Flush...

In case you missed it...markets down 18% - in ONE week. Down 30% in a month, etc. etc. Oh and by the way, happy one year aniversary of the all-time high in the markets - kind of eerie - to the day.

Can't really tell you much you haven't heard already - this is kind of what we've been building towards the past year+. The news is only about to get worse, but technically analysisly speaking, it appears to be bouncy time (but don't try to catch the falling knives...with your tongue - courtesy of Chris). Some of the smart ones are calling for a multi-monther.

Yes, it seems nuts, but nothing goes in a straight line. Still, it's hard to see anything that sustained in this environment - so just be safe. But when we do get that rally sometime soon, my advice is to A) get out of anything that was still long (your choice as to when), and B) realize that this is nowhere near done. Congrats if you haven't had your butt handed to you this year, been a rough ride for the masses. Sidelines are MUCH safer.

But now we know what 3 of 3 feels like. I've been talking about it, but never explained it well. Here you go, with charts - gives you a general idea of what to expect. I say general because preditcing the future is not easy, and tools like this are not exact - especially in real time. Unfortunately it's after the fact that it becomes really clear. Cool stuff though.
http://tinyurl.com/4f39kz


But do not forget that the downward action is NOT over. That was not meant as an endorsement to try to go long into this debacle. Do not go on margin, do not go all-in. If we get the sustained bounce, it's just an opportunity to get people out of the stuff that is probably making them very unhappy right now.

Expect the unexpected, it is not crazy to think that we will be getting a "bank holiday", and the market could be closed for days on end with you stuck in a position (which could turn out great or horrid). You will not be quick enough to get out if you are wrong, because the market will be closed - or the Dow will move up (or down) 900 points in about 30 minutes like it did Friday afternoon! 900 HUNDRED points. Anything can happen. Literally.

VIX at 75?! Shatters previous records. Basically saying that the Dow will finish 400 points away from it's previous close - that's nuts.

More to that point, courtesy of Nathan - The intra-day movement (high v low) in the S&P has been over 5% just 41 times in the last 45 years (over 11775 trading days). It happened every day this week. It was over 10% today and yesterday. That has only happened two other times.



But back to the bullish case I mentioned above. 10 of the things that point to rally (wave 4 of 3 from the Mish article you just read - maybe).
http://tinyurl.com/4yqstd


***********************************

But I'm not about to get all bullish that easy - no matter what the market does....

1 in 6 mortgages in this country are now underwater - WOW. Up from 4% in 2006, and 6% in 2007. Oh, and here come the option ARM's. Oh, and all the "experts" say we will be making money on the MBS's the government is going to buy with our bailout money. Yes, that's why everyone else on the planet was lined up to buy them - but our government said no, our taxpayers get first dibs, the rest of you can go away.
http://tinyurl.com/3opsmv

*************************************

Some of these are pretty funny. Pictures of "sad guys on trading floors".
http://tinyurl.com/4tzrov

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Oh goodie – the clock runs out of digits, but now they are preparing for it to go to a quadrillion! Did Dr. Evil just walk by?
http://tinyurl.com/49bkur

**************************************

Where will the money come from? From the USA Today:

“Unemployment insurance trust funds are being depleted in many economically hard-hit states, setting the stage for a federal bailout to keep them solvent, USA Today reported Tuesday. As the number of U.S. jobless hit 9.5 million in August, pushing the unemployment rate to a five-year high of 6.1%, states such as California, New York, Ohio and Michigan are projected to run out of unemployment insurance funds either this year or in 2009. About one-third of the jobless receive unemployment insurance from state governments. The federal government is required to loan states money when their funds run dry. "People will get their benefits. It's just a matter of where the money will come from," a spokeswoman at the California Employment Development Department said.”

##########################################################################

Items of "lessor" importance:



Carlin telling it like it is:
http://tinyurl.com/2y867d


Adler - generally considered one of the smartest guys in the room...

(Posted in its entirety on www.wallstreetexaminer.com)

"The Long March toward the destruction of the creditworthiness of the United States of America took a Great Leap Forward today, or perhaps we should say “one small step for Paulson, one flying leap for mankind.” The Treasury announced and carried out 2 same-day surprise auctions of medium term notes totaling $20 billion. They announced 2 more auctions of similar paper for another $20 billion tomorrow. The market choked on its vomit. 5 year yields rose 22 bp on the day, and at one point were up 50 bp from the low of the day, which came right after the open when the market was digesting the meaningless worldwide central bank coordinated rate cut.

The Fed action in cutting the Fed Funds target to 1.5% was merely rubberstamping the action it had already taken a couple of weeks ago when it first flooded the system with cash and drove Fed Funds rates into the ground. Today they just made it official that they intend to pursue aggressively reflationary policies of monetizing virtually anything. What next after commercial paper? Baseball cards? Monopoly money?

Ironically, today they had to pump in $20 billion via OMO as Fed Funds soared on Tuesday to nearly 3%. I suspect that they will have ongoing difficulty trying to peg actual Fed Funds trading to anywhere near the target rate.

The Treasury market’s problem is not theoretical. It’s not about the threat of investors discounting future inflation. It’s much simpler than that. It’s about simply choking on a barrage of new Treasury supply that’s running between $100 and $200 billion every week! There is no way that stocks, or corporate bonds, or GSE paper, or munis can compete with this supply. Today we saw first signs that the market can’t even absorb just the Treasury supply. As the interest rates rise on Treasuries as a result, we will be facing an unimaginable economic environment, one in which the world rightly questions the ability of the US Government to service its obligations.

The Fed is converting these Treasury funds into loans on, and purchases of, securities and loans, at least some of which are certain not to be repaid. We are now backing our money with assets that may never be able to be liquidated. A time is now virtually certain that there will be no realistic way to pay off the debts the Treasury is now incurring.

As the market begins to realize this, we may face the ultimate collapse, the collapse of US Government finance. Ultimately the world as we know it will be changed in ways that we cannot imagine. Even if the US Government were to reverse course now and say, flat out, no more bailouts, no more Treasury borrowing to finance bailouts, it’s probably already too late.

It’s one thing to allow private capital markets to fail. It’s another thing entirely to foster, foment, and cause the failure of government. A loss of confidence in financial markets is one thing. A breakdown of confidence in government would mean societal changes that we never dreamed of."

Well that was interesting

Bailout Bill passes. Huge mistake, but for the best. If it hadn't passed then people would just blame the upcoming shit-storm on those of us who opposed the bill. The bill will help nothing, and in fact will only accelerate the destruction, much like the short-selling ban. Thanks to anyone who tried to help.

There are better "solutions" out there if you want to find them. My solution was to head this off a year+ ago when they could've done something about it under less system stress - instead of flat out lying to us and being so concerned with the equity markets. If so many "regular" people could figure it out, the powers-that-be knew (and made it worse). But that's just me, I've been known to be very wrong.

Back to the old way of doing the Replay, lots of links for a paper-trail of how we ended up in a depression. Well, with a little extra commentary...


Wrote all that a few days ago. Market doesn’t seem to have liked it’s bailout? On the same note - do you recall the phrase "no bid"? Since the shorting ban a mere 13 trading days ago, the Dow has lost just under 2 THOUSAND points. Darn shorts.

Wait, there are none! Exactly what anyone with sense should’ve expected – unfortunately the decision makers don’t have that (or were more concerned with helping their buddies for one day - September options expiration day).

Shocker - turns out the shorts were some of the only people buying these past few months (thus putting a floor under the market). Short selling ban expires tomorrow night. That should be interesting at first as they now get to re-apply the shorts with blood in the water. Then again, maybe they all took their ball and went home to avoid the corrupt system?

Earnings essentially started tonight with Alcoa missing huge. Analyst estimates are so off-base going forward it's not even funny.

1300 on the S&P doesn't seem that long ago - oh, it wasn't. 3 of 3 (the technical-analysis "holy grail" of every bear/bull market) is "fun", isn't it? Then again a very slight case can be made that we haven't actually started it yet. Better hope we have, 'cause if we haven't, get ready for Dow 7000 in a hurry. Might as well just get ready for it anyway.

Regardless, we are due for a bounce. I think. (The incredibly stupid SSO position I put on today depends on it.) The scary thing is Cramer is on TV screaming to sell everything. Took him long enough, he finally admits it. That is actually somewhat reassuring for my SSO as he is always wrong. Regardless, CNBC will now be filled with commercials for months talking about how Cramer saved everyone and was the one who saw this coming. You think I’m kidding? I SO wish I was. I wonder when they'll again air his emphatic call that July 15th was THE bottom?

Credit default swaps on Fannie/Fredding and Lehman are due to be settled on Oct 6th, 10, and 23rd. Rumor that a major insurance company is on the wrong side of that in a BIG way - the Lehman ones are the troubling issue - big time. LIBOR, the interest rate that so much on this planet is based on, is eight standard deviations from the norm. How can we rally on this? Actually I have no clue, this is about to get fugly.

So in other words, be careful. It is better to be out of the market wishing you were in, than to be in the market wishing you were out. If you are not playing options and willing to ride out a bounce, the market is heading much lower. Options players have decisions to make with the VIX in the 50's, it's tough to be a buyer.

We've seen big moves, and they could get bigger - in both directions.

Also on that note, once again for anyone trading, let me remind you to not get too crazy – and heed this advice I just read:

"Take it from an old and battle scarred hand on the tiller: This is an extremely dangerous market. The time for making money may be past, and now it is time to preserve what you have. For god's sake, only put at risk a very small portion of what you have. Shorts have been killed, as well as longs. IF this thing turns on, for instance, a global interest rate cut we could run 1,000 points before anyone knows what hit them. We could also fall as much if, for instance, nobody cares at any price about BAC, or GE pulls in their horns. It is just not a time to be a hero. It IS a time to sit back, observe, and know where you want to put your foot back in the water. Unprecedented in our lifetime. Expect the completely unexpected. Don't be foolish no matter which side of the tape you choose."

