Just The Facts

Did the FDIC Sabotage WaMu's Management and Erode Investor Confidence?

I agree. The courts will overturn this "seizure". It violates the 5th Amendment.


I also found it interesting that the bailout bill has language saying that banks cannot sell their troubled assets to the taxpayers at a profit, but makes an exception for assets received through a merger or buyout (meaning that JPM will be allowed to sell WAMU's assets to the Treasury for a nice profit, AFTER the FDIC basically gave the assets to JPM for nothing). It simply boggles the mind. The government seizes private property, gives it to a corporate friend, and then buys it back from said friend at a higher price. Wow!

Barclays Will Not Pick Up Lehman ETNs

And an ETN would be ?

Feddie Pay: The Reality of the Bailout World

Feddie Pay. I like that - LOL!

The Plunge Protection Team Goes to Work

I'm expecting a half point drop in the Federal Funds rate, and maybe some other "unique" approaches aimed at calming everyone's nerves.


My guess? It will provide a boost that lasts roughly 4 hours or so.


Look for DOW 3,500 by the end of this month. :(

Lehman Files For Bankruptcy

You and I both. I hope Cox has enough sense to immediately ban all short selling - of everything. Or as a minimum, all naked shorting.

The Lehman Situation: Brutally Logical, or Patently Illogical?

The way I see it, one of two things is going on.

1 - Either there's a concerted effort to create mass hysteria and drive LEH stock (and a few others) down hard for a short-term gain by market participants (or so the company(s) can be stolen for a few pennies on the dollar), or

2 - The whole house of cards has started falling and all the smart money knows it and is now running for cover.


Option # 2 would be supported with FNM and FRE, as well as recent action with WaMu and AIG. And starting a day or two ago, also with MER. And all the talk of Citi and others to soon follow, which has been going on for a while now. And I saw Goldman and JPM mentioned for the first time today as prime candidates for a huge drop. So far, they've managed to stay largely above the fray. If they start losing 20 to 30 percent of their value every day or two, then there can be no doubt that Option # 2 it is.

Fannie & Freddie: Just the Tip of the Iceberg

Oh. And JPM. They just took a billion-dollar hit on Monday on the bail-out of FNM and FRE. Obviously not included in anyone's projections of their earnings for this quarter ...

Fannie & Freddie: Just the Tip of the Iceberg

No, Paul. They've already taken a dive of 90 to 99 percent.


But how about GS or MS or MER or BAC or WFC?


Isn't there still a ton of downside potential there?

Fannie & Freddie: Just the Tip of the Iceberg

>>> With that in mind, I have two more words for you…got gold? <<<

Through different analysis, I believe that you and I have arrived at the same conclusion!

But just try to buy some, at the "official" price. There is none to be had (in quantity).

:)

Fannie & Freddie: Just the Tip of the Iceberg

>>> but how will financial markets absorb $50 or $100 trillion in triggered swaps? <<<


That's easy. There was an article on it today. The swaps require the bonds be bought back by the insurers, but the nationalization of the underlying debt guarantees that the market will pay full price for the underlying security. So the bondholders sell the debt back to the insurer, who then resells it back into the market at its full insured value. The debts basically became US Treasury Notes via the takeovers. If anything, some people will make a little money in commissions on all those transactions, as everyone honors their obligations and nothing changes (other than who holds the debt).


Maybe that's why the CBO came out today with their opinion that the liabilities of FNM and FRE are now liabilities of the US government and should be added to the national balance sheet.


The problem is, it just increased our national debt by 50 percent. Won't those who own our debt expect a corresponding increase in the rate of return on their investment, due to the increased risk? It's a lot harder to pay back $14.5 trillion than it is $9 trillion --- and especially so, with the economy entering a recession (or worse) and tax revenues declining. And two candidates running for President, one of whom is promising to cut tax revenue and the other who is promising to increase federal spending !!!


Expect the returns on US debt obligations to increase dramatically in the next few weeks. And that, of course, is going to wreak pure HAVOC on our federal budgets for the next several years.


I think we've seen the beginning of the end, for America as it is currently known ...


:(

Fannie & Freddie: Just the Tip of the Iceberg

>>> it’s that the best job in the world is apparently a failed CEO. <<<


LOL! That's been true for as long as I've been following the markets, which is 7 or 8 years or so. The gal at Mattel that drove the stock from $40 to $15 --- and then drove off in the company car --- comes immediately to mind. The guys "retiring" from FNM and FRE are another good example. And I can't help but think of that guy at Boykin Lodging who made that investment in Florida real estate at $19 million with his shareholder's money because it was simply "too good a deal to pass up", while he drove the stock's value from $15 to $6, and then cut a deal with private equity to buy out the company at $8 per share (a whopping 33 percent premium to its "then-current" fair market value ... a good deal - right?). But the kicker was that the same property he "bought" for $19 million with stockholder money got sold back to him for $2 million in the deal. That was supposedly a "great deal" for the stockholders, with the company changing owners at less than half of what it was worth 12 months before.


And I'm sure there are many others.


After watching this closely for 8 years, I'm convinced that our equity markets (and all publicly traded companies in general) are mostly a sham, designed by those with money to transfer money from the pockets of the working class to themselves.


Maybe this latest crisis will finally fix the problem. And maybe not ...

Chewing on the FDIC List of 'Problem' Banks

They were right, and you are right.

As one commentor said in response to your original post, the key would rest in whether or not you believe the data being provided by the government (for starters).

More telling is your statement above that "it should be noted that IndyMac failed and it was not on the problem list at the end of the first quarter". I'd be willing to assume that's correct, although I don't know.

And ANY data you're looking at most certainly doesn't consider the total collapse in value of all FNM and FRE preferred and common stock, or the change in Lehman's situation yesterday.

We're in a highly fluid situation here, where information that is more than 24 hours old or so, probably shouldn't be relied upon for making investment decisions.

Buy some gold, if you can find any. That's all I'll say.

:)

Lehman, How Much Is Your Headquarters Worth?

What is "anything" worth? At what value should assets be carried on a balance sheet?


Someone posed the question a day or two ago (on another site I believe):


"If you live in a home that you paid $250,000 for and your neighbor defaults and his home is sold in a foreclosure auction for $20,000, does that then mean that your home is worth only $20,000?" (or words to that effect)


I said "yes".


If I'm right, then our real estate correction still has a long ways to go. And quite a few of our major banks are worth zero or less.


Would you be interested in buying Goldman shares for $3.00 or $4.00 apiece, if all credit on the planet were dissolved and everything is only worth what someone holding gold or silver is willing to pay for it?

Global Capital Asset Death Spiral

>>> If your home is worth around 250K, but the person next door goes bankrupt, and the home goes into foreclosure and sells for 20K - does that mean the new value of your home is now 20K? <<<


I'd say yes. If it were worth more, wouldn't someone have stepped forward to pay more for your neighbor's house?

Who Killed Frannie?

LOL! Love the analogy, bearfund!