Rolling US Economy Into The Shitbin Thread

Reminder to self: do not check IRA Roth account
Reminder to self: do not check IRA Roth account
Reminder to self: do not check IRA Roth account

i wonder if the fallout of this is actually going to be the thing to bring down housing costs in nyc. i read that they are estimating 100,000 jobs cut on wall street this year. empty condo town usa.

― bell_labs, Monday, September 15, 2008 5:12 PM (52 minutes ago) Bookmark Suggest Ban Permalink

who is going to live in the MYNT and other such ugly ass locations now?????

My OMGWTF money is in a (non-FDIC) Vanguard money market fund -- one of those where if it breaks the buck then yes we will have bigger problems than worrying about whether the fund has "broken the buck." As in, "pass me the drumstick for that rat we're frying up here, Tom Joad." that said, these funds may be safer -- or more liquid -- than funds in some banks these days.

Also, for the next few months I may have front-row seats to this Chernobyl-style bank fuck-up. Good times indeed ;_;

http://graphics8.nytimes.com/images/2008/09/15/business/lehman.531.jpg

(As found outside Lehman offices this morning, sez the NYT)

I am Spartacus!

I sent some of my friends at Lehman emails, wondering what was up. Then I read in Dealbook or some shit that the bank shut down their email yesterday. CAN YOU IMAGINE THOUSANDS OF IB ASSHOLES WITHOUT THEIR BLACKBERRIES??!!?!?!?!

Paulson has been pretty good in this.

omg want (xpost)

i wonder if the fallout of this is actually going to be the thing to bring down housing costs in nyc. i read that they are estimating 100,000 jobs cut on wall street this year. empty condo town usa

No.

NYT: "Nonetheless, he argued that the city remained in relatively strong economic shape. The city unemployment rate is at 5 percent, well below the national average of 6.1 percent. The vacancy rate for Manhattan office space is 5.4 percent, less than half the national average. Real estate values, which have plummeted nationwide, have held fairly steady in New York — in part because of international interest."

although with Restaurant Week getting extended for what, a month, it seems like at least some sectors are being hit.

Fallacy of hasn't happened so far = won't happen

yeah, the Eurotrash demographic is still buying Manhattan real estate. The party may be over for parts of Brooklyn, Queens, and Hudson County NJ

Even rich, property-buying eurotrash have finance jobs, use credit, have money in equities, etc.

given that LEH employees are getting 6-9 months severance packages, I really don't see a huge majority breaking their leases. And eurotrash still get a nice deal on the exchange rate.

Also, Black Swan to thread, pls.

No, Black Swan needs to stay where it is, please, puddling around in an unwritten Tom Robbins book.

Rich, property-buying eurotrash don't have "jobs" as you or I know them

I'm referring to this already written book called The Black Swan, which is awesome, and unfortunately, goes unread by the vast majority of IB/HF/PE asswipes out there.

that book is so badly written

irrespective of the quality or novelty of its ideas

and none of this was a black swan, this was just a bunch of greedy fuckos being shameless and refusing to acknowledge that they were lying to each other. Enron wasn't a Black Swan either

the point of a black swan is that people operate on the assumption that a perfect storm won't happen--attribute it to greed or ignorance or whatever you want. Read the book.

I recommend "Why Most Things Fail" by Ormerod as another good read, though, for people interested in alternative models of economic activity that aren't Freakonomics-esque BS

That is a GREAT book.

And yes, obviously greed and decoupling from risk play a huge role here

The guy who wrote it comes across like a clown and a hustler, and anybody who claims that what's happening now is a "perfect storm" i.e. a once-in-a-lifetime combination of seemingly unrelated events that produce a momentous calamity, would fit that description also.

Talking about the Black Swan

"Why Most Things Fail" is a good title for a book.