Speaking of the VIX - 30's is high, 40's is nuts, we've spent a few days in the 50's. You are supposed to spend a few MINUTES in the 40's. Shorting ban has fueled this as people used options to do it/hedge. Still, nuts.

What will the government/fed try to "fix" next anyway? This is the biggest game of whack-a-mole ever played. The unintended consequences of their moves is almost comical. Will they ban selling stocks period, you can only buy? Will they adjust the Dow so downward points only count as half a point? Will they just reset the Dow to 16k, startinnnnnnnnnnnng now? Close the markets? Wait, that one is real. Down 10%, we close for an hour, 20% two hours, 30% for the day. Rules relaxed in the last hour of trading. (Might as well know the rules just in case)

On a somewhat related note, over beers Friday night I finally proved to myself that over time all the Proshares funds (SKF, SDS, TWM, SRS, SSO etc) will eventually go to zero (both the long AND short funds). So these are not buy and hold for long periods of time type funds - you are better off getting in and out. For those who are interested, the "proof" is towards the bottom - most of you are math people, so please read it even if you aren't interested to tell me if I am wrong???


***********************

Jobs number we got on Friday – down 159K, ouch a huge jump. Unfortunately that will be the "best" one we get for a while – the effects of the credit crunch will show up in next months report. Some expect over 200k. The real numbers must be just horrible.

***********************

Wonder what happened after we bailed out AIG?
http://tinyurl.com/4k5en3

“Less than a week after the federal government committed $85 billion to bail out AIG, executives of the giant AIG insurance company headed for a week-long retreat at a luxury resort and spa, the St. Regis Resort in Monarch Beach, California, Congressional investigators revealed today.

Rooms at this resort can cost over $1,000 a night," Congressman Henry Waxman (D-CA) said this morning as his committee continued its investigation of Wall Street and its CEOs.

AIG documents obtained by Waxman's investigators show the company paid more than $440,000 for the retreat, including nearly $200,000 for rooms, $150,000 for meals and $23,000 in spa charges”

Excellent use of my money a-holes.

**************************

And here's the quote from a Forbes story since we can’t let the size of the bailout just pass us by without comment:

"The secretary and the administration need to know that what they have sent to us is not acceptable," says Committee Chairman Chris Dodd, D-Conn. The committee's top Republican, Alabama Sen. Richard Shelby, says he's concerned about its cost and whether it will even work.

In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."

***********************

Remember the record 187B a day I mentioned the banks were borrowing two weeks ago?

“Banks' discount window borrowings averaged $367.80 billion per day in the week ended October 1, nearly double the previous record daily average of $187.75 billion last week, Federal Reserve data released on Thursday showed.”

***********************

In a Dow Jones column, Michael Rapoport points out the obvious:

"Wachovia went out with a book value of $75 billion. Citi paid $2 billion. Could it be that asset values are overstated, not understated?"

************************

It begins – like I said, our money isn’t staying in the country.
http://tinyurl.com/44xv4q

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Europe too big to bail? As mentioned before, they actually have it worse than us. Probably because of us.
http://tinyurl.com/3jgdyh

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Haven't mentioned the impending bankruptcy of California in a while. Arnold getting desperate. Will run out of money by the end of the month if something isn't done. What happens in California...
http://tinyurl.com/4zymqu

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From Trav

"Son, we live in a world that has bonds and those bonds need to be bought by men with balance sheets. Who's gonna do it? You? You, Lieutenant Fuld ? I have a greater responsibility than you can possibly fathom. You weep for Bear Sterns and curse the short sellers; you have that luxury. You have the luxury of not knowing what I know: that Lehmans death, while tragic, probably saved firms and that my existence, while grotesque and incomprehensible to you, saves markets. You don't want the truth because deep down in places you don't talk about at parties you want me buying bonds, you need me buying bonds. We use words like TSLF, PDLF, Super SIV. We use them as the backbone of a life trying to defend something. You use them as a punchline. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom I provide and then questions the manner in which I provide it. I would rather you just said "thank you," and went on your way. Otherwise, I suggest that you pick a sub-prime option arm bond and pay par. Either way, I don't give a damn what you think you are entitled to."

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Items of "lessor" importance:

Wow, these are some of the worst auto numbers in existance. Good thing they snuck their $25B bailout in while nobody was watching last week. They'll need it.
http://tinyurl.com/4az4cl

Sen. McCain, what do you think of the bailout? Worst thing ever, hate it, hate it, hate it. So you are voting against it? No I am not.
http://tinyurl.com/4sxd8g

I watched Fast Money for the first time in a couple months - Adami and Ratigan look completely grey compared to what I remember! Bernanke's beard gave me the same thought earlier. There is some serious stress being put on people this year.


As for the Proshares funds. Lets use a simple extreme example. SSO is the double S&P 500 - it moves double the % of the S&P EACH day. Let's say the S&P is at 1000 and SSO is at 100. On day 1, the S&P goes crazy and rises to 2000 (up 100%). Then SSO should go up 200% - meaning it will be at 300. Now lets say the next day the S&P gives back all it's previous days gains and goes right back to 1000. This is a 50% loss (from 2000), meaning a 100% loss in SSO - which goes from 300 to 0. So the S&P is right back where it started 2 days ago, but you just went bankrupt. Again, this is the extreme example, but do it in smaller amounts and you'll see as the market zig-zag's you get an incredible amount of "slippage" that eventually over time will make all these funds worthless.

That being said, I'd think the no-fail money making opportunity here is to short EVERY proshares fund in equal dollar amounts. So if you short SSO and SDS (they are opposites in the S&P) your net moves each day should pretty much cancel each other, but over time both funds will work their way to zero. One caveat, the funds do pay a dividend/capital gains so that would likely need to be factored in - but the dividends just lower the value of the fund which brings it closer to zero anyway.

...And more of them voted....

Video's that just weren't important enough to show up on the news - guess it wasn't newsworthy? The public HATES this bill. CNBC even admitted that of all the emails they got on the topic, they did not recieve a single email in support of it. Not one!! Don't believe the hype even though it is now known as a Rescue plan rather than a Bailout. Hype.
http://tinyurl.com/4zq2qt



What's going on here? As heard on CNBC:
http://tinyurl.com/3vn5xr

Paulson and Bush threatened to veto the legislation if there was an explicit prohibition of transfers from foreign banks to an American subsidiary.

The assets do not even have to be American Mortgage assets – they can be an office tower in Shanghai! This money is going directly out of the country.

Who knows what their plan is, but for two guys (Bush and Paulson) who are BEGGING people to pass this bill, why would keeping the money in the US be a dealbreaker?

The Senate is voting tonight, the House again Friday (should we just keep voting until enough people get bribed?).

Senator Coleman 202-224-5641
Senator Klobuchar 202-224-3244

If you are so inclined, call now and tell them to vote against this bill because the money will not stay in the US. More importantly, call your Congresman too since they don’t vote until Friday – they are all up for re-election in a month. Find out who they are at congress.org if you don't know. Tell them you won’t vote for them if they vote for the bill as the money will not be used here.

But far be it from me to say what is right, because no matter what we do there is a very rough road ahead. Some of you think I’m an idiot, which is fine with me - but you also thought that a year ago, so I'll just have to live by my track record. Regardless, you should also call and instead lend your support to the above representatives as they will be happy to have some citizens on their side - and the more people being active now, the better.

But since it’s my blog...The money is doing worse than bailing out wall street, it's bailing out everyone the dill-holes on wall street screwed. With OUR money. Now we see why foriegn ministers spent today saying we need to pass this - UNREAL.

If it was the end of the world because the market tanked, how come it didn't continue, rather that go up 500 points? We are being played. We are being blackmailed. Get ready for an even worse economy than originally predicted – which was going to be horrid.

Final summary of what this bill is: A giant margin call on our countries debt. We don’t play ball, the world tells us to piss off and cuts us off. (recall that we owe 2 Billion a day in interest, we kinda need them)

Not that I was one of the masses living irresponsibly beyond my means, but...Pre-emptive giant SORRY to future generations.

And then they voted...

And now we see what happens when you don't allow shorting (and thus short covering). Floor gone. Have we ever lost 777 Dow points in a day? And we did it without the shorts help - who knew? That's enough on the market, other than 2 things, first a historical point you should heed, and 2nd a rumor - both as a reminder to be VERY careful out there:

With these major moves, I'm sure there's lots of people rushing to short the hole or go all-in long. Before you do, let me offer a quick sanity check -- historical perspective from the '29-32 bear market.

On Oct. 24, 1929 the Dow droped 9%. That was followed by a rally the next day of <1%. The next two trading days (Oct 28-29) saw a 13% and a 12% drop respectively.

If you shorted the hole on Oct 25, you did well - a 23% plunge over 2 days. However, if you shorted the hole after the Oct 29 drop, you got ***********, not for a day but for SIX WHOLE MONTHS, until April '30 with a peak of darn near FIFTY PERCENT above the low after the '29 crash.

In the spring of '30, it probably felt like the bottom was in. After all, that huge crash had happened 6 months earlier, and the market had been steadily churning out gains. If Jim Cramer were on TV in 1930, he would have been patting himself on the back for half a year on his correct bottom call. Ooops - wrong: the next two years would have to Dow drop over EIGHTY PERCENT to a 20th century low of 41.22.

