JasonC

Distinguishing Between Out of Favor Sectors and Doomed Ones

"How is sending the stock to zero avoiding a cascade?"

I can't believe this needs to be explained to anyone sane enough to operate a web browser.

Fannie and Freddie had *debts* into the trillions, all of it owned by other institutions, since no one owns their own debts. The whole issue is whether all those who *lent* to them, would be dragged down with them as well. By protecting the creditors and sending the stockholders to the wall, regulators avoid a cascade of additional failures from the failure of Fannie and Freddie - and my sending the stockholders to the wall, they maintain incentives to avoid failed investment.

The prior comments on Lehman are equally uninformed, while the article takes a sensible position.
Do all those screaming for destruction as more moral think we are talking about Lehman? We are talking about anyone who ever traded with Lehman, which includes oh about half the financial world.

The costs are already going to be born by everybody, because they are too large to be born by a few narrow institutions or people. No amount of whining about it will reduce the losses one iota, or keep any of it from ever mattering to you. "But its unfair that other people's mistakes hurt me!" Tough toenails. If everyone dropped dead tomorrow it'd effect you too. Everything does. It is called existence, grow up and deal with it already, and stop the bleeping whining.

Oil: The Inconvenient Truth

Never buy cyclicals when they are posting peak profits. Buy them when they are in the basement because prices have collapsed. But that is so obvious only trend-follower headline-chasers miss it.

Oil prices are going to go right on collapsing because at these prices demand halves in one decade.