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October 08, 2008

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Charlie (Colorado)

Heh, Tom, you're not keeping up. Rick pointed this out yesterday.

Charlie (Colorado)

I'll also smugly point out that Rick and I had converged on the MBSs being worth 92-98 cents on the dollar.

Jim Ryan

Rick and I had converged on the MBSs

I made $1.5B on that tip this afternoon.

Charlie (Colorado)

I made $1.5B on that tip this afternoon.

Rick and I would be happy to take a 0.1 percent commission on that.

mcg

Can anyone help a layman like me understand this news a bit better? Just how good is it?

bgates

Just how good is it?
Dude, look at Jim's comment.

mcg

Bah. Someone's always making money! :-)

Rick Ballard

"Just how good is it?"

Pretty good, mcg. I won' take you through the last few weeks commentary here but if you dig into what "mark to market" has meant in this mess you'll realize that lack of reported sales of garbage MBS has removed the information necessary for an orderly market.

This auction provided some of the necessary information and the Lehman auction on Friday should provide even more. If it comes off as well as the FM auction then we'll see a ton of balance sheets strengthened significantly based upon the information provided.

There is still the matter of settlement of the CDS swaps to get through. A fair portion of the last six days stock market action is related to companies raising cash to pay off the losing side of the deals. The winning side will then need to park their winnings somewhere.

Rick Ballard

CDS swaps

Pardon me twice over for redundant redundancy.

Jim Ryan

Rick and I would be happy to take a 0.1 percent commission on that.

Sorry, guys. Repub climate of greed and all that. I'll keep every penny of it. To promote virtue.

clarice I'm NOT Spartacus

We could just tax it and share it--so Chaco and Rick won't live "too high on the hog" in the words of the Messiah.To each according to my whims,from each according to mine, too.

Charlie (Colorado)

Pretty good, mcg. I won' take you through the last few weeks commentary here but if you dig into what "mark to market" has meant in this mess you'll realize that lack of reported sales of garbage MBS has removed the information necessary for an orderly market.

Word. Wish I'd said it tat way.

kim

Stan J. Leibowitz at the 'Independent Policy Report' has a nice article about the mess: 'Anatomy of a Train Wreck'.
=================================

Jim Ryan

Kim's reference.

badjane

high on the hog

Man, Obama will smoke anything. How big must the bong be?

SlA

Insurance is funny. It's not the value, but the replacement value. So, the houses sold for 90% of their value or whatever when the actual sale value is like 60-70%. The 1 trillion needs to buy the actual houses, not the insured value. The insurance value is the pay out for the mortgage holder, so when will they start to buy?

mcg

Thanks Rick. I'm up to speed on the mark-to-market issues, but I did not understand to what degree this auction was an antidote. I appreciate the help.

Sue-Jane

and I am relying on some cogent commenters to do the heavy lifting here.

I hurt my back. Sorry...

badjane

An Obama guy going nuts on Fox about Ayers. Rich Lowry couldn't get a word in edgewise.

Jim Ryan

Question: This Jerome Corsi. I've heard he's, well, a quart low. Is this so?

Corsi was just interviewed on Hannity's radio show. He claimed to have documents proving something along these rather nefarious lines and that he will produce these documents on Hannity's TV show on Monday, after he returns to the U.S. on Saturday.

Rick Ballard

"So, the houses sold for 90% of their value or whatever when the actual sale value is like 60-70%."

Nope. The MBS (pool of mortgages) which contained a slice of mortgages (not houses) which had a current value of 60-70% (based upon default and foreclosure rates) had a value of between 92% and 98%. The Lehman auction will include bid items consisting solely of Stinky Stuff tranches (check 'Deliverable Obligations' list) and will provide an even better level of clarity regarding overall valuation than did the FM auction.

Although it is not being said, the Lehman auction may obviate the need for a Treasury buy in of Stinky Stuff. At the worst, it will provide a market rationale (or lack thereof) for the price offered or taken by the Treasury wrt the MBS which they propose to purchase.

This does not mean that the Paulson Plan was not necessary. It was and is. Without the Treasury standing as a 'market of last resort' the FM auction could well have failed and the Lehman auction would certainly have failed. The absurd price which Merrill took in a vain effort to save itself made that a virtual certainty.

mcg

So what I'm hearing is that the result of these auctions is to provide a clear and less deflated valuation for these instruments, which should improve the balance sheets and creditworthiness of companies that hold them. Yes?