So my point of boring you with this history lesson is that while history never repeats exactly, it often rhymes. Please be VERY VERY careful with positions. Volatility cuts BOTH ways. Market timing is very difficult and rather unpredictable - don't get overconfident just because you've timed the market right in the past. We live in truly historic times which are and will continue to be market by truly historic market moves.

And the rumor (for entertainment purposes of course):

I just recived a e-mail form a source in the big windy

"Spoke with a good friend, well-connected pension fund guy in Manhattan, he is CERTAIN the market tomorrow will close up huge. He only knows the close will be bloody for shorts."

"can you say the Intel you have? Rate cut? FDIC limits raised can you point me in the right direction?"

"Our source says the democrats have come up with the needed votes, that's all he told us on his cell phone from some lower Manhattan rest/bar."

At the second I got that e-mail the /es (futures) started to move north.

Take it with for what it is worth

What are the odds, especially now that it has been posted publicly, hopefully it doesn't work like that (but it seems to) - but be careful both ways regardless, nothing wrong with straight cash. I hope.



And now the less important part of me saying whatever I want 'cause it's my blog:

Let me state one thing off the bat. The bailout plan was a horrible deal. Anyone that says "see, we need it" is wrong. People who are long because the goverment would save us are wrong. And anyone who bought something expecting everyone else to cover them if they are wrong is not very nice/smart regardless. Go to Vegas and see how that works out for you.

The bill fixed nothing and stole $700B from us to give to people who caused this mess. They will ask for more, they need probably 5 times that. They tried to tell us we'd make a profit to push this through. ZERO chance of that. They told us the world would end if it didn't get passed to try to scare us. They pulled Buffet in (a private citizen) to talk to Congress (but didn't allow economists in) - talk about a conflict of interest, of course Buffet says to pass it, his empire depends on it.

Feel free to look it up, banks borrowed an average of 188 Billion a day from the Fed last week (which is already more than the miracle 700B). Where did that get us? It's not liquidity - it's solvency.

What we need is TRUST. We have been lied to. The rules have been changed on us. We are supposed to now trust them when they ask for $5000 per taxpayer no strings attached?

Who the heck wants to invest/play in a completely rigged game. EVERYONE is taking their ball and going home. The market isn't tanking because of the shorts, or the lack of a bailout - it's tanking because you don't know what to trust anymore. Confidence is gone. Thanks a lot Hank and Ben, this is the system you have now created.

On the other hand, major props to Fedupusa.org for the leadership in informing congress etc through massive faxes/phone calls and round-the-clock work. Every media outlet told us ALL weekend and right up to the vote that it was a DONE DEAL. EVERY SINGLE ONE. Talk about trying to sway the vote. The Fedup folks talked to
so many congressmen and it was very clear to them that this wasn't a slam dunk - so how did the entire media get it wrong???????????

Don't get me wrong, something HAS to be done. I don't have the perfect answer, because one DOES NOT EXIST. Greed and leverage destroyed the system. Can't fix that in a day/week/month/year. Time will heal it, but in the meantime there will be a lot of pain no matter what they do. That is why I'm against mortgaging the future
of the country to make a few few people happy now - seems pretty selfish. Oh, and I had a large long position that got hit quite hard today, so trust me, I'd much rather have had the market surge today.

My point is that I have learned the hard way over the years that throwing good money after bad doesn't fix things. The Fed has done that for the past year and where has it gotten us - oil is way up, food is way up, mutiple 100+ year old companies are gone, the largest Savings and Loan, the largest insurance company - not a single good thing has come from any of it.

Let them blame it on the public, the shorts, now Congress - there will be MANY scapegoats. Ignore it, the problem was the laws and Greenspan catering to the market with low rates, and everyone being encouraged and wrangled into buying a home whether they could afford it or not. The things I've read/heard that people did and said to swindle the public are sickening.

You want a solution - Denninger makes some great points here:
http://tinyurl.com/4ht4ns

Otherwise, if you want to see the severity of the situation, read Roubini's latest - he has been SO far ahead of all of this, and SO accurate. This should make everyone sit up and pay attention!
http://tinyurl.com/4t8ru7

The beat goes on!

Gaaa, I can never catch up (I have so many saved up that I haven't had time to send yet). WaMu just got seized by the FDIC - largest bank failure in history. JPM buying the deposits (probably getting yet another sweet deal at our expense) to avoid completely bankrupting the FDIC. This is such a mess.

McCain causing problems for the 700B bailout too. Republicans actually showing some backbone here? Crazy stuff going on at the moment.

Call your senators, call your congressmen, tell them to stop the fleecing, it's being heard!! Calls have been 300 to 1 against the bailout.

Denninger and co have been on NBC news, the front page of the LA Times, the Financial Times and many other places, people are hearing us and at least asking questions of Paulson's joke of a plan.

Nobody even seemed to notice that the auto industry got their $25B bailout yesterday. More money for EACH of the automakers than Chrysler got in their major bailout (1.5B) back in the 80's.

The stuff I just mentioned (WaMu, auto) etc. is HUGE, and being dwarfed/snuck by everyone under the bailouts shadow.

Wish I could attach the hammer/sickle flag Trav sent me.


Tomorrow could be insane, if the talks don't go well tonight, Ben/Hank might just allow the markets to fail tomorrow to prove a point. Or they could come to agreement and "save the day" and the market rallies huge. Truly a time to play it safe on the sidelines or play VERY close attention.


**************

Don't even know where to start. Last Thursday the FED unleashed another $180 BILLLION onto the system. It disappeared. Literally. Gone. That forced Friday's actions of banning shorting (really?), announcing the bailout, and doing it all on options expiration. Nice job manipulators.

And they think the 700B will do anything other than be a complete waste of our money to bail out a bunch of jack-a$$es? Until the process starts again in a couple months.

Other great stuff on this site - but the two links on the left listing Paulson and Bernanke's lies is an eye-opener - and proof of what we've been discussing for over a year. This site was an off-shoot created by many hard-working individuals on the TickerForum - visit it!
http://www.fedupusa.org/



Paulson, reportedly to congress on his piece of sh$t bill:
"If it doesn't pass, then heaven help us all,"

F him and the F'ing bullshit he has spewed for the past year+. In case you still don't believe me, HE runs the planet. Do you think it's a coincidence that AIG, Bear etc get to live, and Lehman is let die? Be a friend of Paulson and you will live like a king. Unfortunately the other 99.99999999% of us are f'd.

He told us how strong everything was until he needs a bailout for his buddies, not it's heaven help us?!



Mish’s open letter to Congress
http://tinyurl.com/4275jc

Actually, Mish had a ton of good stuff the last couple days, scan them over if you have time.


Well guess what? Goldman and Morgan turned into banks last night. Not how I envisioned their end, but the investment bank model is now dead. I'm sure they will rally on the news, but they are now limited to be leveraged like 12 to 1 (oh, the humanity) instead of 30 or 40 to 1. Slash their future profits massively.

Taiwan, Australia, the Netherlands, Germany, Ireland, Dubai etc. all also banned short selling in some form. IT IS NOT THE SHORTS.

Ask Pakistan. Great charts in this one:
http://tinyurl.com/4orw6c


One of those fantastic Mish's I just mentioned. Includes "what you can do". Do it.
http://tinyurl.com/4thvvy


Finally, the video that explains it ALL. 47 minutes. Cartoon. Save it for later, but don't forget about it. It's the reason this country is on the verge of...
http://tinyurl.com/27jppm

********************


Sent to every congressman, but worth a read because it tells the story:

=========================

Enabling Act of 2008

Dear Member of Congress:

You are being asked to assign unprecedented powers to an unelected, and unaccountable former Wall Street banker, under the guise of bringing stability to the markets and solvency to our banking system. With one hastily thrown together vote, you are going to create the most powerful human being in world history – Henry Paulson.

This is being done for the purposes of fixing a “crisis” that has suddenly, in the last hour, been presented to Congressional leaders. This act would remove the constitutionally mandated powers of regulation of the money supply, and the value thereof, from Congress and give it to an unelected member of the President’s cabinet. According to the act, this person would be above judicial review, and be allowed a $700,000,000,000 revolving line of credit to print money on behalf of the United States government. That is more power than anyone has ever had – anyone. Caesar did not have this power.

This should sound eerily familiar.

In March of 1933, after the “crisis” of the Reichstag Fire, newly named Chancellor of Germany, Adolf Hitler, petitioned the German Reichstag to give him plenary powers over the affairs of German government. The Reichstag transferred its power, on an emergency basis, to the Cabinet of Germany for a period of four years, and this was called “The Enabling Act”. This was to deal with the perceived “crisis” of Communists within the German government, when the “crisis” was never fully substantiated. It is believed by most historians that the Reichstag Fire was a deliberate act to coax the Reichstag into giving up its power.

That history did not end well.

You are being goaded into giving Henry Paulson plenary powers over the economy and government spending, money supply, and value of that money. Those powers belong to you, held in trust for the citizens of the United States. Our Founders gave you those powers TO PREVENT THE VERY SCENARIO THAT SECRETARY PAULSON HAS PRESENTED TO YOU.

You are being manipulated.

For the past 13 months, Paulson, and Federal Reserve Chairman, Bernanke have repeatedly given public statements through the various media, and have testified to Congress on the soundess of our banking system. As that time has worn on, they have repeatedly come to Congress for various bailouts (Bear Stearns, AIG, Fannie/Freddie), as well as acted to install confidence through the manipulation of the Federal Reserve Monatary Policy, and announcing various liquidity programs to keep money in the banking system (TAF, TSLF). While they have been taking extraordinary measures to shore-up the banking system, they have always maintained that the system is sound and just needs a little time to get through a “soft spot,” or a “contained” problem (Subprime).

