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.
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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
3 comments:
Didn't expect ZION to lose $6 (23%) today alone...
whew - S&P up 2.5% today. Glad the downturn is over.
Yes, we are all saved! Definitely the bounce I've been waiting for - as you know, luckily removed anything short (and then some) the day before it started - chalk one up for technical analysis (or pure luck).
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