How Many Ultra Bears Are Surprised By Recent Events?

[Captain Coma]

The question is are we surprised by recent events. I feel as if I'm not, and checking back over old posts I found this, from precisely a year and a day ago, where I wrote (re Lehman Bros):

Okay, correct me if I'm wrong (I'm sure you will), but re: the mystery of A&L ...

Q What connects NR and A&L?

A Lehman Bros (they both originate subprime loans for- e.i. supply CDOs for - the brokerage).

Now, Lehman Bros are the first of the big brokerage forms having to report 3rd quarter results on Wall Street this week. Tomorrow morning, in fact.

Perhaps someone has seen Lehman's figures and decided that A&L are toast.

That might mean Lehman Bros are toast.

And as the man said,

"If one big brokerage goes there is a very significant risk that they all will."

(http://www.tickerforum.org/cgi-ticker/akcs-www?post=4669&page=15)

Well, Lehman has now gone, only GS and MS left standing, the latter tottering as we speak, and I wouldn't trust GS further than I could throw them.

My thoughts were nothing special at all - they were informed by Karl Denninger ("If one big brokerage goes there is a very significant risk that they all will."), and lots of us did think all this would happen. We think this is still only the beginning in fact.

More prosaically, concerning house prices ... 70% down now looks cautious.

Yeah, ban short sellers, that'll fix everything.

Yeah, set up a big dump for all the toxic balance sheet debt - the new strategy: debt is no longer debt!!! (Like Lehman's desperate "Good Bank/Bad Bank" idea of last week, ha ha.) That'll work for sure.

Pillocks.

[dances with sheeple]

On Sunday night I had a hunch this week was going to be bad (so much so that I even started a 'black' thread)

However the scale of what's gone on has taken me by suprise. And we've still got tomorrow to get through.

The banning of shorting could well cause carnage as it will highlight the real reason why the markets are in meltdown which has little to do with hedgefunds shorting them and everything to do with unwinding positions and deleverage.

Whilst I'd like to think (and part of me hopes) I'll be 'eating my words' this time tomorrow I fear that the FSA has just scored a massive own goal and it could be the worst day yet this week.

Will it? or will it just stop people EXPLOITING and EXPOSING the real reason? short sellers are usually acting on knowledge they have gleaned themselves or accepted from another source about weakness in a business? The average investor who moaned (and probably still is moaning) about their losses in NR doesn`t really have their investment head screwed on do they? The people running the ponzi don`t want a bunch of smart-arses coming along and showing the sheeple that many of the components of the banking sector have business models that are a crock of shit, and making profit into the bargain? Wouldn`t the ponzi masters rather have a bunch of shareholders holding out until they are told " sorry your bankrupt investment is being taken over, here`s 10p for your trouble" ? same way as they would rather have a bunch of sheep selling their children to "get on the ladder" than a bunch of informed people telling others that houses have been the dumbest investment you could have made for a long time? Alex Salmond really pissed me off with his comments about "city spivs" because it shows total denial of the reckless manner in which some of these banks have conducted themselves over the years.

[Jim B.]

I have regarded myself as pretty well to the bearish end of the scale. I have been expecting falls of about 50% from peak house prices and a recession and have acted accordingly.

Like most regular posters on here, my views have been documented if anyone is interested enough to look back on them.

But never in my wildest dreams did I expect the carnage in the financial sector that we have seen. I watched the news on telly last night with my jaw hitting the floor.

How on earth do the former bulls feel?

Staggering isn't it, this collapse. Who knows how much prices will fall now.

[hope4crash]

It's designed to keep certain banks alive until the weekend when another round of crisis meetings will no doubt take place.

Here's a question:

All these crisis talks seem to keep leading to mergers/take-overs hence creating even bigger monsters which then become even more so 'too big to fail'.

Is this not making the problem worse in the long run? Where does this end: one 'super-bank' with a total monopoly?

[?...!]

Here's a question:

All these crisis talks seem to keep leading to mergers/take-overs hence creating even bigger monsters which then become even more so 'too big to fail'.

Is this not making the problem worse in the long run? Where does this end: one 'super-bank' with a total monopoly?

It's certainly heading that way for now, but I imagine once things settle financial institutes will be forced to split up into many small firms.

Then possibly each firm will require a license to operate in certain markets. No firm will be allowed to hold a full set of licenses. Thus preventing contagion.

This is the kind of thing that Obama or McCain will be looking at to prevent this kind of disaster in future.

[dances with sheeple]

Here's a question:

All these crisis talks seem to keep leading to mergers/take-overs hence creating even bigger monsters which then become even more so 'too big to fail'.

Is this not making the problem worse in the long run? Where does this end: one 'super-bank' with a total monopoly?

I think they are aiming for three or four "super banks" the spanner in the works (apart from all the inter-bank problems) will be when the sheeple become bold enough to start defaulting and scared enough to start withdrawing their money. The Brown administration is not capable of leading us through this. The sight of Darling on BBC news this morning babbling a load of nonsense and getting rattled does not inspire confidence.

[ARIMA]

It's certainly heading that way for now, but I imagine once things settle financial institutes will be forced to split up into many small firms.

Yup justing thinking that myself. As easily as the government orchestrated Lloyds & HBOS, they can force the combined institution (and any other mega mergers yet to come) to split up again further down the line.

[Mart]

Recent events have been shocking rather than surprising : the question now is what next ? will we have our jobs in 12 months time ?

[hope4crash]

Yup justing thinking that myself. As easily as the government orchestrated Lloyds & HBOS, they can force the combined institution (and any other mega mergers yet to come) to split up again further down the line.