You now know that they were lying the entire time. There is no way to sugar coat this. They have been lying to you since March of 2007. They are lying now. This was plainly known to many in the professional and amateur investment communities, recently smeared as “short sellers.” It turns out that the cynics were right all along. This is why we have a free press.

Ask yourself, why didn’t they come to you for this unprecedented bailout last October, when Paulson attempted the same thing with various Wall Street banks? Surely, the problem was known last fall when Paulson attempted to create his “super SIV.”

Had he come to you at that time, there would have been at least 11 months to debate the issue, open it for public review, and deal with it while the stock market was trading at an all-time high. Why did he wait until the weekend before the Congressional recess for the bi-annual election cycle, and present the plan over a weekend where the public could not comment? Why did he have to wait until the stock market teetered on collapse, and the credit markets were frozen solid?

He needs a “crisis” so you will not oppose him.

Ask yourself, why did the Senate Majority Leader and Speaker of the House, as late as September 16, attempt to leave the issue in Washington and head back to their districts, leaving the Administration to clean up the mess, then suddenly have a change of heart less than 36 hours later? What was said? Why are the details of the briefing given to Congressional leaders not available for public review? Why are you being asked to vote for something so hastily and without proper briefing or public review? Does Democracy flourish in the dark, or does tyranny and fraud?

We know the following:

Paulson and Bernanke have lied for the duration of the credit crisis.
Every bailout has been bigger, more frequent, and has resulted in a much bigger “crisis.”

Now, Paulson and Bernanke are telling you that they really are telling you the truth and this bailout will work.

You are being played.

They are framing the issue in terms of Congress voting to rescue the banks and the markets. Let me be clear on this point: YOU ARE NOT VOTING ON THE HEALTH OF THE BANKS OR THE MARKETS. YOU ARE DECIDING WHO GETS WHAT MONEY IS LEFT OVER AFTER THEY FAIL. The markets (equity and credit) are going to experience a large dislocation, or in the common lexicon, “a crash.” That is an absolute certainty. You are merely deciding if the US citizens are going to keep their money, or give it to Wall Street bankers. You are deciding if the US government is going to survive or collapse. Giving Paulson unlimited spending powers will ensure that the government collapses. That is a certainty.

Paulson and Bernanke need to be removed from office for malfeasance. For 18 months, the health of the banking system has been very suspect. They have known all along what is happening and have failed to act. Their actions have been limited to lying to Congress and the American people and manipulating the accounting to cover the insolvency of the US banking system.

You are being asked to abdicate. The American people want their Constitution and their government to survive. We will rebuild what Wall Street has destroyed, but we need to keep our money in order to do it.

Vote against this unprecedented power grab. History shows the folly of such endeavors.

Very truly yours,

***************************





Sen Dodd: If we are paying $1 TRILLION (If that is the estimate, multiply it by 5 = America is gone, but that's a different story), don't you think we deserve to hear what was said?

Senator, you have got your hands full right now. Before we get into the specifics, describe the mood last night when you heard the potential dire consequences of what we're talking about now, if the federal government were just not to do anything. What were you told would happen?

SEN. CHRISTOPHER DODD (D), CONNECTICUT: Well, I'm going to be reluctant to repeat exactly the words, not because I can't remember them, but, because, if you were to repeat them exactly, I'm fearful it might cause even more concern.

I can't begin to tell you. I have been here for 28 years, Wolf, been in a lot of very critical meetings involving a lot of important events over the last quarter-of-a-century. I can't recall another occasion when I was in a room where statements were made about the conditions of not only our economy, but the global economy, that caused every member in that room, the leadership of the House, the Senate, Republicans, Democrats, leaders of committees, that, when Chairman Bernanke finished his appraisal, a brief appraisal, along with Hank Paulson, there was dead silence in the room for maybe five to 10 seconds.

The oxygen went out of the room. People were stunned by what they heard. And I'm angry about this, because I think this was preventable, I will tell you, but we're not going to talk about that today, because the issue is, what do we do?

As for the rumor as to what was said:
Rumour is that Ben said the DOW would go to 8300, payrolls would fail, factories would shut, businesses would close, within 48 hours.

Just a rumour...

********************************


Exerpt from Patrick Buchanan:

What we are witnessing today is how empires end.

The Last Superpower is unable to defend its borders, protect its currency, win its wars or balance its budget. Medicare and Social Security are headed for the cliff with unfunded liabilities in the tens of trillions of dollars.

What we are witnessing today is nothing less than a Katrina-like failure of government, of our political class, and of democracy itself, casting a cloud over the viability and longevity of the system.

Notice who is managing the crisis. Not our elected leaders. Nancy Pelosi says she had nothing to do with it. Congress is paralyzed and heading home. President Bush is nowhere to be seen.

Hank Paulson of Goldman Sachs and Ben Bernanke of the Fed chose to bail out Bear Sterns but let Lehman go under. They decided to nationalize Fannie and Freddie at a cost to taxpayers of hundreds of billions, putting the U.S. government behind $5 trillion in mortgages. They decided to buy AIG with $85 billion rather than see the insurance giant sink beneath the waves.

An unelected financial elite is now entrusted with the assignment of getting us out of a disaster into which an unelected financial elite plunged the nation. We are just spectators.

What the Greatest Generation handed down to us ­ the richest, most powerful, most self-sufficient republic in history, with the highest standard of living any nation had ever achieved ­ the baby boomers, oblivious and self-indulgent to the end, have frittered away.

********************

Non-req as it is quite anecdotal but very interesting - esp the 2nd part:


Every now & then i get a call from a very upscale salon near Wall St. to be a hair model. And if my hair happens to be too long like it was today i accept their invitation.

Today i happenned to be chit chatting with a stylist there from Russia and i mentioned that i had heard that the russian stock market got shut down this past fri. and i'm not even sure if they re-opened it.

She said "i dont know about the russian stock market but this one here is in REALLY big trouble!". Playing dumb i said "what do you mean"? And she went on to tell me that the Salon has lost DOZENS of regular clients over the past few months - many confided that they had been laid off and the others simply disappeared. The clients who they still have come with an extremely noticable difference in mood and many confide that they simply have no idea from day to day if they will still have a job and how they will be able to support their wife and kids and house. When she asks how bad it is they say things like "its REALLY BAD - TRUST me". And she said one guy really scared her the other day by talking about some foreign land that he owns that he would go to as a possible exit strategy. She feels that many of them are simply grabbing any money they can and sticking it away and preparing for the life they had on Wall St. to imminently end.

In another piece of news that is SURELY going to get me accused of tin - I got a call last night from my father (now a semi-retired lawyer) who told me that a friend of his called him and told him that his son made 17 MILLION Dollars going LONG on thursday afternoon and selling Friday morning. The person told my father that his son was in some sort of group that was tipped off DAYS IN ADVANCE and basically told to buy on thursday before the announcement. My father then told me that the whole thing was a plan to help re-capitalize the insolvent institutions that had to be bailed out. By timing this properly and leaking the information to the right people the FED was able to get tons of money into these institutions which means they will have to be bailed out that much less now that they made so much money from friday mornings pop.

Wow! (Just a rant)

No time to put my links together or anything, but wow. So you've heard by now that the biggest financial event of our lifetimes happened last weekend - the government taking Fannie and Freddie over. Insane. Washington Mutual is on the brink of bankruptcy - one that will eat up half the FDIC fund - a fund that only covered like 1% of the bank deposits anyway. Ummmmmmm...

Now a WHOLE week later (yes all of this is happening TONIGHT), Lehman going bankrupt. Merrill Lynch gets shotgun-wedding bought by Bank of America (as it was OBVIOUS that Merril would not have made it through the week otherwise, post Lehman - nevermind the fact that Bank of America doesn't have the money for this), AIG (a FLIPPING INSURANCE COMPANY with NO access to help from the Fed etc.) says they need $40 BILLION from the Fed to keep going because they can't get money elsewhere, and to top all this off, the Fed is expanding it's lending facilities even more - and it will now accept EQUITIES as collateral!!!!!!!!!!!!!!!!!!!!!!!!!!

Are you F'ing kidding me? Lehman went from $18 to zero last week, that's the type of stuff the Fed now accepts as collateral? And by "the Fed", I mean the taxpayer.

It won't get reported - as proven by the lack of caring the past week - but the Fannie/Freddie thing + this just sealed the fate of this country, and the financial system of the world. This WILL fail so badly. I don't even know what to say or think anymore. This is nuts.

If for some INSANE reason you still doubt the crap I've been spewing for 2 years now - welcome to the part where I say this: I told you.

Game over - you don't need me anymore. It'll be a real-time disaster for everyone to witness for generations to come. They'll blame it on other things - but these manipulations are what caused it. Greenspan caused it. Greed caused it. We'll all pay because we don't have friends in high places.

I am plain shocked. As for what happens to the stock market - who the heck knows in this rigged system? But nearly all banks are insolvent, and most companies will not be making money for a long time with a consumer that gets thrown more under the bus everyday (and doesn't even seem to notice/care) - so you tell me how that ends. Another hint the market gave us - the biggest bailout in the history of the world happened last Sunday, the market loved it - for 1 day.

(Oh by the way, I'm counting Merrill as having gone down. Which makes my Bear Stearns, Lehman, Merrill part of the prediction correct. Next is Morgan Stanley. I had it ending there. That just changed, JP Morgan and Goldman Sachs now go down too. Yep, the 6 biggest investment banks will be gone. Good riddance. Unreal.)

Oh, just get it over with!

