fact that their viewers knew ahead of time about the housing bubble because they had aired the views of Roubini and Shiller.
Now they have Maria in a promo spot touting the fact that their viewers knew ahead of time about the housing bubble because they had aired the views of Roubini and Shiller
Cramer nullifies all that.
Great conference call moments:
http://seekingalpha.com/article/53642-great-conference-call-moments-mike...
2% markdown! SOS. Mark to Fantasy. Lie, cheat, steal, fraud. Transfer to taxpayer. 40 trillion in private debt backed by 20 trillion in assets.
SOX, Glass-Seg, SEC=not, CFTC=not. TALF, TARP, BARF. 12.8 trillion so far. Leverage as a business plan. Nothing new here. Move along.
They should just burn down the sets, and give the cameras to Goodwill. They should replace the show with perpetual reruns of Clueless.
Is the CC being webcast by any chance?
"They should just burn down the sets, and give the cameras to Goodwill. They should replace the show with perpetual reruns of Clueless."
They should throw the Money Hags into prison as well. Erin, Becky, Maria, Michelle and the rest can create a series of films to pay back their debt to society.
The new growth is the spreading realization that perma-growth is not possible.
What does he mean by will exceed great depression levels?
In absolute dollar terms?
In real dollar terms?
In pct of portfolio terms?
In bank failure terms?
Mike Mayo ?
I don't know . Who should I believe more : Mike Mayo or Britney Spears ?
Loan losses will easily exceed Lesser Depression levels.
Falls in home prices are already greater than in the L.D.
Default rates are already greater than in the L.D.
Unemployment is tracking at the progression seen in the L.D.
And, we have not yet started writing down household debt levels.
Big mess ahead.
Obama, save the powder in the Treasury to feed folks, 'cause a lot of folks have no resources to fall back on.
Mike Mayo is a dingbat. He has no foresight. Check out his views from 2004-2007. Pitiful.
Regarding CNBC, Erin, Maria, et al:
Propaganda was used to inflate the bubble. Propaganda is now being used to prevent the bubble from bursting.
I find it very telling that CNBC is touting debt monetization as a positive.
Gee, what a surprise:
Financier Warren Buffett has been lauded for his plain-spoken denunciation of the greed and foolishness behind the economic crisis. He has pushed the massive federal bailout of imploding banks as the essential response to an "economic Pearl Harbor."
When Buffett speaks, people in high places listen. The famous investor is so highly regarded that in a debate last fall, both presidential candidates said they were considering him for treasury secretary.
A Bee examination of regulatory records shows that Buffett, the world's second-wealthiest person, also quietly has become a top beneficiary of the banking bailout he so vigorously advocated.
http://www.sacbee.com/topstories/story/1756261.html
"Obama, save the powder in the Treasury to feed folks, 'cause a lot of folks have no resources to fall back on."
That's no fun. It is much better to let the crooks in charge have a huge feast on the little bit of seed corn that is left. Chefs Timmay and Benny are busy preparing their seed corn souffle at this very moment.
Financial stocks have lost > 80% over the past two years and Mike Mayo puts out a sell recommendation. What incredible insight and timing!
It rivals the calls of Citi's former telecom analyst Jack Grubman during the dot.CON bust.
Anyone that gets their info from CNBC, Wall Street analysts, the MSM or right wing radio is clueless.
I'm not sure this was a public conference call.
But I'm online ...
So now we have a new baseline scenario - GD1.
About 3/4 of assets are not mark-to-market at banks ...
Cracks in the facade. Treasury extends deadline, loosens PPIP participation restrictions:
Treasury Department Provides Updated Guidance on Legacy Securities Public-Private Investment Program
Deadline Extension
To better accommodate increased participation, the deadline for email submission of applications has been extended to 5 p.m. ET on Friday, April 24, 2009. Treasury now expects to inform applicants regarding preliminary qualification on or prior to Friday, May 15, 2009. The Treasury Department requests that all applications be submitted via email only.