I'm just so glad that the folks entrusted with other peoples' money who subsequently pissed it into the wind are going to let us all share their pain - it's so democratic

perfect storm

perfect storml?

lol

haha, did don weiner just create a fake wiki page to try to make tracer look like he cribbed, only to have it deleted moments later?

haha, yeah, I have that much time on my hands. try deleting the "l" (sorry about my linkage error) and you get the definition:

"the simultaneous occurrence of weather events which, taken individually, would be far less powerful than the storm resulting of their chance combination"

which is what I was getting at, obviously.

I don't know where Tracer got his definition, but I guess it worked for his argument.

I got it from my head!!

(That was me who made that page, derr)

Asia currently diving: http://finance.yahoo.com/intlindices?e=asia

although with Restaurant Week getting extended for what, a month, it seems like at least some sectors are being hit.

it's extended every year (for select restaurants)

No, Black Swan needs to stay where it is, please, puddling around in an unwritten Tom Robbins book.

now wait a minute - reference, please?

"Why Most Things Suck" : an anthology featuring non-fiction by Thomas Frank, Jim DeRogatis, Chuck Klosterman, Jonathan Franzen, Rick Moody, and other luminaries.

So Wall Street got fucked today.

Besides, if this is a "black swan", how come it's like the 10th one this year?

Aw cmon, *everyone* in the banks has either read The Black Swan, or is aware of its central proposition--it's like a number one best seller (at least here in the UK).

I find the book quite disingenuous in some ways--he spends a long time talking about the fallacy of using the normal distribution in models, yet the idea of adjusting models to fatten out the tails of the distribution is almost as old as the Black-Scholes model itself. Taleb knows this--he's fully aware of what a volatility surface is.

There were clearly problems with the models people were using--severe and utterly retarded ones on the credit side--but The Black Swan is a straw-man argument.

so which upcoming story is worse ? oh easy for me to say it's this one, since I've had an acct there since February...

I'm returning to BoA now

Monday, September 15, 2008 - 2:01 PM PDT
Chase seen as a likely suitor for Washington Mutual
San Francisco Business Times

http://www.bizjournals.com/sanfrancisco/stories/2008/09/15/daily18.html?t=printable

J.P. Morgan Chase & Co. is seen as a likely suitor for Washington Mutual, which is staggering under huge mortgage losses.

Earlier this year, Chase made overtures to WaMu that were rebuffed. The New York bank reportedly offered a stock-swap buyout valued at $8 per share, although other reports put the buyout price at slightly more than $4 per share based on conditions such as contingent payments made based on the performance of WaMu loan portfolio performance. Instead, WaMu went with a $7 billion financing led by TPG Capital, formerly Texas Pacific Group, that valued WaMu at $8.75 per share. TPG structured the deal for its 13 percent stake in WaMu so that it’s made whole if the bank sells for less than it paid within 18 months of the April investment.

WaMu’s shares (NYSE: WM) closed Monday at $2 per share, down 26 percent. Last week, Chase was reportedly in advance talks with WaMu again about a potential deal.

Also fueling speculation on a WaMu sale is the board’s decision this month to oust long-time CEO Kerry Killinger, who resisted selling the thrift. He was replaced by Alan Fishman.

“Killinger was fighting to shrink the balance sheet and keep the bank independent,” Dick Bove, analyst at Ladenburg Thalmann, told the New York Post this week. “By adding Fishman, who’s known as a guy who can get a bank ready for sale, they removed an important obstacle.”

Other banks that have been cited as potential suitors for WaMu include Wells Fargo (NYSE: WFC) and HSBC.

Chase (NYSE: JPM) could be attracted to Washington Mutual’s large branch network in areas where Chase has none. Specifically, key growth markets such as California and Florida. San Francisco bankers have long said it’s only a matter of time before Chase operates branches in the Bay Area.

A sale is looking increasingly likely for Washington Mutual, possibly in a government-assisted transaction. Should WaMu fail, the government’s already on the hook for the bulk of the bank’s long-term debt that’s owed to the Federal Home Loan Bank in San Francisco.