The market is schizo. S&P fading downward, financials and builders are up. Day after day. For the past year+ that has meant one thing and one thing alone, hedge funds are blowing up. They are forced to unwind – buying back their financial/builder shorts, and selling their oil/commodity longs (energy now being the biggest part of the S&P). Hence you get the nutty effect noted above. And you can imagine what eventually happens.

We are once again getting dangerously close to closing below 1260 (1257 to be safe) – but we’ve seen this before and the market shot up to 1300. 1300 seems to be impenetrable to the upside though. For those playing the home version - If you see it again, I’d up those short positions to 50% of your intended stake. But at the rate the world economy is decelerating on a daily basis, seeing those levels would probably take trickery. I’m not giving up on 1320 (but most are), but each passing day makes it tougher to see happening. But make sure we close below 1257, I'm nearly certain we will test this 1260'ish area again and bounce up - the question is how high?

Regardless, we're about to break one way or the other soon. Simply because this last 2 weeks has been ridiculous and non-sensical to even the experts.

But what do you I know? This picture sums it up.
http://tinyurl.com/3daqnu


FDIC troubled banks list just jumped from 90 to 117. Assets at those banks jumped from $26B to $78B. IN ONE QUARTER. As for the usefulness of said lists, Indymac was not on them. I'll let you pick the multiplier to apply to theses numbers to get the real answer. Hint: Your number was too low.


Before I get to the links, something to keep in mind from Bloomberg:

The Standard & Poor's 500 Index, which had the worst first half since 2002, added 0.2 percent this quarter, the only gain among the world's 10 biggest markets in dollar terms. Shares in the benchmark index for American equity climbed to an average 25.8 times reported profits, the highest valuation in five years. The last time that happened, the S&P 500 fell 38 percent.

And now for the links:

Couple of interesting charts. Nice feat indeed.
http://tinyurl.com/6coud9


This video is WAY too funny
http://tinyurl.com/6caavp


This is why the housing downtrun won't end for YEARS. Whoever is allowing this sh*t to happen needs to be tarred and feathered TONIGHT.
http://tinyurl.com/5frvqm


Chart of the S&P since 1971. Raise your hand if you think that trendline holds us up yet again?
http://tinyurl.com/69q489


I got on her once upon a time, but she is coming around - great work getting on Greenspan like he deserves!
http://tinyurl.com/6qt66l


Putting the pieces together. Great summary with some great charts (Decline in Mortage Lending Standards was the most shocking to me). Consumer, RIP.
http://tinyurl.com/6mk7x7


"Large bank may fail" (not my words)
http://tinyurl.com/5rwdxh


Nice work IndyMac. Nice job regulators. Good estimates of value to both of you.
http://tinyurl.com/5u6b73




####################################################################

Items of "lessor" importance


How can you not include anything that mentions "BenSteinery". (Todd, how could you have breakfast with him and not give me warning?!) #7 is spot-on too.
http://tinyurl.com/5a662y

Prime defaulting faster than subprime now - yep, well "contained" dill-holes. Didn't see that coming [/sarcasm]
http://tinyurl.com/58sdog

Final update on the WaMu pool of complete crap:
http://tinyurl.com/5qamkb

His comments always make these articles even more interesting as well as easier to understand.
http://tinyurl.com/5u9xfr

Companies on the edge
http://tinyurl.com/6kdqky



And for your reading pleasure to close the Replay - a take on the DAILY rumors we are hearing about Lehman (tick, tick, tick...)

Breaking News: Lehman To Be Acquired by Tooth Fairy

The market responded with enthusiasm to reports that the Tooth Fairy has agreed to acquire Lehman. The purchase price has not yet been determined and will be set by Dick Fuld wishing upon a star, clicking his heels three times, and being transported back to that magical place where Lehman still sells for over $70 per share.

In related news, Lehman has agreed to sell all of its level III capital, including CDOs, ABSs, pet rocks, baseball cards, slightly used condoms, and credit default swaps written by MBIA and Ambac. Lehman’s level III capital will be acquired for 150% of its face value by Tinkerbell, who will carry it off to Neverland to be fed to a crocodile. Lehman is financing 90% of the acquisition at an interest rate that has not been announced; Tinkerbell’s up-front payment consists of a handful of pixie dust, three crickets, and a bullfrog. Analyst Dick Bove estimates that the bullfrog could eventually be transformed into three princes and a pumpkin coach. The deal gives Lehman no recourse to any of Tinkerbell’s assets other than the Level III capital. If Tinkerbell defaults, Lehman’s successor entity will stick its hand down the crocodile’s throat and attempt to get it to regurgitate. The firm’s historical value-at-risk analysis shows that sticking your hand down a crocodile’s throat is completely safe.

Treasury Secretary Hank Paulson issued a statement: “I am delighted that SWFs (Sovereign Wealth Fairies) continue to express confidence in the terrific values represented by American financial institutions. As I have been saying since August of 2007, this shows that the crisis is now over.”

Meanwhile, the SEC has announced an investigation of mean, evil, bad short-seller David Einhorn. While out for a beer with a friend, Einhorn reportedly suggested that the Tooth Fairy does not exist and that wishing upon a star is not a wholly reliable price discovery mechanism. Christopher Cox, chairman of the SEC, said, “Vicious rumors attacking the Tooth Fairy will not be tolerated. Our entire financial system and indeed the American way of life depend on the Tooth Fairy and wishing upon a star. How else could one value level III capital appropriately?” The SEC is reportedly planning to set up re-education camps for short-sellers.

You expect a 20% fudge - and tick, tick, tick...

Not a ton of articles here (shortest Replay yet!) as I've been monitoring the market rather than the economy, but still some good ones worth reading.

Well we are reaching that point. The bounce that started at S&P 1220 is starting to lose steam. My target is still 1320 to 1350, but people smarter than me don't think we'll be getting there. I don't buy that just yet, but figured I should let you know.

If you don't like what happened to any long positions you had between May 19th and July 15th, you might want to consider taking action soon as I expect us to probably top out this week - with the upcoming downturn actually being larger than the aforementioned. Somewhere closer to 1060 on the S&P looks like an early indication (but not in a straight line obviously).

But anything is possible. I can put a comment out when I feel we've topped, but bottoms have been easier to pick than tops lately.

While it's convenient to blame this bounce on the technicals, or bailouts or the drop in oil - there is one thing you aren't hearing it blamed on. Hedge fund collapse. THE trade has been long commodities, short financials. Hedge funds who are getting destroyed by mortgage holdings/people cashing out are being forced to unwind THE trade, meaning they are buying back financials and selling commodities. Market goes up...

But just so you aren't tempted to get lulled in by all the happy talk during this corrective bounce - From David Rosenberg recently (chief economist at Merill Lynch):

The Dow has enjoyed a 452-point two-day bounce that seems to have a lot of folks very excited that the bottom has been turned in. Since this bear market began a year ago, we have seen no fewer than six of these flashy 400+ point two day rallies – these happen in bear markets, hardly ever in bull markets. In fact, in the 2003-2007 cyclical bull run, not once did the Dow manage to turn in a two-day advance of over 400 points.

To reiterate – these wild moves are characteristic of bear phases, not bull markets. As for the financials, take note that 9 of the largest 20 up-days of all time have occurred...In 2008!

This was no different than what we saw during the tech wreck – 19 of the largest 20 rallies in Nasdaq actually happened during the 2000-02 bust. Ditto for the Nikkei – 17 of its top 20 sessions occurred during its secular bear market than began in 1990. So stick that in your pipe and smoke it.

On to the links!

****************************************

These guys bring up some great points. Math doesn't lie.
http://tinyurl.com/698nsc

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A list of stores that have went away in recent weeks. Interesting cycle of unemployment, less spending, more closings...Carry on.
http://tinyurl.com/5um6ed

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Ah California, what are we going to do with you? What if we become you? 1300 a day - ouch!
http://tinyurl.com/63usob

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FirstFed figured that some borrowers had fudged their incomes and tried to protect itself with tighter credit standards. "But we were shocked by the magnitude of the lies," Ms. Heimbuch says. "You expect a 20% fudge. You don't expect 500%."
http://tinyurl.com/6kjzov
(article at bottom of Replay if link no longer works)

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Roubini interview: Yes, That's $2 Trillion of Debt-Related Losses. What ever happened to the $30B Bernanke told us it would be???
http://tinyurl.com/5llymg



####################################################################

Items of "lessor" importance:

Is the banking system safe and numerous other musings
http://tinyurl.com/5wmpmc

A good rant about those corrupt f**kers in office.
http://tinyurl.com/5p7fu8

That's some crazy profits! And guts. If the company was brought down underhandedly, shame on those who did it. But how about this, don't get yourself in a position to be brought down like that?! What person in their right mid leverages themselves 30 to 1 anyway? Nobody, that's who. Dumb asses deserved it.
http://tinyurl.com/6zu5sf

Is there a way to punch someone through youtube? She is clearly delusional - but FOX News shows how completely irrisponsible they are by continually bringing her on to mis-inform the public.
http://tinyurl.com/6hjkwo




FirstFed article from above

FirstFed Grapples With Fallout
From Payment Option Mortgages
By RUTH SIMON
August 6, 2008

LOS ANGELES -- Like many mortgage lenders, FirstFed Financial Corp. is struggling with rising losses. The bank posted a loss of nearly $70 million in the first quarter -- reversing years of profit. Forty percent of its borrowers became at least 30 days delinquent after the payments on their adjustable-rate mortgages were recast. The number of foreclosed homes held by the bank doubled in the second quarter from the first quarter.