Rick Ballard

SIA,

I forgot - if you would like to know the value of houses rather than mortgages, just check Zillow and zero in on the neighborhood in which you have an interest. Check recent sales on a price per square foot basis and take a look at the various valuation charts which are easily accessible. There are actually very, very few markets which would fit in the 60-70% number which you used.

Check around and let us know what you find.

mcg

I bought a house in December 2007 and I did not find Zillow's price estimates to be particularly accurate. They were all quite low compared to the actual market. This was in Austin, TX.

Zillow's bird's eye view is great, though, so it's a must-bookmark web site when shopping for a house.

Jim Ryan

That link I gave above: Read it and watch this video mentioned in the link. And Corsi says he has documents proving extensive, recent support of Odinga by Obama which he will produce in a few days?

Anyone have any debunkery on this?

Rick Ballard

mcg,

Zillow is good in 'typical' subdivisions and bad wrt custom built and 'special' (waterfront or golf course) property. I didn't express an opinion on their valuation model, I said "check recent sales on a price per square foot basis". They're a good information source but they sure aren't a substitute for doing your homework before making a purchase.

mcg

You did refer to recent dales, fair enough. But my neighborhood while high-end and relatively little new construction. I was surprised by the discrepancy.

Rick Ballard

mcg,

The Zillow valuation 'model' suffers from defects similar to those used in creating the very complicated MBS securities. There is no 'national' real estate market and attempts to spin up a 'national' model have proven whimsical (to be very kind). CDS are one step farther removed from even the opaquely whimsical MBS models and have achieved fantastical status.

What is being worked out in this is how much dough Bob (Bigco CFO) had slipped into his income stream by peddling a little CDS on the side. After all, it was a very, very safe bet to sell CDS for a very, very long time. What could it hurt? It was like found money.

I would like to see the exchanges force disclosure of outstanding CDS positions as a matter of maintaining listing. In fact, it would be an outstandingly intelligent move by Otherbigco to disclose that they had no exposure (their CFO wasn't nearly as smart as Bob).

hrtshpdbox,

Should you pass by, I would be very interested in your opinion of the cause of these heavy sell offs in the last 15 minutes of trading. It really has me stumped.

Pofarmer

So, who's buying?

Rick Ballard

There's no problem on the buy side. It's as if market sell orders are all being executed at the end of the session. I don't trade so I have no idea if this last minute order completion is something new or something that I just hadn't noticed in the past.

Bill in AZ

Speaking of trolling for good news, and in the continuing series of "unexpected headlines", WSJ editors must have been asleep at the wheel for this one:

"IBM Sees Quarterly Profit Up 20%"

I'll write tomorrows al-AP's headline today:

"IBM Reports Unexpected Profit During Recession"

kim

Jim Ryan, 5:01, thanks for the link to Leibowitz's paper. I'm still struggling through it. He points to the garbage data from the 1992 Boston Fed study and someone at climateaudit compares it with the garbage data underlying the AGW scam.
====================================

Clay

Rick-

The selling at the close is probably selling for the purpose of meeting margin calls - usually more pronounced when stocks are down quite a bit over a number of days, and hitting multi-year lows. Traders who are overleveraged have to sell positions, but they'll usually wait until as late in the day as possible so that they don't have to sell more than is necessary to keep their accounts above the margin requirements.

pagar

Jim Ryan,
"This Jerome Corsi. I've heard he's"

I had a lot of references to Jerome Corsi, bookmarked back in the 2004 election, when the goal was to defeat John Kerry. My guess would be he is one of the most hated men in America if one asks the American hard leftists.

What the American right says about him is often not really great. But his work in 2004 probably cost John Kerry some votes, so in my opinion that is good. Hopefully, his actions in this campaign will cost Barack Obama some votes and that will be good.

I haven't read his latest book on Obama, but apparently the Obama camp spent some serious effort trying to debunk it, so that is good.

As for the Kenya political scene, there is no disputing the fact that others than Corsi have written on the problems in that country.
How many of those problems involve Obama is,
like many other things about Obama, difficult to pin down. Since he has said he will present something on the Hannity Show, I would suggest we wait and see what he presents. To sum up my thoughts, any American working to insure that Obama is not elected is good, however some may be better than others.

