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Catch of the Day — [Mar. 23rd, 2008|09:51 pm]
Confessing how I likely overlooked the significance of rumors coming out of Ireland as a result of property prices caving.. (get reports, yet lost in the heap sorting..)

Anyways the UK's Telegraph run the following storyline on 12/3/2008:—
Irish banks may need life-support as property prices crash

The Irish banking system faces acute strains and may require a phase of temporary nationalisation as the property slump leads to a wave of defaults, according to a leading Irish economist.

Morgan Kelly, of University College Dublin, said the government is almost powerless to stop the downturn becoming a severe slump. "We're in a classic post-bubble recession, yet we can't do anything that a country would normally do in this situation because we're inside the eurozone," Prof Kelly said. "We can't cut interest rates, we can't devalue, and there is a lot less room for fiscal stimulus than people think. We're stuck.

"We have a domestic recession now colliding with a global recession. It is the state of the banking system that will determine how terrible this will be, and frankly that is looking very shaky."

Irish house prices fell 7pc last year. The pace of decline has accelerated so far this year. The damage is spreading to the broader economy. Unemployment jumped to an eight-year high of 5.2pc in February, from 5pc in January.

We are going to see banks on life-support with very big bail-outs. The precedent for this is what happened in the Nordic countries in the early 1990s when they had to take over the banks. We may have to do something similar," he said.
Further to this and consequent Mr. Bernanke's action vis a vis Bear Stearns (h/t: PB@PBboard) economist David McWilliams - 19/3/2008 on Forbe's vid - asked How much has Corporate America invested in Ireland?


And the board - highly informed for the most part - came back with a glut of responses amounting to:—

Twice the amount that it has invested in China and India - combined. This uses Ireland as a platform for export to Europe/EU (Ireland has record low corporate tax regime within EU).
Which leads on the the significant question of what would happen to Ireland and the Irish economy in the global crunch/recession scenario considered underway (at least in part) should US money be withdrawn to shore up corporate balance sheets and liquidity in the US?

Known to date is how the Dublin government appears to be almost powerless to prevent a severe downturn.

pp J
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Catch of the Day -- misc.. [Mar. 21st, 2008|06:32 pm]
Deserves a great clap for the fun of it. The trouble is that I canna now recall which* post(er) made the joke. Still, because it brought the biggest of smiles and still tickles me pink, I'll share it..

Winner then for expression of the day:—
(Whoever) is about as much use as a chocolate teapot..
* Very english language so likely a pohm.. at ft of tol. Then again there's a sometimes lively crowd at the standard in London..

pp J
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A Could Be.. [Mar. 20th, 2008|08:34 pm]
Part answer to my question yesterday.. re mav..

h/T: Yves Smith@NC the following clip from a Bloomberg piece..
Some of the same LBO (leveraged buy out) firms that generated the debt in the first place are raising funds to buy it back at reduced prices. Blackstone raised a $1.4 billion fund last November to buy bank loans, and Leon Black's Apollo has bought $1 billion of distressed loans and bonds....

In addition to the buyout firms, traditional loan investors and hedge funds are also buying the debt.
Maybe 'discount takers' are 'master' counterpartying.. hey look I'm a long way from sure about this.. the language has twists and turns for starters.. but understandable would be lose now(certain) vs later(uncertain)..

pp J
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A Quickie.. [Mar. 20th, 2008|02:27 pm]
On how ATTITUDE can and will lead, too.

I never thought I'd say this but therein Rosenberg@ML is vg value..

pp J
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Update: MAVs.. [Mar. 19th, 2008|05:06 pm]
Mortgage-Lender-implode appears to have taken at least one important aspect - the capacity for derivatives' misuse/abuse etc by unscrupulous financial market operators - as related in the above post..
``... even as you read these words, derivatives are emerging as the new core of the crisis. And derivatives are definitely not limited to Bear Stearns. Among investment banks that do not report to the Fed, the biggest players are Lehman Brothers, Goldman Sachs, Morgan Stanley and Merrill Lynch. And among those who do report to the Fed, the five dominant players in derivatives that I mentioned a moment ago are Citibank, Bank of America, Wachovia, HSBC and the biggest of them all: JPMorgan Chase. We believe all are vulnerable, in varying degrees, to the kind of crisis that struck Bear Stearns last week. ''
It is far from inconceivable that JPMC had a very distinct interest in acquiring BS. And in the circumstances is unlikely to be forthcoming either on its own account or the acquisition's insofar that regard. A point which I sense is contributing to greater market confidence - (displayable in the BS stock price today). viz. this could be the truly BIG ISSUE in respect of corporate America and indeed americans corporate around the globe..

pp J
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Update 4: CoD... [Mar. 19th, 2008|11:15 am]
In from TOL this insider from BS. Seeks to be amused - distractedly - and succeeds in giving me a laugh at the pub name - Slug & Lettuce on London's Canary Wharf(harks back to 70s/80s "I fink four!" crowd - but thereafter, aside from some useful refs re bonus splits, payouts etc the "wake" wore on..

and off.. into the following morning's headaches..