“The cost to the FDIC if this company fails is likely to be quite high,” Bove told the New York Post, adding that such a huge bank failure could cost the Federal Deposit Insurance Corp. $24 billion. One factor in making the bank’s failure so costly is that most of the bank’s deposits are mainly from mass-market depositors with relatively small balances that are well under the FDIC’s $100,000 insurance limit. Bove said the average size of WaMu’s checking and money market accounts is only $5,200.

Bove suggests that the best solution for resolving the WaMu situation may be the sale of WaMu to Chase or another party with the FDIC agreeing to cover all losses above a specific threshold.

Last week, Bove issued a note to clients suspending his rating on WaMu, which was “neutral” at the time. He made the move, citing the company’s memorandum of understanding it had received from regulators. He also noted in the Sept. 11 report to clients that he doesn’t expect WaMu to return to profitability until mid-2010.

http://online.wsj.com/article/SB122148503202636197.html?mod=special_coverage

AIG Faces Cash Crisis
As Stock Dives 61%
By MATTHEW KARNITSCHNIG, LIAM PLEVEN and SERENA NG
September 16, 2008

American International Group Inc. was facing a severe cash crunch last night as ratings agencies cut the firm's credit ratings, forcing the giant insurer to raise $14.5 billion to cover its obligations.

With AIG now tottering, a crisis that began with falling home prices and went on to engulf Wall Street has reached one of the world's largest insurance companies, threatening to intensify the financial storm and greatly complicate the government's efforts to contain it. The company, whose stock fell 61% yesterday, is such a big player in insuring risk for institutions around the world that its failure could shake the global financial system.

AIG has been scrambling to raise as much as $75 billion to weather the crisis, and people close to the situation said that if the insurer doesn't secure fresh funding by Wednesday, it may have no choice but to opt for a bankruptcy-court filing.

"The situation is dire," a person close to AIG said.

This is "ironic" now right? It's not really funny, except that it kind of really is...

http://www.jeroenbours.com/gallery.php?type=work&uid=88

yeah, the Eurotrash demographic is still buying Manhattan real estate.

Don't know how many of these there are with access to funds. EU getting hit pretty bad too

Roubini can be a good read on some of this stuff. Over a longer time frame Galbraith

Haven't read black swan but Talebs other book is supposed to be a lot better?. Not really sure I agree with the concepts of black swans (Greenspan may be the swan himself, but is the post 9/11 debasement of the $ really a change in policy from anything post-1973? or even post world war two?)

Anyone read this? (I haven't - just saw it looking for something else)

http://www.amazon.com/Dollar-Crisis-Causes-Consequences-Cures/dp/0470821027

According to a Wall Street Journal bit, "Goldman posts sharply lower profit amid "marked decrease in client activity and declining asset valuations.""

Tracer, was your reference to this? have you been there?

WSJ:

London's commercial real-estate industry is more vulnerable than New York's because it has seen more building of office space in recent years. More than eight million square feet are being built in London's financial district. About 80% of that is considered "speculative," meaning the developer hasn't signed leases for it yet.

In London, Lehman leases a one-million-square-foot building in Canary Wharf and occupies 80% of that space, subleasing the rest. Lehman officials haven't announced plans for those offices. In New York, by contrast, there are only a handful of speculative office buildings.
[Bloomberg, Michael]

Michael Bloomberg

Still, stocks of companies that own Manhattan real estate were hammered. Merrill's biggest landlord in New York, Brookfield Properties Corp., saw its stock plummet 18% to $17.40 Monday as of 4 p.m. New York Stock Exchange composite trading.

In bankruptcy-court protection, Lehman's leases could be canceled, leaving landlords on the hook for gobs of space as job growth contracts. If Lehman gives up three-quarters of its roughly 2.7 million square feet of office space, the New York office vacancy rate would rise from the current 8.5% to 11.5%, a level not seen since the period after the Sept. 11, 2001, attacks, according to an estimate by Peter Riguardi, the New York president for real-estate brokers Jones Lang LaSalle.

That Bloomberg bit was a picture on my clipboard, not a quote attribution.

i wonder if my goldman sachs schoolmates will show up to class this week