Rick Ballard

Trouble at IBM?

Company insiders reported today that they fear the company's Chief Financial Officer's inability to accurately forecast profits is a measure for investors to consider prior to purchasing the stock. Developing...

See, Bill, I could write for AP. It would require having my character completely removed but that doesn't seem to have been a problem for most of their reporters and all of their editors.

Clay,

Thanks. Do you have any idea what the margin interest share of the market might be at the moment?

kim

The Swiftie effort cost Kerry the election, pagar, in my proudful opinion, but I think it was more John O'Neil than Jerome Corsi. I wish he were so influential this year. I got a feeling it's Steve Diamond and Stanley Kurtz this year.

Kerry and the Swifties opened a sore festering for a third of a century. Ayers is the festering sore here. And this time it's not the pus of pusillanimity, rather a cancerous lesion on education.
================================

hit and run

Obama just had a full 2 minute ad on local tv here.

Two minute ad at 8pm

He wants NC.

In other news, we finally have our yard sign. Unfortunately, the O fan across the street has hers too.

Barney Frank

Obama just had a full 2 minute ad on local tv here.

That means one of two things.
Either you were channel surfing and saw the start of it, then came back around two minute later and saw the end or;
you've been drinking heavily and sat through the whole thing.

clarice

Good point,BF--I think we need to have a SWAT team head out to NC.

pagar

Kim, I agree that John O'Neal was more of a factor than Jerome Corsi. In the effort to get the Swiftboat vet's message out, I was not Jerome Corsi's biggest fan and I had hoped my message above show that. But he was, in 2004, and now in 2008, working to defeat the same person I am hoping to see defeated, so from that standpoint I like his efforts, just not always, his way of promoting those efforts.

kim

Sure, pagar, no enmity for the enemy of my enemy. Wasn't Biden's 'epithet/epitaph' gaffe funny? It's one of my favorite, and not rare even among the literate and verbal. You have be both or either to even use them mistakenly.

The analogy with the Boston Fed study was that once the study was reworked to compensate for the errors in the original study, the results showed no racial discrimination on the mortgages. And it is on this that the errors in policy were engendered upon which this present disaster was built.

Similarly, the hockey stick and the General Climate Models. And the climate disaster lurks in the frigid future. Just how far, even kim doesn't know.
=====================

Pofarmer

Talking about who's buying on the CDS auctions, not on the stock market.

Anybody know?

kim

I beg the pardon of John O'Neal for misspelling his name and to Kenneth Fritsch for not H/t'ing the analogies of the bad data leading to disastrous policy, but not for mispelling misspelling. It's hard to double-underline unless there is some red on the screen.
====================================

hrtshpdbox

" I would be very interested in your opinion of the cause of these heavy sell offs in the last 15 minutes of trading."

Rick, Looks like it was Paulson's late-day comments about how more institutions may yet fail and that the fix won't be a quick one. Really ugly action last few minutes and I'm sure it didn't help that, as someone else mentioned, the impending reality of yet another lower close forced some further margin positions to exit. There's always tomorrow (the sun will come up, that's all I'd bet my bottom dollar on).

kim

Well, Pofarmer, perhaps Jim Ryan.
====================

kim

Or more likely, Jane Ryan.
================

kim

Paulson now has the Greenspan Disorder, his slightest remarks move markets. And the opinions about his remarks only cluster approximately around his meanings.
==============================

Elliott

Ayers' and Dohrn's parenting tips.

Jane Verner

Well, here's some decidedly bad news--the democrats plan on taking away our 401ks.

First raise the payroll tax, then income tax, then capital gains tax, then corporate tax. Any idea how much this is going to cost?

By the time they are done, 75% of every dollar will be going to the federal government.


LUN

clarice

After reading all the carp churned out by this distinguished professor I suggest one fast way to save money would be to immediately close schools of education at every university and college in America.

