And this went undetected for how long?
Feb. 20th, 2009 09:53 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdGood morning.
First: no panic right now, which is good. About three minutes after I posted, the markets did bounce, albeit weakly. Most of the up forces seem to be in the NASDAQ, I don't know why.
I haven't talked much about the Madoff ponzi-scheme masquerading as a money-management fund, but this story even made me blink - apparently he bought no securities in 13 years with that US$50B. None. I wonder what this tells us about the potential recovery rate?
This is not going to help confidence, which continues to be a hole in the ground. Are your stock investments really there? Madoff's firm was supposedly under surveillance for 15 years, longer than the period of time in which it failed to buy anything, and nothing happened until just recently.
Also at that link: Karl at Market Ticker thinks he's sniffing out capital flight. I'm considering the case for that; if we are, we're also seeing a lot of flight-to-dollars at the same time, which is an interesting combination, but possibly one that could be triggered by foreign investors settling US positions on the way out the door. It has become almost impossible to sell Fannie Mae/Freddie Mac securities, however. (And since Bloomberg is screwed up right now and not showing story text, try this copy-pasted repost here.) Basically they want the same US government guarantees as granted to Bank of America, Citigroup, and some others. The problem with that is that's another huge liability put onto the taxpayer, through Treasury sales.
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hubbit points me to Consumerist thinking that the market this morning was panicking about bank nationalisations. That's fair, it is the talk of the town. But Mish wants to know what kind of bank nationalisation you're talking about here, because that matters quite a lot.
Oh, and also about that earlier comment about anger, check this out - CNBC's Rick Santelli flips out, and the Chicago trading floor cheers him on. They're outraged about Mr. Obama's mortgage/foreclosure stabilisation plan. Note, of course, that these people were generally quite happy when far more money was thrown away at Mr. Bush's attempted bailouts of banks, but, well, goose and gander comparisons aren't for them. Market Ticker pointed out a key element from this plan, as related by Bloomberg:
Almost out of time, so have a bunch of links and minipoints:
GM will want another US$16.6B in said as it announces 47,000 layoffs. A layoff-management lawyer whose firm handles layoff legality for large corporations warns that much larger rounds are coming. The New York Manufacturing Index plunged to -34.7, which is a record. Moody's warns about US and UK credit ratings again.
We're seeing the effects of the sales-tax bomb here, with Metro Transit talking about as much as $100M in shortfall.
Brad Setser is asking how much we should be worried about Dubai; Mish worries about jumping protectionism as Asian export economies free-fall (Japan's GDP fell 12.7% annualised in the last quarter) and the European economy freezes up (and faces its own banking system meltdown); Singapore exports fell 35% in January; the Chinese government is engaging in some serious monetary contraction efforts, which is interesting (if this weird article is accurate, anyway); India reports that sales are being propped up domestically by purchases from rural areas less affected by the global meltdown, which certainly won't do them any harm.
Rachel Ziemba at the CFR talks about China's major resource buys in recent weeks. (C.f. the spike in dry bulk shipping.
Markets are breaking down again, hard; the NASDAQ in particular has dropped below the opening lows. Hopefully that's not it for the bounce.
Good luck.
eta: Huge (by currency standards) spike down of the US dollar against, hum, everything, about an hour ago. Credit-default swaps on major banks are soaring - that's actually from yesterday but I'm told it's still going.
eta2: White House Press Secretary Robert Gibbs says the Obama administration favours a "privately held" banking system.
First: no panic right now, which is good. About three minutes after I posted, the markets did bounce, albeit weakly. Most of the up forces seem to be in the NASDAQ, I don't know why.
I haven't talked much about the Madoff ponzi-scheme masquerading as a money-management fund, but this story even made me blink - apparently he bought no securities in 13 years with that US$50B. None. I wonder what this tells us about the potential recovery rate?
This is not going to help confidence, which continues to be a hole in the ground. Are your stock investments really there? Madoff's firm was supposedly under surveillance for 15 years, longer than the period of time in which it failed to buy anything, and nothing happened until just recently.
Also at that link: Karl at Market Ticker thinks he's sniffing out capital flight. I'm considering the case for that; if we are, we're also seeing a lot of flight-to-dollars at the same time, which is an interesting combination, but possibly one that could be triggered by foreign investors settling US positions on the way out the door. It has become almost impossible to sell Fannie Mae/Freddie Mac securities, however. (And since Bloomberg is screwed up right now and not showing story text, try this copy-pasted repost here.) Basically they want the same US government guarantees as granted to Bank of America, Citigroup, and some others. The problem with that is that's another huge liability put onto the taxpayer, through Treasury sales.
hubbit points me to Consumerist thinking that the market this morning was panicking about bank nationalisations. That's fair, it is the talk of the town. But Mish wants to know what kind of bank nationalisation you're talking about here, because that matters quite a lot.Oh, and also about that earlier comment about anger, check this out - CNBC's Rick Santelli flips out, and the Chicago trading floor cheers him on. They're outraged about Mr. Obama's mortgage/foreclosure stabilisation plan. Note, of course, that these people were generally quite happy when far more money was thrown away at Mr. Bush's attempted bailouts of banks, but, well, goose and gander comparisons aren't for them. Market Ticker pointed out a key element from this plan, as related by Bloomberg:
The average borrower’s home value could be stabilized against a price decline by up to $6,000, the White House fact sheet said.Who's that going to help, then? I don't really know. Marketwatch likes it, though. (See also here.)
Almost out of time, so have a bunch of links and minipoints:
GM will want another US$16.6B in said as it announces 47,000 layoffs. A layoff-management lawyer whose firm handles layoff legality for large corporations warns that much larger rounds are coming. The New York Manufacturing Index plunged to -34.7, which is a record. Moody's warns about US and UK credit ratings again.
We're seeing the effects of the sales-tax bomb here, with Metro Transit talking about as much as $100M in shortfall.
Brad Setser is asking how much we should be worried about Dubai; Mish worries about jumping protectionism as Asian export economies free-fall (Japan's GDP fell 12.7% annualised in the last quarter) and the European economy freezes up (and faces its own banking system meltdown); Singapore exports fell 35% in January; the Chinese government is engaging in some serious monetary contraction efforts, which is interesting (if this weird article is accurate, anyway); India reports that sales are being propped up domestically by purchases from rural areas less affected by the global meltdown, which certainly won't do them any harm.
Rachel Ziemba at the CFR talks about China's major resource buys in recent weeks. (C.f. the spike in dry bulk shipping.
Markets are breaking down again, hard; the NASDAQ in particular has dropped below the opening lows. Hopefully that's not it for the bounce.
Good luck.
eta: Huge (by currency standards) spike down of the US dollar against, hum, everything, about an hour ago. Credit-default swaps on major banks are soaring - that's actually from yesterday but I'm told it's still going.
eta2: White House Press Secretary Robert Gibbs says the Obama administration favours a "privately held" banking system.
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no subject
Date: 2009-02-20 06:46 pm (UTC)Darkside of the Looking Glass (Failure To Deliver/DTC lecture)
http://www.businessjive.com/
This can be found linked from the FinancialSense.com series on The Crime of the Century series they ran last year: http://www.financialsense.com/metals/crime/main.html
These are very crazy times.
no subject
Date: 2009-02-20 07:07 pm (UTC)no subject
Date: 2009-02-20 07:36 pm (UTC)no subject
Date: 2009-02-20 08:12 pm (UTC)