Business Partnerships
In order to ensure broad based participation in the program, Treasury will encourage small, veteran, minority- and women-owned businesses to partner with private asset managers. There are several ways smaller firms can partner with fund managers including as an asset manager, an equity partner, or a fund raising partner. Other ways to participate include providing such services as trade execution, valuation, and other important financial services. Treasury will allow smaller firms to partner prior to or after the application deadline, including after the selection of the initial group of pre-qualified Fund Managers. Treasury encourages innovative proposals from Fund Managers that incorporate the options listed above as well as other potential options.
Potential for Program Expansion
The goal of the Legacy Securities PPIP is to restart the market for legacy securities, allowing banks and other financial institutions to free up capital and stimulate the extension of new credit. In achieving this goal, Treasury seeks to maximize the inflow of private capital into the market from firms large and small while protecting the interests of US taxpayers. To effectively accomplish this goal, after the initial pre-qualification of Fund Managers, Treasury will consider opening the program to Fund Managers that are not selected in the initial pre-qualification process.
CR, no web address? Or is it a secret?
"The seven deadly sins of banking include greedy loan growth, gluttony of real estate, lust for high yields, sloth-like risk management, pride of low capital, envy of exotic fees, and anger of regulators,"
Loan growth too fast - will overshoot on the downside.
Real Estate: not just residential. Grew an average of 20% per year this decade.
3.4% loan losses in Depression. In Depression you didn't have home equity, credit cards, and construction loans (like today)
We moved from 'worse than the last recession' to 'worse than the early 80s' to 'worse than any since the end if ww2' to 'worse than GD1'. I am liking the discovery processs..
Max, I don't think they have a webast.
CR,
Hubris is my favorite sin, precisely because clever people get caught up in it.
the mike mayo conference call must be skying FAZ, but is it any different from what whitney or roubini have stated?
I got on with no problem CR.
'I am liking the discovery processs.'
Only someone named Lucifer would, since this how the Great Depression ended -
'I rode a tank
Held a generals rank
When the blitzkrieg raged
And the bodies stank
Pleased to meet you
Hope you guess my name, oh yeah
Ah, whats puzzling you
Is the nature of my game, oh yeah'
I am also on. CR might have gotten the "special people" dialin. Usually, the conference system will say "you are in listen only mode". Toward the end, you usually either get an operator screening questions, or you have to press a couple of keys to get in line to answer questions.
il dilettante
an interesting take on Obama in the last post... night of the long knives, eh? there is a passage in one of his books that hints at his feelings about banks...
like you I'm not quite convinced that he is now 'owned by the bankers'... the problem is with your thesis is creating the shadow team of bankers waiting to take over, that was the problem with Stone's JFK - the size of the conspiracy all the way down to the White House shoe shine guy!
guess you could tell them you're vetting them for the World Bank...
Has anyone really thought through this current refinance boom and it's impact on Banks? Long term capital earning 4.5% on average is going to present bigger problems than people expect. If servicing runs at about 1/2 percent of the total rate income, and inflation eats away another 1 percent, are we really expecting to have healthy financial service companies earning 3% while paying 2.0% for CDs? Sure, for now the fee income is great, but that's a very thin spread to consider a bank to be "strong" over time.
My .02
SGIP
Angry Saver "Financial stocks have lost > 80% over the past two years and Mike Mayo puts out a sell recommendation. What incredible insight and timing!"
Since early March XLF up 57% and BKX up 65%
On MTM: "Most of the market is not active"
Once you've decided that the market is inactive - use something other than quoted price. Must use valuation techinique other than quoted price.
Recommend income approach to calculated fair value - estimate cash flows and discount cash flow.
A couple of things missing from that debt list - student loans, leasing, and odd as it may sound, the entire concept of pensions.
Odd as it sounds, there is a logic to propping up the market, broadly conceived - after IRAs, 401K etc became common, part of Americans' retirement were privatized, so to speak - and now the bill is coming due.
And for all those poor protesting boomers - the bill isn't coming due for our retirement guys, it is coming due for yours.
Shame that we will wreck everything attempting to give the boomers one last time at the trough.