Rick Ballard

Pofarmer,

Auction participants are listed here. A direct link isn't possible - click the 2008 Fannie Mae Protocol link on the menu on the left side and then open the 'Participating Bidders' which lists the following:

* Banc of America Securities LLC
* Barclays Bank PLC
* BNP Paribas
* Citigroup Global Markets Inc.
* Credit Suisse Securities (USA) LLC
* Deutsche Bank AG
* Goldman Sachs & Co.
* HSBC Bank USA, National Association
* J.P. Morgan Securities Inc.
* Merrill Lynch Government Securities, Inc.
* Morgan Stanley & Co. Incorporated
* UBS Securities LLC
* The Royal Bank of Scotland PLC

They rounded up the usual suspects. The list of adhering parties is actually more interesting. If they published which side of the deal was involved it would be even more interesting.

hrtshpdbox,

Thanks for the reply. I found the NYSE margin credit through August. It really doesn't look out of line or of a size that could account for that kind of volume. It's as if there's a need to raise an enormous amount of cash every day - far more than that necessary to maintain a correct margin balance.

Pofarmer

Geez Jane.

Is there anything that isn't an excuse for the Dem's to want to socialize something?

clarice

Jane, that is distressing news.

JaneAnn

Sarah and Sidney are on Hannity. Anybody else watching?

Jane Verner

Nothing like making people want to sell into a panic heh?

We are on the verge of electing an out and out solicalist, who with Nancy Pelosi and Harry ried will be able to confiscate half of the private wealth in this country at the stroke of a pen.

And no one in a position to do anything about it is saying one damn word.

aardvark

the democrats plan on taking away our 401ks.

Not to worry! Republicans are making darn sure that there won't be anything left in your 401k to tax.

Rick Ballard

dirtpig! We've missed you! You're like an incurable running sore, steadily dripping pus!

I sure hope you're watching Palin and McCain explaining how big a liar your boy is. They're doing a nice job.

JaneAnn

"You're like an incurable running sore, steadily dripping pus!"

Just love it! :) Go Rick.

DrJane

Rick is being quite genteel tonight.

JaneAnn

Thanks Jane. I just printed that for my husband to give to all his O workers. (He had to watch the debate with them in Seattle)

Where are we moving?

sbw

So 'splain to me the logic behind the Dem's 401K deal.

MayBee

sbw- the logic is, some people are still rich, dagnabbit.

Jane Whitman

Australia

Jane Whitman

(that's where we are moving)

Sue-Jane

I love the way they describe tax breaks. They are spending money when they give a tax break. Someone, somewhere, start screaming!!!!!!

Sue-Jane

Australia already has the socialist thing down, Jane. Healthcare is free. I know, because I've been told, over and over and over.

clarice

Australia is socialist.

Jane, why don't we just find a nice island in the Caribbean ,buy it and make it tax free.
You can be the president for life. You'll need a reliable ally for Minister of the Interior (mainly me).

kim

Oh, God, they'll go off on their cruise and never come back. Sob.
========================================

Pofarmer

So 'splain to me the logic behind the Dem's 401K deal.

There's money there that the Dim's don't control. There is now a panic, so they think they can grab some of it. Really pretty simple.

JaneAnn

Just for bad........

Alan Colmes sucks.

clarice

Folks you'll all be welcome to visit St Jane Island--

Sue-Jane

Visit? I want to live there too...

sbw

For everyone who plans to leave after the election...

GingerAnn

I want to be Minister of Fashion and Decorating and Tourism.

clarice

Sure. Just be sure to stop in my office where we can discuss licensing and regulations.

Sue-Jane

sbw,

Before I click, let me guess. They are going to tax me to leave?

Rick Ballard

..welcome to St Jane Island--home of S.C.A.M. Headquarters. St. Jane's is world famous for its banking and investment facilitation operations as well as all the natural beauty imaginable.

Unfortunately, St. Jane's, while enormously large in welcoming spirit, is geographically constrained to the extent that not everyone who wishes to visit can be allowed to do so at any given moment. St. Jane's is fully committed to free market solutions to all problems and in that vein solicits bids for the right to visit our Heaven in the Caribbean.

Those wishing to bid on a chance to spend some time in an earthly paradise are advised that cash, bearer bonds and/or postal money orders for the full amount of the bid must accompany every visitor's application. Unsuccessful bidders will have their entire bid amount returned to them (in cold, hard St. Jane's cash, accepted everywhere on the island) less a modest handling fee.

Please direct all correspondence to the undersigned.