If this should happen to reach Times Online screens I'd like them try for an answer. This question: MAV = Master Asset Vehicles - how new/novel are they?

Master trusts I know about and, in terms of securitization etc they can appear to be used in some very 'unusual' ways.. structured (SIV-like) for instance.. but when you get to scrutinise them as such possibs they appear to feed on contribs only ie no actual other collateral.. and you can't help but think that the deceit potentials of language alone are being deployed against lesser intellects of investor populations..

Answers welcome..

pp J
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CoD: Update 3.. [Mar. 18th, 2008|08:44 pm]
And NOW for Jim Rogers's take on BS - (h/t: ML-I) —
'You know the reason they did it this way was because, if Bear Stearns had to declare bankruptcy, you'd realize that Bear Stearns paid out billions of dollars in bonuses in January - six weeks ago. If he let them go into bankruptcy, they all would have had to send back their bonuses. This is what they're doing, they're doing it so they don't have to give back their bonuses.'
pp J
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CoD: Update 2 — [Mar. 18th, 2008|08:14 pm]
These folk have kindly collated and linked to a selection of articles on BS.. includes individuals now biting the bullet big time.. (IMO one of two words in that could be worth local looksees) and no one but no one would leave off JPM possibs.. and there are others as you'll see..

pp J
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COD: update 1 .. [Mar. 18th, 2008|04:09 pm]
To hand this pull from Ken Sweet@FoxNews(biz):—
Bear’s employees currently own about one-third of the firm’s stock. It was considered a point of pride among Bear employees to own stock in the firm, and selling that stock was considered bad form. Indeed, employees often received their annual bonuses in the form of stock. Bonuses received recently are now basically worthless.

Even the company’s top management was required to own significant stakes. Former Bear Chief Executive Jimmy Cayne’s was worth nearly $1 billion as recent as last year when the firm’s stock was at $170. That paper wealth has now evaporated.
Apparently some of the offices' foyers were tagged by real estate agents on a basis that (former) employees would soon be selling down on their prestige properties etc..

pp J
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Catch of the Day - whatever (numeral it is) [Mar. 18th, 2008|02:40 pm]
Regarding the calls for greater clarity in current status terms of the US markets, Tom Palley - h/t MarkT@EV - has penned the following:—
The current problem is that asset prices are falling owing to lack of confidence, triggering margin calls on these non-bank lenders. That has compelled them to sell assets, further driving down prices and triggering further calls. Some lenders have been unable to meet these calls, threatening bankruptcy even though their underlying loans are still performing. That threatens a cascade of asset price collapse.
in his latest piece entitled Preventing a Financial Crash.

In the matter of asset prices for Bear Stearns, for example, SEC filings reveal that in reality BS was carrying more than $28 billion in 'level 3' assets on its books at the end of fiscal 2007. Set against a net equity position of only $11.7 billion.

In other words, the company's balance sheet was highly leveraged to many untradable and potentially worthless assets.. (Level 3s). Furthermore, elsewhere in the same filings was straight out declaration of 'fair value' attribution all known assets. The L3s are not market valued in any real sense of that term.. REPEAT: it's own balance sheet.

Which to me - and even allowing a beneficial interpretation on incompetence versus criminality - explains the ready and great willingness of BS people to sellout at fractions of their previously claimed/rated stock values.

Unrelated to the above perhaps, but in BS's case we must recognise that it was essentially a COUNTERPARTY player. [ every deal; requires at least two parties like buyers and sellers.. to a seller the other party is counterparty..and vice versa ]. At 30 November 2007 filings show how BS had contract amounts approximating $13.4 trillion and 'business' had grown to this in a single year(from 2006) by $4.66 trillion. [ Who are holding the other ends..? ]

For illustrative purposes, these figures are big enough to embrace the whole of the US property market. IMO they are why the US Fed participated in the JP Morgan buyout. Without it, and books going to the bankruptcy wolves instead of a secure deep vault at JPM, all hell would have broken loose.

pp J
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