But then, the boomers never actually took their parents or grandparents seriously, so having them get a front row seat right when they are too old to actually have a chance to run for the exits as the stage burns is at least fitting. It is just an accident of fate, and none of their responsibility, that they will be trampling their children and grandchildren in the attempt, though.
OT FYI:
Brian worked on crbot over the weekend, and while it does not post, you can still use CRCizer if you are a read-only type.
expect to move a lot of assets from Level I and Level II to Level III.
Sauce for fresh asparagus: Mayo mixed with fresh lemon juice. mmmmmm
This provides cover for having a large percentage of assets in Level III.
I think Black's thoughts regarding outright fraud get to the root of the evil problem:
Senior S&L Regulator Says Government Engaging in Massive Cover-Up of Economic Crisis: “The Entire Strategy Is to Keep People from Getting the Facts”
William K. Black was the senior regulator during the S&L crisis, and an Associate Professor of Economics and Law at the University of Missouri (bio).
Black says that massive fraud is what caused the economic crisis. As one example, he explains that everyone involved knew that the CDOs which packaged subprime loans were not AAA credit-worthy (which means that they are completely risk-free). He also said that the exotic instruments (CDOs, CDS, etc.) which spun the mortgages into more and more abstract investments were intentionally created to defraud investors.
Moreover, Black says that the government's entire strategy in dealing with the economic crisis is a massive cover-up:
[They] don't want to change the bankers, because if we do, if we put honest people in, who didn't cause the problem, their first job would be to find the scope of the problem. And that would destroy the cover up....
Geithner is ... covering up. Just like Paulson did before him....
These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed....
Until you get the facts, it's harder to blow all this up. And, of course, the entire strategy is to keep people from getting the facts....
[Question] Are you saying that Timothy Geithner, the Secretary of the Treasury, and others in the administration, with the banks, are engaged in a cover up to keep us from knowing what went wrong?
[Black] Absolutely....
They're deliberately leaving in place the people that caused the problem, because they don't want the facts. And this is not new. The Reagan Administration's central priority, at all times, during the Savings and Loan crisis, was covering up the losses.
[Question] So, you're saying that people in power, political power, and financial power, act in concert when their own behinds are in the ringer, right?
That's right. And it's particularly a crisis that brings this out, because then the class of the banker says, "You've got to keep the information away from the public or everything will collapse."
Read the entire transcript here: http://www.pbs.org/moyers/journal/04032009/transcript1.html
they let me on the CC.... Can't be that supa-dupa top secret
"I find it very telling that CNBC is touting debt monetization as a positive. "
Well, the company they work for is probably pretty close to liquidation. That is a lot of uncertainty for them and I bet they would like to avoid it.
"Most of the market is not active"
Exactly!!
And with the new FASB ruling, this "model" interpretation can be broadly and liberally used!
The model says that losses are only 98 cents on the dollar damnit! And now the FASB rules allow them to BE rated as that. In that world, banks are looking pretty!
This is why I'm convinced, RE is coming back this year, or soon; don’t doubt it.
With the new FASB mark to fantasy ruling, the following changes to key statistics is under way:
1. Banks capital ratio is now fantasy ratio, and will allow them to lend.
2. Banks can now hold onto REOs, indefinitely. There’s no incentive to sell at market. By holding REOs, banks can rate that REO asset at 2007 level. Sure they’ll have to put taxes and maintenance, but that’s going to be like a cost of business to keep 2007-model alive.
3. Similarly, Banks can now DRAGGG ON the NOD and foreclosure process. Expect things like allowing people to stay, semi-permantly (as in for months and years at a time), rent free; without any foreclosure NODs or auctions or what not. Next few months you’ll see a sharp decline in new foreclosures as the banks adapt.
4. Commercial RE (CRE) was going to be a bomb in 2009, because all those commercial loans are due and the market valuation means no bank will refi them. Well no more, we’re not using market valuation anymore, so those model all says these CREs are awesome profits, so there’ll be increased refi of CREs and the crisis averted.
5. With the new model, HELOCs may even be a viable source of credit for consumers now; Those on the margin may find banks offering HELOC now, the home ATM is now open!