But FirstFed isn't another bank grappling with the fallout from subprime mortgages that went to less-creditworthy borrowers. In fact, FirstFed was ranked last year as one of the top five banks in the nation by a trade publication, partly because it appeared to have pared back on risky mortgage loans. Yet this year, the Los Angeles bank is on the front lines of what could be the next big mortgage debacle: payment option mortgages. These loans went mainly to people with good credit, but they are likely to experience defaults that are nearly as high as -- in some cases higher than -- those for subprime.
[Babette Heimbuch]

Barclays Capital estimates that as many as 45% of option ARMs, as they are often called, originated in 2006 and 2007 could wind up in default. Another analysis, by UBS AG, suggests that defaults on option ARMs originated in 2006 could be as high as 48%, slightly higher than its estimate for defaults on subprime loans. Both studies looked at loans that were packaged into securities.

Option ARMs typically carry a low introductory rate and give borrowers multiple payment choices, including a minimum payment that may not even cover the interest due. Borrowers who make the minimum payment on a regular basis -- as many do -- can see their loan balance rise, known as negative amortization. Monthly payments can increase by 60% or more once borrowers begin making payments of principal and full interest. That typically happens after five years or earlier if the amount owed reaches a preset amount, typically 110% to 125% of the original loan balance.

FirstFed's experience highlights the challenges lenders face as option ARMs recast. That is happening earlier at FirstFed than at some other banks because it set a 110% cap on many of its option ARMs, while many other lenders have higher caps.

FirstFed is a relatively small lender, with just $7.2 billion in assets. Babette Heimbuch, FirstFed's chief executive, says that option ARMs were "a very good loan for the borrower and the bank" for more than 20 years. But that changed, she said, when investment-banking firms entered the industry and set lower lending standards, which FirstFed and others followed.

For most of the product's history, Ms. Heimbuch says, the introductory rate on an option ARM was one to two percentage points below the actual interest rate on the loan. As long as interest rates were flat or falling, the minimum payment was enough to cover the interest due, making the option ARM equivalent to an interest-only loan in the early years of the mortgage.

But around 2003, as home prices accelerated, lenders began pushing mortgages that made payments more affordable. As competition increased, lenders dropped the introductory rate on option ARMs to 1% or even lower and made more loans to borrowers who didn't fully document their income or assets. FirstFed was initially reluctant to follow the crowd. But as mortgage brokers took their business to other lenders with easier terms, FirstFed's mortgage originations declined to $366 million in the second quarter of 2003, from $389 million a quarter earlier. At the same time, its existing borrowers refinanced into new loans at other banks that offered easier terms. "The fear was that at the rate loans were paying off we were going to have to close the company down," says FirstFed President James Giraldin.

Rather than shut its doors, FirstFed joined the crowd and business boomed. But as the Federal Reserve boosted short-term rates, the gap between the introductory rate, used to set the minimum payment, and actual rates swelled to as many as 7.5 percentage points. That meant that borrowers making the minimum payment weren't covering even the interest due.

FirstFed started to pull back in mid-2005 and, as a result, didn't see a big jump in delinquencies until loans began recasting in the second half of 2007. Others lenders are seeing borrowers fall behind even before recasts.

Now, as loans are recasting, FirstFed is scrambling to modify the loans of borrowers who can't afford the higher payments. As of the end of June, nonperforming assets climbed to 8.2% of total assets, compared with 0.85% a year earlier.

Instead of waiting for borrowers to fall behind, the company sends borrowers letters as their loan balances swell, offering them a chance to modify their mortgages. From January through June, the company had modified 705 loans totaling $345 million.

There have been unexpected hurdles. Many borrowers took out home-equity loans with other lenders after getting an option ARM from FirstFed. These borrowers account for 25% of FirstFed's mortgage loans but represented nearly 50% of its delinquencies in the third quarter of 2007, the company says. It is harder to modify the terms of these loans because FirstFed often needs the approval of the holder of the home-equity loan.

In addition, many borrowers submitted loan applications that overstated their financial condition, making it more likely that they won't be able to afford even a modified loan. FirstFed figured that some borrowers had fudged their incomes and tried to protect itself with tighter credit standards. "But we were shocked by the magnitude of the lies," Ms. Heimbuch says. "You expect a 20% fudge. You don't expect 500%."

Dien Truong, a 35-year-old, water deliveryman, pulled out $156,000 in cash when FirstFed refinanced the $628,000 mortgage on his Richmond, Calif., home in 2005. Mr. Truong used the money as a down payment on another home and turned the FirstFed home into a rental property. But the $2,500 a month he collects in rent is no longer enough to cover his mortgage payments, which have climbed to roughly $5,100 from $1,618.

FirstFed offered to refinance him into a new loan with payments of roughly $4,250 for the first five years, but Mr. Truong says he can afford only to pay the $2,500 in rental income. Because he has been making the minimum payment, his loan balance has climbed to more than $690,000, which is more than the home is worth.

"I've been a good customer," says Mr. Truong, who hasn't made a loan payment since March. "This time my credit will be screwed up for good." His loan application shows that Mr. Truong and his wife earn $165,000 a year, more than double their actual income, says Katrina Vizinau, a housing counselor with Community Housing Development Corp. of North Richmond. Like Mr. Truong, she says, many borrowers say they didn't read the application until later.

Frederick Cannon, an analyst with Keefe, Bruyette & Woods, believes the company should be "well enough capitalized" to absorb the losses.


MY COMMENT: Maybe Mr. Cannon should read this article? For those paying attention this was FED that we watched fall from $35 to $3 this summer.

Bouncity, bounce, bounce

Bailout city baby! The good old United States of Amerika is kicking in as expected. Housing bailout works out to a few thousand dollars per person - starts to add up when your household has 3, 4, 5 members...

Don't worry, it's not a line-item that you'll see anywhere, they don't like to tell you when they are bending you over.

But don't worry, the banks say "thank you".


Mervyns Department stores going bankrupt, Bennigans filing too. They've been around since '76 - these aren't ticky-tack companies disappearing on us. The list is quite large - which is a lot of unemployed people.


Annual CPI numbers up the most in 26 years. The Fed is no longer of consequence, as they can't raise AND lower rates. But we've known that for a while...


Case/Shiller house price declines come in horrid again this month.


So how long has it been since I wrote, we've already had Wave A of the correction, Wave B back down, and now Wave C up looks to be starting. When that ends (S&P 1320 to 1340), we have a long deep flush heading our way.

Chalk one up for Technical Analysis. I've been saying for months we are heading to 1220 on the S&P. We close at 1217 last week and the bounce the next day was epic (Financials up 13%! Double financials up...you can do the math). We hit 1291 eventually and fall right back to just below my 1240 target and now a bigger bounce begins. As I said above, this one will likely last about 2 weeks (give or take) and at that point I'd advise not being very long at all!


2 more banks go down over the weekend. 7 on the year. Many to follow. The only people who seem to care are the ones who lost money in their account - bailouts are more newsworthy these days I guess?


On to the links....


The best 25-point summary around - if you only read one link in this Replay, this is it.
http://tinyurl.com/6prwvh

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Barry at his absolute finest. I just said it for the last one, but read this!
ttp://tinyurl.com/6zgv38

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John Stewart in a hilarious description of how things work - great vid!
http://tinyurl.com/6s4avr

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Don't fight the Fed? It's been uttered plenty of times. This chart shows how things turned out when people were still believing that. Imagine what will happen now that they realize it's a farce, and the Fed is powerless over what is about to happen.
http://tinyurl.com/662vsh

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Keith at HousingPanic put it best:

Americans have $6.8 trillion deposited in institutions. $4.2 trillion is FDIC insured. And the FDIC only has $52 billion tucked away to back the entire system. One more time, the FDIC only has 1% put away to back the entire thing. And Americans stupidly have $2.6 trillion sitting out there at naked risk. In the end, after the banks fail, and the tiny little FDIC kitty is swiftly blown away, the 'insured' deposits will still be backed up. But you-know-who will be called upon to cut the check. You and me. The taxpayer. And once again, if this happens, Bennie and the Inkjets would just get those printing presses going. And the US currency emergency would go into high-gear.

Here's a more complete view:
http://tinyurl.com/6mct67

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Why Fannie and Freddie Have Doomed Housing Prices, Regardless of Bailouts - good read
http://tinyurl.com/5vs4b3

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Jim Bunning (yes, the former Tiger pitcher turned Senator) is looking to be the one Senator who gets it – I wrote him a while back congratulating him, he seems to be taking all the support to heart.

At congressional hearings this week - on the bailout of Fannie/Freddie - great exchange between him and Paulson:

The strongest criticism came from Republicans.

“When I picked up my newspaper yesterday, I thought I woke up in France,” Senator Jim Bunning, Republican of Kentucky, said at the hearing. “But no, it turns out socialism is alive and well in America.”

Mr. Bunning complained that Mr. Paulson would be gone in January, while most lawmakers “will be sitting at the table” left paying the bill.

“You want an unlimited amount and some of us at this table don’t like an unlimited amount of federal dollars,” Mr. Bunning said in a particularly testy exchange. “Do you really think we can believe exactly what you are saying, Secretary Paulson?”

“I believe everything I say,” Mr. Paulson replied. “I’ve been around markets for a long time.”

“So have I,” Mr. Bunning angrily responded. “Where will the money come from if, in fact, we have to use the backstop?”

After Mr. Paulson replied that he did not think any money would be needed, Mr. Bunning said, “That doesn’t answer my question. Where is the money going to come from?”

“From the government,” Mr. Paulson said.

“And who is the government?” Mr. Bunning asked.

“The taxpayer,” Mr. Paulson said.

Mr. Paulson suggested that if Mr. Bunning did not like the plan, he should vote against it.

“I will do everything I can to stop it,” Mr. Bunning said, referring to the Treasury’s plan.