This is the bit I'm not getting.

Imagine: you're the LTSB CEO - surely you can see this coming a few years down the line - so why merge and take on liabilities when the regulatory goal posts keep moving and look set to continue to do so? Looking at long term strategy with the current markets you're not looking at a ROI for a few years (at best) by which time you may be broken up before you can realise your investment. So why bother?!

A CEOs remit is to build a stable business that maximises shareholder value and profits - I don't see how this works here unless there are other factors in play here - and I'd like to know what they are.

[winkie]

Governments really don't want to own anything if they can help it, they rather the resposibility and risk is left to others, then they can reap the taxes from growth and taxes from labour and sales.

How things turn around when you least expect it, you end up owning what you would rather not, and end up paying for what you would rather not.....and end up housing what you would rather not.

[warpig]

Short selling is where you borrow shares for a small premium, sell them in to the market expecting the price to drop, assuming they do you buy them back, keep the profit and return the shares to the lender, an easy way to make money as long as you are correct. Dealers rely on shorting to function, this will basically mean they cannot function. The problem is short selling is not the problem and is merely the scapegoat. The drop in share price is a direct reflection of the organisations market value and whilst shorting can exasperate the decline it is not the root cause.

can someone explain short selling and what the concequences are in the near future

Edited September 18, 2008 by warpig

[Guest mattsta1964]

I have regarded myself as pretty well to the bearish end of the scale. I have been expecting falls of about 50% from peak house prices and a recession and have acted accordingly.

Like most regular posters on here, my views have been documented if anyone is interested enough to look back on them.

But never in my wildest dreams did I expect the carnage in the financial sector that we have seen. I watched the news on telly last night with my jaw hitting the floor.

How on earth do the former bulls feel?

I'm surprised by the speed and seriousness of the situation.

I've been pretty bearish for some time but even I feel unprepared for it....and quick shocked actually

[warpig]

This `rescue` relies entirely on the depreciating assets returning to their near peak value, this will clearly not be the case for at least 16-25 years. In the meantime it solves nothing. It simply pushes the loses further up the chain and will certainly result in the debasement of the currency of any supporting government.

Given easy credit caused the problem, I fail to see why they think the same activity will fix the problem, it is mearly a delaying tactic. This is so obvious it's frightening. The only solution that ever existed was to let everything collapse and pick up the pieces, they have now made everything 10 times worse.

Is this not making the problem worse in the long run? Where does this end: one 'super-bank' with a total monopoly?

[apom]

This is massive, properly the biggest thing to hit the markets in living memory...

Lehman Brothers, City Group, Bear Stearns..others swallowed....

Axia, Hbos...

Fannie Mae, Freddie Mac...

more institutions then have failed in the last 80 years, have failed in the last fortnight.

that is quite a thing...

quite a thing...

hell of a thing.

[hope4crash]

Apologies if I'm harping on but can someone explain why the CEO of LTSB, whos remit is to deliver stability and shareholder return, is going ahead with the HBOS takeover when the rulebooks are being torn up on a daily basis and look likely to continue to be for quite some time.

Edited September 18, 2008 by hope4crash

[winkie]

Apologies if I'm harping on but can someone explain why the CEO of LTSB, whos remit is to deliver stability and shareholder return, is going ahead with the HBOS takeover when the rulebooks are being torn up on a daily basis and look likely to continue to be for quite some time.

Rules are made to be broken...nothing is ever set in stone, and nothing is guaranteed...100% or not.

[Converted Lurker]

Apologies if I'm harping on but can someone explain why the CEO of LTSB, whos remit is to deliver stability and shareholder return, is going ahead with the HBOS takeover when the rulebooks are being torn up on a daily basis and look likely to continue to be for quite some time.

Money/personal gain? My wife worked in the human resources (or wtf it's called these days) of a Japanese bank ten years back, seemed to her back then the more you negotiated your; salary, bonus, argued about fukcin luncheon vouchers, car allowance, extra day holiday, pension transfers/contributions... the more respect you got....

These guys are short term, none of them IMHO give a flying re. the history and future, past their own contract length and value and why should they? The history has been smashed to pieces over the past few months and is irrelevant anyhow in the sector they operate in.

Edited September 18, 2008 by Converted Lurker

[Guest Mr Parry]

Old friend called tonight. He just re-mortgaged. Bought in 2005.

£500 set up fee. 5.29% fixed for 5 years.

[ʎqɐqɹǝʞɐɥs]

Old friend called tonight. He just re-mortgaged. Bought in 2005.

£500 set up fee. 5.29% fixed for 5 years.

And???

[Guest Mr Parry]

And???

Shows it can't be that bad.

[Guest mattsta1964]

Shows it can't be that bad.

Yet..............

[ʎqɐqɹǝʞɐɥs]

Shows it can't be that bad.

You're right. I'm off to buy.

[Guest Mr Parry]

You're right. I'm off to buy.

Arrr. . . not buying, re-mortgaging after last fixed rate deal expired. Shows there is still credit available, even now at reasonable rates.

[Guest Mr Parry]

10% LTV?

63%.

[Converted Lurker]

10% LTV?

60% gets you access to just about the full market if you have a clean credit file. Customers can forget all that; near prime, slightly tarnished boll@cks now. There's 74, 95% mortgages currently available and there's a whopping 466 mortgages if you have 10% deposit/equity, there'll be approx. 4 when all the banks are saved/merged.

http://firstrung.co.uk/articles.asp?pageid...&cat=44-0-0