6. Ditto to Credit Card ABSs, the model says much better profitability; In fact, there’ll be more solicitations for people to own more cards; coz the model says it’s such good business, plus the customer can use one card to pay off another — further enhancing default rate for their model!
7. The obvious is that all the bank’s financial releases for the rest of 2009 will beat expectation now. So now permabulls have ammunition to say recession is over.
Bears are fighting a losing cause with the deck to heavily stacked against them.
Are these going to be a permanent solution, or actually save us from impending doom? Heck no. It’s the same playbook from Japan that pretty much sealed their fate to the 20 year economic decline. *BUT* it’ll drag everything into SLOW MOTION decline.
Kinda like treating an acute disease that *MAY* kill you, by taking a poison that kills the bacteria and the short term disease problem, but guarantees you will die SLOWLY. We just did that.
I thought I could time the market and buy a house in 2010 or 2011; I can see my folly now. The govt will make it a money losing proposition to own a house for 20 years. The govt will stretch it out so long, so maximum number of people are bearing the housing decline and nobody can “time” and get “out” — in the end you need a place to stay, and that is their trump card.
I think I’m so depressed I’ll go jump off a bridge somewhere now.
So now we move on to the "uptick" rule. Laughable.
And for all those poor protesting boomers - the bill isn't coming due for our retirement guys, it is coming due for yours.
The ultimate conundrum is in the public pensions, where governments must cut current costs or raise taxes to become current on obligations that are due decades from now.
expect to move a lot of assets from Level I and Level II to Level III.
That is bad, right ? It means more stuff are becoming toxic.
you heard it first
Ponzi LLC
my new fund... bought at 12 cents level 1, moved to level 3, now marked at 90 cents. I'm RICH
Mayo: suggests markets are wrong - move back to discounted cash flow model.
NYCityBoy wrote 7:47am.
"They should just burn down the sets, and give the cameras to Goodwill. They should replace the show with perpetual reruns of Clueless."
They should throw the Money Hags into prison as well. Erin, Becky, Maria, Michelle and the rest can create a series of films to pay back their debt to society.
---
and then make a pron movie, "bank whores do ( ya know "DO" 
prison"
Depends on the bank.
Moving to economics ... I'm going to get off the cc.
CR - this conf call is superb - thanks
"Read the entire transcript here: http://www.pbs.org/moyers/journal/04032009/transcript1.html"
As I was listening to this yesterday, all I could think was that I'd been reading this crap on Calculated Risk for going on 1/2 a year now. I know many of you have been on the wagon a lot longer. That said, it was an excellent piece, and very accurate (as far as we know) as well.
expect to move a lot of assets from Level I and Level II to Level III.
That is bad, right ? It means more stuff are becoming toxic.
No, it means more stuff are becoming mark to model (because it's more favorable / trendy to do so) Credibility and transparency is considered so overrated by the banking community.
I can't wait for everything in the USA to be mark to model. Then we can have an annual "model adjustment day" and the industry collectively tweak their model. Interestingly, the annual bankers bonus celebration will happen right after model adjustment day -- every banker will always get their bonus.
Mark to desired unemployment rate; mark to desired birth death rate; mark to desired CPI. We're already there in some sense.
Awesome.
Thanks for the link.
This one http://www.pbs.org/moyers/journal/04032009/transcript1.html
I'll read it later on.
Never heard of William K. Black ......but its on pbs (a good station IMO), so who's listening?
I agree the government is in collusion with the banks/big companies (their political sponsors and handlers) to cover up the extent and cause of this crises and will put the burden on the taxpayer. "Change" would mean a new political order, and those currently handling the politicians want the status quo to protect themselves. Since Obama put Geithner in, I think it shows "Change" does not apply to the banking / monetary system.
"governments must cut current costs or raise taxes to become current on obligations that are due decades from now"
Right; the anti-thesis of a stimulus.
press * followed by the number 1 to ask a question
FDIC’s Insurance Commitments 34% Higher Than Reported
http://optionarmageddon.ml-implode.com/2009/04/06/fdics-insurance-commit...
It's discovery; they're finally going to admit what most already know to be true.