“And maybe you can come up with a better plan,” Mr. Paulson tartly replied.

Senator Chuck Hagel, Republican of Nebraska, asked why the management of the two companies should not be held accountable.

Mr. Paulson responded that since the companies were in one line of business and had not been lax in their lending standards, there was no reason to take it out on the executives.

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From the Economist:

Separately, the Federal Reserve said Fannie and Freddie could get financing at its discount window, a privilege previously available only to banks. The absurdity of this situation was highlighted by the way the discount window works. The Fed does not just accept any old assets as collateral; it wants assets that are “safe”. As well as Treasury bonds, it is willing to accept paper issued by “government-sponsored enterprises” (GSEs). But the two most prominent GSEs are Fannie Mae and Freddie Mac. In theory, therefore, the two companies could issue their own debt and exchange it for loans from the government—the equivalent of having access to the printing press.

So the stuff that nobody on the entire planet wanted (so the taxpayers will now have to purchase) will now be used as their way of stabilizing themselves – which will ALSO go on the taxpayer WHEN, not if, it eventually blows up.

Cash will be king. No matter how much they devalue it.

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"Gov. Arnold Schwarzenegger plans next week to slash the pay of more than 200,000 state workers to the federal minimum of $6.55 per hour to deal with the state's budget crisis"

"The governor also will order an end to overtime pay for all but critical services, a freeze on state hiring and the immediate layoff of 22,000 temporary, seasonal and student workers."

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I don't even recall who said this now - but they are GOOD!

This rescue plan isn't about mitigating today's housing difficulties. Nothing in the plan gets a mortgage paid that wouldn't otherwise be paid.

Nor is the rescue really about today's credit crunch, except for the minor effect a doubt about the reliability of Fannie and Freddie guarantees might have on the capital of other financial institutions.

Instead, it's about enabling Fannie and Freddie to continue to do even more of the same in the future, and that's a bad idea. The rescue plan makes an implicit federal guarantee for Fannie and Freddie explicit. This would give them an even greater competitive advantage, enlarging their already dangerously overlarge presence in the secondary mortgage market.

The Bush administration and Congress are moving toward a much larger federal role in the housing market. Congressional Democrats propose that the federal government refinance some $300 billion in mortgages, while the Bush administration wants to open the federal checking account to Fannie and Freddie and perhaps invest in them.

Meanwhile, the Fed's balance sheet is getting corrupted with junk that others won't buy or lend against.

All this is to keep the housing market propped up at a time in which the market is screaming, about as loudly as it can: THERE'S BEEN AN OVERINVESTMENT IN HOUSING.

What the politicians propose to do about our economic problems has been consistently more troubling than the problems themselves.

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SEC banning shorting on 19 "important" companies?! Looking to expand it to other stocks now too?! It's like they want a crash to happen. When stocks go down, it's the shorts covering and taking profits that puts a floor under the price - with no shorts, no floor. HINT to the F'ing clueless - the shorts DID NOT CAUSE THIS PROBLEM.

I hope communism is gonna be fun.

Mish on the topics
http://tinyurl.com/6z4h3a

http://tinyurl.com/6fhrnq

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In an interview with RTT News, Nouriel Roubini, Professor of Economics and International Business at NYU's Stern School of Business and Chairman of RGE Monitor stresses that we are in the middle of a "severe recession that is deepening" and will cause "at least a couple hundred small banks," to go "belly up," a third of regional banks to be in "severe trouble" and "at least a couple" major national banks to become "insolvent."

Roubini says there is "no doubt" that the FDIC's reserve will be "drained 100-percent" and stresses that there is "nothing that can be done" to prevent this financial crisis and recession.

In addition, Roubini predicts that Lehman Brothers "won't be able to survive" as an independent broker dealer.



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Items of lesser importance:

Yep, it's the bloggers that caused this. My fault. Nothing to do with Greenspan, greed, corruption. Have fun with that theory FDIC.
http://tinyurl.com/6hmulq

The never-ending destruction of value – and the lies.
http://tinyurl.com/57cwm4

Indymac pics of people wanting their money
http://tinyurl.com/676enq

People will care when WaMu leaves a giant crater in the financial system the likes of which nobody has ever seen:
http://tinyurl.com/58zdex

Great summary from the NYT – not too much should surprise you, but still kept me interested throughout:
http://tinyurl.com/5ou6n2

Great Fleckstein piece on why the shenanigans won’t work.
http://tinyurl.com/5tmy5s

HELOC exposure for later use
http://tinyurl.com/5z9c3b

Ba-bye Fannie, Freddie, Indymac, Lehman...

Indymac bank taken over by the Fed's late Friday night - 2nd biggest bank to ever fail. They couldn't even find anyone to take on their deposits - no other bank wants to deal with this crap becuase they have so many problems of their own. Never understood why this was a $30+ stock a few months back. I can say that about a lot of financials...

Oh, and people were camping out Friday night at IndyMac, Downy, and FirstFed to withdraw their money Saturday morning. Customers in Indymac had $1 Billion over the $100k limits - money they won't be getting back.

By the way, FirstFed (FED) made it under $5 - long run from the $30's I mentioned it at.

I have a new one for you that was in th $30's but I was going to wait for it to bounce before recommending it - hasn't happened yet. ZION - have fun, it'll be in the single digits eventually too. For some reason people think Utah is immune to this mess???

I also said Lehman Brothers (LEH) was next for the investment banks when it was in the $40's post Bear stearns - made it's way to the lower teens this week. Tick, tick, tick...

Preview: After Lehman, it'll be Merril Lynch (MER).


As for the markets overall - still expecting a multi-week bounce sometime. Then a monster decline that could last through the Fall before bouncing. Otherwise know as wave 3 of 3.


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Interesting action in the markets on Friday afternoon due to the rumor that Fannie and Freddie will now have access to the discount window too! When will anyone learn? Oh - the rumor was false?! Oh, they waited to tell people until after the market closed?! Oh, all the people who have been calling for jail time because of the "shorts" spreading rumors have no comment now?! Oh - and if you pay attention at all you'll now know with near certainty that nearly every "bad" rumor has proven to eventually be true, and every "good" rumor has proven to be false - who belongs in jail???? Must be nice to be in charge of what the public knows.

Don't get me wrong, Fannie and Freddie will get all sorts of taxpayer money.

Leveraged at 60 to 150 to 1 (depending on what "accounting" they use) - hedge funds aren't even that dumb. How did they expect this to end??? Funny what a government backstop will make you do...

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Oh and never mind that Bernanke and others were on TV the DAY BEFORE adamantly saying how well capitalized Fannie and Freddie are. As if they don't have complete access to all their books. QUIT ruining the trust in our system you idiots!!!

6 straight down weeks in the markets is quit abnormal, so yes markets have to go up (and I'm still waiting for the bounce) - but destroying the trust will destroy the dollar and send interest rates uncontrollably higher.

I assume you now believe that joe-6-pack has nothing but pain ahead - they are laying the groundwork for it to get MUCH MUCH worse.

***************************************************

We knew Fannie and Freddie were insolvent long ago. As I’ve said, Fannie and Freddie stock will both be zero when this is done. And everyone will own (and pay for) everyone else’s house. Stock action this week tells you the world figured it out. I should've followed my own advice.

They own more than $500 billion in Alt A and subprime paper. They have taken less than $20 billion in write downs. Legislation keeps giving them power to take more junk on (because they supposedly had the “safe” stuff before).

CNN Money talks about the doomsday scenario if/when this goes down. And that's exactly what it is...
http://tinyurl.com/56au5q

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Housing bailout bill passed this week - quote of the century from the press relase:

"To make it more palatable to Republicans, the Senate measure would take responsibility for any losses away from taxpayers and instead cover them by diverting a newly created affordable housing fund drawn from Fannie Mae and Freddie Mac profits."

What's realy silly about it - the Republicans were the one's who didn't like it very much. Only 68 Senators voted for some reason?? Where were the other 32???? Nearly every one of which was a Republican too...
The list:
http://tinyurl.com/65g8uh

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On that note, this is what happens when you let the foxes run the hen-house:

CBO Projects Housing Bailout Program Will Send 140,000 Families Into Second Foreclosure
By Dean Baker - July 6, 2008, 11:35AM
The Congressional Budget Office (CBO) is not terribly optimistic about the success of the housing bailout bill going through Congress. They project that 35 percent of the homeowners "helped" under the plan, or 140,000 families, will find themselves again facing foreclosure. The reason for the pessimism is that the lenders get to decide which loans enter the program. Naturally, they will pick homeowners who they think will be the least likely to make it.

I wonder what the folks who support this bill will tell those 140,000 families? Many of these families will struggle to make their mortgage payments for 2 or 3 years, sacrificing health care, child care and other necessary expenses in a hopeless effort to hang onto their home. At their end of their struggling, they will end up out on the street, foreclosed a second time.

That is what Washington policy wonks call "asset building."

It was painful to have a housing policy designed by economists and analysts who were too out to lunch to recognize the largest housing bubble (in absolute size) in the history of the world. It is even more painful to see that the same folks are still calling the shots.

As a result, we see Congress rushing to push through a bill that CBO projects will hand $680 million to lenders. Yes lenders -- you know, the folks who issued predatory mortgages on an enormous scale to low and moderate income families in the last few years. Given the structure of the program (it does nothing to prevent loans from being issued at prices that are still inflated by the bubble), it is questionable how much any homeowners will actually be helped.

And, CBO's numbers are likely to prove optimistic. Remember, these are the folks who over-estimated capital gains tax revenue in their 2001 budget projections by $600 billion because they assumed that the stock bubble would persist indefinitely.