Rick Ballard, K.G.B.

clarice

Rick, you are absolutely the man I had in mind for Minister of Finance.
(PUK , of course will be in charge of the Commission of Foreign Investments)

aardvark

Rick - As insults go that was pretty weak tea. I think you can do much much better (or worse, as the case may be.)

boris

If you want better insults then you need to be stoopid in a more interesting fashion. Troll with stink bait.

sylvia

"Sarah and Sidney are on Hannity. Anybody else watching?"

I saw it and I got annoyed. Even Hannity is saying that Ayers and Obama "were on a board together". No wonder the people don't get this with everyone saying that. They weren't just on a board together, Obama was the CHAIRMAN! Grrr. Chairman, for years on a foundation co-founded and guided by Bill Ayers. "Chairman" is lot different shade than co-board memeber.

Rick Ballard

Dear dirtpig,

Provide a list of Senator Obama's accomplishments (any matchbook cover will suffice) or get placed on Trollblocker. You're not worth any more pixels.

Jane Whitman

Jane, why don't we just find a nice island in the Caribbean ,buy it and make it tax free.

I'm in. I'm not sure I should be president tho. Can we get Sarah Palin instead - unless she is busy?

Jane Whitman

Provide a list of Senator Obama's accomplishments

You know, I've asked that question of 100 liberals, and not one has ever answered it. They don't even try. It should be an entry condition for trolling here.

Charlie (Colorado)

I would like to see the exchanges force disclosure of outstanding CDS positions as a matter of maintaining listing. In fact, it would be an outstandingly intelligent move by Otherbigco to disclose that they had no exposure (their CFO wasn't nearly as smart as Bob).

I'm too tired to get a link for it, but I understand there's a big come-to-jesus on Friday about just this: making the positions clear and the contents transparent.

clarice

Jane, she's not going anywhere she can't hunt moose or Todd can't do that ice racing.

Hmm..You know maybe PUK--His accent will lure suckers investors.

Jane Whitman

Let's see - Rick is Minister of Finance, Clarice can have the state department - or should it be the island department. If we can ever get DOT back we can put him in charge of the military. SBW can run the newspaper, GingerAnn runs tourism and decorating, TM can be the unseen Karl Rove, unless of course Karl makes the trip, Hit can be in minister of keeping us out of line, Elliott can run advertising, JMH, Cathy and Simon can be the think tank. PUK can do foreign affairs, with Daddy, Charlie can run the secret service.

I think I'll run the bar.

Who else wants what?

aardvark

Provide a list of Senator Obama's accomplishments

You mean besides kicking McCain's ass in the 2008 election? Because that one seems pretty relevant right now.

Charlie (Colorado)

It's as if there's a need to raise an enormous amount of cash every day - far more than that necessary to maintain a correct margin balance.

With no more to go on than that hint, sounds like the credit freeze again.

Another possibility is that after gapping down two or three days of the last couple weeks, no one wants to be long stocks at the opening bell.

clarice

I think we're almost there--I can already picture it.

Charlie (Colorado)

Who else wants what?

Dark rum on the rocks, two limes.

Jane Whitman

Ardvark,

As I understand it, an accomplishment is generally something one has accomplished. So you are #101 of not having an answer. You lose. And we have voted you off the island.

DrJane

I'll do the technology and energy infrastructure.

clarice

you'll be happy to knoe Dr, we have a fantastic array of geothermal possibilities on St Janes..

aardvark

As I understand it, an accomplishment is generally something one has accomplished.

Goodness, you're an impatient bunch. Just wait 20 some days and you'll have your answer.

Sue-Jane

I'll handle secret service duties. I look cool in dark shades. I'll ditch the pink earmuffs while on duty.

DrJane

Just a quibble: I'd personally prefer an island like Niihau. Lanai is probably too expensive, though beautiful.

Jane Whitman

Feel free to apply for a visa in 20 days aardvark, but don't count on getting it. I'm sorry to say you have not passed the entry requirements, so please leave.

Jane Whitman

Sue, I didn't picture you in secret service, but yes, those shades do look fab!

clarice

Adult Aardvarks have dimorphic external. genitalia (Pocock, 1924). The penis is short,. flaccid and shaped like a truncated cone, the ...

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Wilson/Plame