“Whosoever holds the ring, by the ring they shall be enslaved.”
-- Alberich, Das Rheingold, Richard Wagner
Hey! PPT-- you better get back to work, the Dow is down over a hundred points. Can't let the public
think the markets are no good. Get that index back into positive territory by the market close. Stocks
have been up soooo much lately everyone is feeling good. Never mind all the terrible economic news.
Moving to economics ... I'm going to get off the cc.
roflmao
Thanks for the updates, CR. FWIW, I've never heard a good argument why we can't do both discounted cash flow and m2m at the same time. Any difference between the two would be an inefficiency that would be worked out pretty quickly.
expect to move a lot of assets from Level I and Level II to Level III.
Level III because they are difficult to value. Okay, I understand. This valuation of financial instruments is hard work. Clearly anyone unable to value the very holdings they are responsible for managing is admitting they are incompetent. Give Ms. Warren a scythe and let's clean house of this incompetence.
This may sound like a broken record, but in order to have change of the banking system / monetary system, so that we do not get completely screwed over, we do need to keep pressure on our elected representatives.
I do the following - if you do something else you think works, please let me know.
1. I call my representatives regularly (202) 224-3121 is the switchboard for the house and senate.
2. I am involved in my local party because I want local candidates aware and focused on the corruption of our current system. This is important because all national politicians come from local politics. We can have direct face to face contact now with the congressmen and senators of the next few decades.
3. I spread the word about about the current situation. Many people like to be fooled by the government, business and the media. (Government and the Media is really controlled by Business as they provide most of the funds). Just the graphs on this website are very useful in talking to people about our economy, our federal reserve (tell people they don't control the value of their savings, and ask them if thats a fair system).
Lots to be done, we don't enjoy doing the above, but we need to, and we should want to.
/soapbox off.
Hold the Mayo. Lettuce isn't wilting on this one. Tomato is ripe over this. Onion is crying on how bad it is.
If were goin back to the DCF model, may i suggest using the T-bill rate!
Booooyaahhahhahaha
"The seven deadly sins of banking include greedy loan growth, gluttony of real estate, lust for high yields, sloth-like risk management, pride of low capital, envy of exotic fees, and anger of regulators,"
Sins or features? Even if these money centers are taken over today, the vast majority will still be way, way ahead.
Communities print own currencies to keep cash flowing
http://www.usatoday.com/money/economy/2009-04-05-scrip_N.htm?loc=interst...
pavel 04/06/2009 - 8:37am.
“Whosoever holds the ring, by the ring they shall be enslaved.”
No offence Pavel but this sounds like a line from LOTR. Of course, the line in LOTR would have been "whosoever seeketh the ring..."
If were goin back to the DCF model, may i suggest using the T-bill rate!
The realities of "return OF capital" instead of "return ON capital" kind of puts a wrinkle to DCF, doesn't it
Upshot of the economics section was that aggregate income growth has dropped (is probably negative in real terms), and this will make it very difficult for the consumer to deleverage. Deleveraging will be a protracted (another 18 months) and painful affair.
somebody anonymous wrote at 820a
"And for all those poor protesting boomers - the bill isn't coming due for our retirement guys, it is coming due for yours."
---
two points
boomers are defined as born between 1946 and 1964..almost 2 decades, thats a rather large net being thrown over a huge swath of the population...talk about generalizations
point 2, lots of us "boomers" are x hippie like libertarians...socially liberal but very conservative (as in conserve) like lots of my peers i listened to the stories of my grandparents (not my parents who wasted money) and i saved, lived conservatively, built a home and a sustainable lifestyle
i wince at the coming of the greater depression...no man is an island...but my family should be ok
Mayo just now on M2M:
"an artificial accounting induced capital injection into the banks"
If MTM only applies to AFS assets....then why the f&*k are the bids ignored?
You wanna stop bleeding to death from the lows bids and mark them based on "valuation" or income.....then move them to HTM.
Doesn't matter how much I owe on my car....the dealer is going to give me the market bid when I trade the shit in....my only other choice is to hold the car to maturity.