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Mish quote:

“It took nearly 80 years for people to get as reckless as they did in 1929. 80 years! Few are still alive that went through the great depression. That is the nature of the game. People have to forget what a depression is like to bring about the conditions that cause them. And they did. And they made the same mistakes over again, except larger.

The madness of crowds, however, can only go so far. A significant reversal is now underway. The secular peak in consumption has been reached. A reversal in attitudes towards consumption started with houses, but it’s spreading to cars, boats, and even Starbucks coffee. It will take a long time for attitudes to get back to equilibrium. And attitudes, like pendulums, will not stop at equilibrium once they get there.

The odds of a significant bout of inflation now are about the same as they were in 1929. Next to none. History is about to repeat.”

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Got SRS? This'll make you want to get some when the time is right...
http://tinyurl.com/66ry82

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European inflation hits 4% - a 16-year high. Chances are they’ll be raising rates here soon (they did). Guess what that does to the dollar – it makes it weaker. Which sends oil etc. higher. Unlike our Fed, they only have the mandate of “low inflation” in Europe (they don’t have the added pressure of rigging stock markets like the Fed here has). So if rates need to be raised to stop inflation, they are going to have to do it no matter how much we continue to balk...

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Very interesting view. Not sure about the $1 house thing – but the rest works for me.
http://tinyurl.com/4ewnul




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Items's that are "less" important.

ShSuHorn on why the Fed is in a box. (mentioned the name as a couple of you may remember him as a strong Big 12 picker in the college football ranks)
http://tinyurl.com/5jn7o4


Long on Bear's final week - but quite interesting. Didn't realize
how cutthroat it is at CNBC (page 5)
http://tinyurl.com/5c25lf


3-minute Video From NBC: Former Countrywide exec says one thing,
company says another. You can decide who to believe.
http://tinyurl.com/3tf6hs


Vegas in big trouble
http://tinyurl.com/65un4u


Poor lackey. Almost felt bad for him - or not.
http://tinyurl.com/66hubc


10 best “Doom and Gloom” websites
http://tinyurl.com/6ah7ax


Ahh, the amount taxes are going to have to increase to cover all of this is insane.
http://tinyurl.com/5nknha

Camels, faulty bailouts and scary price increases

My favorite quote of the week:

"The consumer is an overloaded camel and the air is full of straws."

Consumer confidence: third-lowest reading in the 56-year history of the survey

Don't need to tell you how the markets reacted this week. A 4-digit Dow isn't as far away as you might think.

But we are overdue for a bounce - although the VIX shows no "fear" in the markets. Regardless, it looks like a multi-week bounce may start at some point this week.

GM stock at a 53-year low.

Want the head's up on Tuesday's announcement on June auto sales? Not good.

According to J.D. Power's forecast, generally accepted as among the most accurate in the auto industry, General Motors Corp. will see a 26.2% decline, Ford Motor Co. a 31.4% drop and Chrysler LLC a 30.1% fall.

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Uh-oh - the world is catching on:

Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero".

"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."

Barclays Capital said in its closely-watched Global Outlook that US headline inflation would hit 5.5pc by August and the Fed will have to raise interest rates six times by the end of next year to prevent a wage-spiral. If it hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it. They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility," said Mr Bond.

http://tinyurl.com/3tjerw

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For the large former Fortis contingent in the house:

"American 'meltdown' reason for money injection Fortis. 28th of June, 9:10
BRUSSELS/AMSTERDAM - Fortis expects a complete collapse of the US financial markets within a few days to weeks. That explains, according to Fortis, the series of interventions of last Thursday to retrieve € 8 billion. "We have been saved just in time. The situation in the US is much worse than we thought", says Fortis chairman Maurice Lippens. Fortis expects bankruptcies amongst 6000 American banks which have a small coverage currently. But also Citigroup, General Motors, there is starting a complete meltdown in the US"

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I didn't mention it last month, but Dow Chemical raised prices 20% across the board. They make “thousands of products ranging from plastic wraps to car parts and insecticides.” Now a month later, they do another 25%! 50% price increase in a little over a month!! This affects pretty much everything in Target - why is nobody concerned about this...yet? This surely won’t help the CPI...
http://tinyurl.com/5mnmwk

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Mike Morgan - read him while he still posts publicly...
http://tinyurl.com/64ply3

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$300 Billion Housing bailout bill passes 83-9.

“The resounding vote reflected a keen interest in both parties in claiming election-year credit for helping homeowners amid tough economic times.”

Welcome to paying for irresponsible people/lenders to continue their ways. People’d probably care more if a line-item showed up on their taxes showing you the charge, instead it will be hidden in there with all the other increases for years to come. Be ready.

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We aren’t thinking about winter yet, but it’s definitely not too early for people to prepare for this – maybe some of our Maine-ites can comment...

Apparently, the sky IS falling!

That’s the word not from Chicken Little, but from former Maine Governor Angus King, who says he doesn’t use the term “catastrophe” lightly.

“This is a human catastrophe coming at us in the state of Maine in terms of energy supply and costs,” King said last week at a daylong seminar on harnessing tidal energy and offshore wind to confront runaway energy costs, costs he sees as a direct threat to Maine being habitable.

“This winter, the cost of fuel oil is going to more than double,” he said. “What’s being quoted now is $4.96 — $5 a gallon. That’s $1,000 to fill up your tank in the basement one time, and most people are going to have to fill up their tank six times.

“How is somebody who is making $350 or $400 a week going to pay to fill up the tank to keep warm? How are they going to pay to fill up the truck to get to work? This is, I think, the most serious crisis to ever face the state of Maine.”

“Eighty percent of homes in Maine are heated with oil,” he said. “The national average is 9 percent. If you do the math, 87 percent of the total energy bill of the average Maine person is dependent on oil or natural gas, and that is a particularly serious problem.”
King notes that oil prices have more than tripled in the last 10 years. Only six months ago, he said, the price of oil was $75 a barrel. Last week it was $114.

It’s not $114 any more...
http://tinyurl.com/4uu5cr


Just as bad expected in Montana:

Natural gas is used to heat more than 250,000 Montana homes. During winter months, a household with natural gas heat may use 15 to 20 dekatherms. At current prices, that means a $300 monthly bill.

http://tinyurl.com/6qfovm

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In case you haven't seen the pictures of Iowa - unreal
http://tinyurl.com/3oy5qh

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Here we go – Fannie and Freddie already abusing the power we just gave them – taxpayers beware!!!

Three months after Fannie Mae and Freddie Mac won the freedom to step up home-loan purchases, the government-chartered mortgage-finance companies are doing what critics in the Federal Reserve and Congress had predicted.

Instead of using powers granted by Congress to buy jumbo loans for the first time, Freddie Mac and Fannie Mae are purchasing their own mortgage-backed securities, helping reduce losses, company filings show. The large loans, above $417,000, made up almost a third of the U.S. market last year, according to the Mortgage Bankers Association.

Since the rule change took effect in March, Fannie Mae has packaged $24 million of jumbo loans into securities, while Freddie Mac added $220 million, according to the Inside Mortgage Finance newsletter. In April, the companies spent more than $32.4 billion to buy their own instruments, regulatory filings show.

``They were granted expanded opportunity to help recovery in a troubled housing market and yet have appeared to focus on their own recovery,'' said former U.S. Representative Richard Baker, a critic of the companies who left office earlier this year to run the Managed Funds Association in Washington.

Congress had kept Fannie Mae and Freddie Mac out of the jumbo market to force them to concentrate on low- and moderate- income borrowers.

The change places taxpayers at greater risk ``without facilitating the policy goals I believe the Congress had in mind when they eased these portfolio limits,'' said Baker, 60, a Louisiana Republican.

http://tinyurl.com/6jtd8h

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“It’s never been this bad” – bad omen.
http://tinyurl.com/584v2a

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I'll sum this one up for you if you've made it this far - it's from the monolines to the banks. "Remember that $125 BILLION of insurance we have you covered for? How about we round that down to the nearest zero?" Ridiculous. Oh, by the way, I moved this up from the "less important" section because of the exposure that Merrill Lynch and Citigroup have to the monolines. Monolines go down and those two are boarderline toast.
http://tinyurl.com/6bvne7




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"Less" important, but still worth a scan:

Bank of America is doing just fine - which is exactly why they leave messages on peoples answering machines "offering to settle all 3 accounts (credit card) with me for 70 to 80 percent OFF existing balances.... I'm delinquent on all 3 and getting ready to file. YIKES and they left that on my voicemail!!!"

When the banks go, credit goes, and it all goes...
http://tinyurl.com/3p7k8t

It does seem like everything is happening at once on this planet..
http://tinyurl.com/54rkwk

Lest we forget the upcoming ARM resets - the numbers in here are scary. Oh, and don't forget how BADLY the banks need this money from people.
http://tinyurl.com/6pxwwt

And don't forget the unemployment situation. For the record, I think his unemployment estimates are way low.
http://tinyurl.com/654g6n

If the Fed doesn't have to play by the rules....
http://tinyurl.com/5jqyer

More on how the banks are the ones who actually wrote the bailout bill. Sad how this country is now run.
http://tinyurl.com/6sbdq8

Yep, these are our leaders.
http://tinyurl.com/56w9w8

Multiple states suing Countrywide, some asking their boards to remove Countrywide’s license to sell in their state. Bank of America says the deal is going through (duh, it came out this week that the taxpayers will be paying for up to $5 Billion of it!). This blemish could bring them down. Remember when I said it was a mistake to make Bank of America a Dow stock a few months back??? Have fun taking over Mozillo’s rapidly SINKING ship – and tying your anchor to the Dow Jones...