The Realist

JPMorgan and the Concentration of Risk

HE Loans & Lines are barely 20% writedown. This is insane.

For example, if you purchased a house in 2003 at $300k and its value went up to $400k and you took out a $50k line of credit life was good. But when that home dropped back down to $300k you now have a HELOC that has no equity behind it.

These HELOCs are not percentage writedowns, they are 100% writedowns on many of them. To assume only 20% will be written down is nuts.

Financials To Resume Meltdown Momentarily

Are you saying in point 1 that the banks are going down now only because of the short selling rule? It has nothing to do with the fact that these companies are in serious trouble and any one way collapse at any moment? It has nothing to do with billions of loans outstanding that might not be paid back in full? It has nothing to do with having to use what precious little money they have to buy back auction rate securities that they sold by deception?

With at least another year of write offs and to the real estate bottom, a contention that I believe is off by one to two years, why would the market rally in two months? Because it is forward looking and effecient? Just like it was forward looking in Aug-Oct of 2007 when it ran to a new high in the face of the sub prime meltdown?