Stocks down commodities down bond yields up and gold down.. where is everyone putting their money? King size mattress sales up??
This Mayo guy should open his own clinic.
PS - Who is Mike Mayo?
Lucifer, if that's not 'containment', I don't know what is....
"No offence Pavel but this sounds like a line from LOTR. Of course, the line in LOTR would have been "whosoever seeketh the ring..."
It's a line from Das Rheingold, an opera by Richard Wagner. The speaker is Alberich the Dwarf, who, if he renounces love, will win the ring and rule the world.
Mock,
Based on that paper that was posted here a few weeks ago the baby boomer generation(
are in for a lot of trouble. I think your circle of influence and the saying 'birds of a feather' might explain your sample space!
.....
that was suppose to read "generation ( s )"
(second try!)
The Government's Hand Forced
Geithner and company, having apparently gathered a sufficient amount of data to determine which of the nation's nineteen largest Banks are adequately capitalized, will reportedly convene this week in order to devise a plan of action. The new accounting rules, conveniently implemented just prior to this "meeting of the minds", will be taken into consideration during this decision making process. Given the crucial nature of these tests, along with the Catch-22 that the Government has created for itself, we expect Treasury to take some form of decisive action in the next two weeks.
For starters, we are told that Treasury has all intentions of keeping the results of the stress tests shrouded in secrecy, and away from the judgmental eyes of the Market. Realistically however, the sieve-like tendencies that pervade every level of Government will impair Mr. Geithner's ability to maintain 100% secrecy. The game then, is for Treasury to act upon the results before any Government Insider decides to feed his sense of self-importance by whispering into the ear of a journalist.
Given that the above assumption is correct, we would additionally propose that it is nearly impossible that all nineteen banks managed to "pass" the tests. Furthermore, it is highly probable that at least a few Institutions will be viewed by the stress tests as beyond the point of repair. This being the case, Treasury will be forced to move in and either nationalize or dismantle the most crippled bank(. Now, due to the anti-nationalization rhetoric that has emanated from Washington, this new rescue effort will likely embody the full spirit of nationalization, while assigning some sort of euphemistic moniker to the action.
In any event, the conclusion of the stress tests has effectively forced the Government's hand. Every day that passes without action will only serve to fuel speculation as to the identity of the "weak links in the chain". This is our humble view.
www.TheValueatRisk.blogspot.com
Ban boomer navel gazing. It's vapidity disintegrating into Alzheimer's. Yawn.
MLM,
That also suggests a growing component of the consumer sector deleveraging will occur through default...no?
The FED's silence on the stresstests speaks volumes.
It is a certainty that if the banks were well capitalized they would be putting the results up on billboards.
Mark this day. Citi is going to get broken up and today is the first serious discussion I have heard to date of piecing out the healthy parts of Citi for sale. Vikram put on your golden parachute and get ready to deploy.
Artist's Rendition on the State of the Economy . An interesting artistic rendering of the economy at mish's blog
nades
you make good points regarding sample and the retirement troubles ahead...as did that anonymous person
i get defensive when people say hey its those boomers...more than anything i guess we were just next in line when the music stopped
george bush and bill clinton and many of the so called boomer leaders were born very early in the boomer generation ( late 1940s?)
i know lots of peers 10 years younger who have turned their back on conspicuous consumption and generated a high net worth in the process
If the current state of the banking industry is characterized as adequately capitalized then I don't want to know what inadequately capitalized looks like.
BTW way bob igers compensation hit 50 million while presiding over the biggest lost of share value in company history. Happily short Disney. This guy might need to get canned.
That also suggests a growing component of the consumer sector deleveraging will occur through default...no?
Their economist didn't say that, but it seems to me that would have to be a significant part of it (already is).
I find it very telling that CNBC is touting debt monetization as a positive.
Yes they were espousing "free markets" for years and now they espouse free "money:
hc @ 11:25
While I'm of the same mind about the motivations behind the FASB rules and guidance and am also a current renter waiting for a more solid bottom in housing prices, I come to some different conclusions than you. I'm definitely still trying to get my head around all of this, so I'm sure some of this is wrong.
- as long as unemployment and REAL economic activity are depressed, consumers will be working to reduce their debt levels. thus, while this may be an inducement for banks to lend more freely, I'm not sure their will be the same appetite for debt from the customers.
- if the banks start stashing all their REOs in Level III for the long term - they will tank the housing market. after all, these are accounting for something like 40% of existing sales.
- not sure if the HELOC ATM can be opened again if LTV ratios continue to rise based on the V continuing to deteriorate (see above point)
- not sure this will affect the default rates on credit cards, which is the big issue in that market. yes, if might make existing CC ABSs look better on the balance sheet, but I don't see the CC companies aggressively extending new credit to a faltering consumer or consumers looking to lever back up with doubts about their jobs and asset values (points 1 and 2)
Just lots of moving parts and unintended consequences. Time will tell.
To whomever said that many here have been calling this what it is...outright fraud and corruption...AMEN! Now some in the MSM are starting to report the fraud that has brought our countries to their respective national knees. This fraud was premeditated in every way, and Black has the credentials to prove it. These bastards should be pounding big rocks into little ones, but the PTB won't let justice take place because they are part of the fraud and scared shitless.
"Trainyard Tech acquires GE train signaling business"
http://www.bizjournals.com/pittsburgh/stories/2009/04/06/daily4.html
Is GE running low on cash?
Bankers shuffling worthless paper from 1 accounting asset class to another while the government is furiously pumping cash into these institutions .
Shamelessly robbing taxpayers blind in broad daylight.
debtinator wrote on Mon, 04/06/2009 - 9:00am.
Ban boomer navel gazing. It's vapidity disintegrating into Alzheimer's. Yawn.
---
i wasnt gazing at my navel...
i was looking at something much much bigger
my portfolio
Satellite pics of Las Vegas from '84 to 2009. Look at Lake Mead and wonder what was going to destroy LV before the credit bubble. Water rights are the most valuable commodity in the west.
http://j.photos.cx/vegasgrowthsatellitephotos-754.gif
No offence Pavel but this sounds like a line from LOTR. Of course, the line in LOTR would have been "whosoever seeketh the ring...
No offense, but where do you think Tolkien got the idea?
Yah, yah, boomers are evil, they're going to get theirs, etc. etc.
Frankly, we're _all_ going to get ours. Young adults starting out and young families are going to hurt as bad as boomers as every institution hits the wall: medicine, education, legal, etc. etc.
Families raising kids now are going to need heavy gov't subsidies to get them into college -- or a restructuring of the educational system. Families who want decent medical care that doesn't bankrupt them (as corporate-sponsored care goes away, as I believe it is), will need a gov't mandated -- and somewhat subsidized -- restructure of health care. And the same for retirement.
It's all of a piece. We'll all suffer together. We'll all recover together, by the same mechanism: a change in the values and methods by which the resources of society are allocated and directed.
Krugman on more gaming of the PPIP
http://krugman.blogs.nytimes.com/2009/04/06/bank-scams/
OMG, banks using SPVs as surrogates for BK and accounting purposes! Sacre Bleu!
Market Musings
One bearish note in this last rally is that all stocks and I mean virtually all of them were unable to reach new highs. That is although we hit Sp 745 many quality companies such as McDonalds and Walmart did not hit meet their previous 3 month highs. Select materials hit new highs such as FCX and Pcu but other names in steel, aluminum and companies like BHP did not follow. This looks like very concentrated buying and short covering not a real rally. @ 745 we hit overhead supply and I don't think we see that before the summer ends.
Angry Saver "Financial stocks have lost > 80% over the past two years and Mike Mayo puts out a sell recommendation. What incredible insight and timing!"
Since early March XLF up 57% and BKX up 65%
Schaeffer,
The financials are still off ~ 80% from their highs despite the recent "big" gains you cite. A 50% move off a 90% loss is of little consolation to most bagholders. It makes for a good sales pitch, but is by no means indicative of sound fundamentals.
“Whosoever holds the ring, by the ring they shall be enslaved.”
-- Alberich, Das Rheingold, Richard Wagner
Pavel Chichikov
Twilight of the Financial Gods can't come soon enough.
"Happily short Disney."
Good bet.
Coming this summer, Staycation II. Can Disney make up the loss at the parks, via DVD sales? Does legacy animation benefit from any transition from DVD to Blu-Ray? I heard on NPR, that the parks were laying off any non-customer facing jobs, that they can. Might be a good time to go, for those of us who do not like crowds.
Vegas should continue to feel pain. I wonder how much of the Casino expansion this decade was on credit?
Look at Late January Early February we were trying to build around 745 base only to crash through. We rally last week right into that baseline and fail three times then we all fall down. This is bad and very bearish IMO. New lows before we hit 750 again.
http://www.google.com/finance?q=INDEXSP:.INX
Mike Mayo is a dingbat. He has no foresight.
Are you saying Mayo is full of baloney?
(heh heh)
Blackhalo
MS actually brought to my attention the enormous amount of debt they have to service from recent buying binges. Don't have a statement on front of me but I trust him. Good hedge if we continue to go down.
not CR-BOT, but....
new post "Altman: Not a normal cyclical recovery"
Mayo moved to a new shop, and hence is putting out "new" coverage. he was pretty downbeat about the banks when he was a DB, so a lot of this critisim is unfair. He might not have nailed it as well as Whitney did, but he did better than most, and certianly a much better job than Bove. Why that clown is still employed, let alone often quoted/interviewed is beyond me.
"Satellite pics of Las Vegas from '84 to 2009."
That is insane! Talk about an unsustainable Ponzi! I can see the next Vegas coming attraction - the ghost town.
"Twilight of the Financial Gods can't come soon enough. " - TCA
Ha! Ragnarok for the banks. Can the small profitable regional banks slay the Giants of BoA, Citi and GS? or are we doomed to an eternal darkness of servicing their debt?
Linked & bh;
That's nothing. The thing is: Nevada's allocation of Colorado River water is based on their population decades ago (pre-mob) relative to CA and AZ. Most of that water that feeds Vegas therefore comes from groundwater diversion from the north. They have bought up huge water rights and ship the stuff down, much like the LA basin raids the Sierra runoff every year. It's going to be ever more expensive to keep that going, especially as those rights (literally) dry up.
Remember the stink McCain caused when he had a senior moment while trolling for Nevada votes? He said that they should renegotiate the Lower Colorado River Compact, forgetting that if they do, the state he is actually paid to represent would necessarily lose out.
bearly (member) wrote on Mon, 04/06/2009 - 11:08am.
Bankers shuffling worthless paper from 1 accounting asset class to another while the government is furiously pumping cash into these institutions .
Shamelessly robbing taxpayers blind in broad daylight.
With impunity I might add! When taxpayers blinders are lifted as to what has actually happened, the lyric" nowhere to run and nowhere to hide" comes to mind for the perps who bankrupted our country. These are the last desperate acts of thieves and fraudsters who ran a worldwide Ponzi Scheme for better than 2 decades. The repeal of Glass Steagall was the last nail in the coffin, but it bought them more time which has now run out. I say this because we went from 65% debt to income for individuals in 1994 to 135% debt to income for individuals in 2007/2008. We had our inflation, and now it's time to pay the piper.
It has been estimated that 45% of the world's wealth was vaporized last year. $50 Trillion Dollars I believe is the figure associated with said percentage. We have fallen down the rabbit hole, and God knows how far down it goes.
Did she happen to also mention that at the the time they were both ridiculed and laughed at by other guests and hosts?
No offence Pavel but this sounds like a line from LOTR. Of course, the line in LOTR would have been "whosoever seeketh the ring..."
"Both rings were round, and there the resemblance ceased."
Interesting lecture on Tolkien and Wagner:
http://www.isi.org/lectures/text/pdf/birzer.pdf
On the flipside, there have been realitively few bank failures during this "crisis" compared to other crunches in the past... an historical chart here... Has your bank failed? Probably not.
http://mast-economy.blogspot.com/2009/04/has-your-bank-failed-probably-n...
