The Credit Criisis is Over!

ummmm, not exactly.

Buy now or be priced out forever

ummmmm, exactly. Read the details.

Tune in to Bloomberg radio.

WB:

Are you countering my statement, or countering JM's statement? Because if you truly believe that "there will be no more credit crunch," you're sorely mistaken.

WB squared: "you're sorely mistaken."

We don't know every last detail, but from what I understand even healthy banks will be allowed to offload their garbage.

Miller sees an L-shape. “It will move sideways until credit is fixed,” Miller said. “Housing doesn’t get fixed until credit does and that’s going to take a while.”

Yeah, and the consumer will wind up bailing out Wall Street, by paying for it in the end! Then Fed Government has now decided what financial institutions are worth. When the short ban 'time out' is over, everyone will rush back in. They should just ban naked shorts, and bring back the uptick rule. Why should the taxpayer, who didn't take undue risk, have to bail out Wall Street?

The credit crunch is no where NEAR being over.

I agree with you 100%, except that the plan that they're coming up with will probably address all of that. Congress is going to require it.

Naked shorts are already illegal, just they never enforced the law. The uptick rule is important.

"Why should the taxpayer, who didn't take undue risk, have to bail out Wall Street?"

Because the result if we didn't would be worse - total collapse of the financial system, which relies on trust and transparency. What you Republicans don't understand - and I'm pretty much a middle-of-the-road guy - is that the reasons why these regulations were instituted were a) to limit the government's exposure to risk; and b) to smooth out market gyrations. Cox at the SEC knows nothing about Wall Street - he's another political hack appointed by Bushistotle. His hedge fund buddies probably convinced him that the uptick rule wasn't needed - knowing as they did that it could cause huge swings in very short amounts of time.

Sorry, but re-regulation is needed, but if you want more credit-card federal deficits and carried-interest tax subsidies for billionaires and huge market gyrations, free-marketeer McCain is your man.

malraux- I agree 100%, but the real question is are you more likely to make money in stocks in the next several months? Everyone, including myself, talks about moral hazard, but it's clear that you and I worrying about it doesn't matter.

If you went to a Vegas casino and they told you that there was a 99.9% you will lose, would you place the bet. Well IMHO that's exactly what the Fed as done. Forget about it, it's much bigger then you or I. I;m not saying it's right, it's just fact. So do you get on the crowded bus or wait for the one behind hoping you can get a seat.

Today I'm getting on the bus and you want to know why? Because it's a federally subsidized bus and the rides free.

Basically, isn't the taxpayer now paying for the foolish Republican idea of small government & big business? It appears to have worked out very well. It's called fascism, no?

WB and dco:

I do understand that Paulson (and Bernake) wer reacting to real and palpable fear in the market, in the end result. But I don't believe total collapse of the entire financial system was truly imminent. As far as smoothing out market gyrations, volatility is now MORE explosive than ever.

And as for being called a "Republican." well, that's just plain mean.

Oops - MARKET OPEN - Oh boy - mayhem!!!

I apologize for calling you a Republican. However, the market was in fact at risk of a total collapse. Look at the difference between the Fed Funds rate and LIBOR - people were actually paying negative interest to move into treasuries, just for the security. It was a panic that would have drowned the system.

Fidelity's website is not able to keep up with orders.

I do understand that we were in the middle of a national crisis that has (only for the moment) been averted. There was a very real possibility of Goldman and Morgan going under. So in that way, we're talking about maintaining the general welfare of society. But the perception still exists (correctly, IMHO) that the taxpayer is bailing out the greed of not only themselves (after all, there are 3.5MM people who over-reached severely on their home mortgages to the tune of 2 Trillion dollars, and those are the mortgages that had to come off the books), but also the extreme greed of Wall Street proper (I might add as a side note that after this they'll still have to buy in the CDS's).

But this still begs the obvious question - how can you work if you ban shorts? It's stupid!

Banning shorts is just a temporary measure, but the problem is it's very hard to identify naked shorts in the short-term, which is why they did it. The uptick rule must be reinstated, and mark-to-market must be reviewed.

this whole thing about blaming the shorts is a canard. MS went down in price b/c they have real fundamental problems as a result of the bad debt on their books.

now on to other matters. No one knows how the the resolution trust II will work. The best case scenario is that the debt is given to the government, they are able to establish a market of some sort for it, but the banks are able to recapitalize and start lending again...we need the normal course of finances to happen. For the past two days the gloabl markets completely seized...we were staring catastrophe in the face.

Even if the bonds start working normally again...prices are still going to tumble...you people seem to forget that unemployment is rising.

Stevejhx: what is happening to you?...your simplistic reasons for what is going on...call free market people republicans is just silly.

We are all to blame for this mess. Repubilicans and Democrats both forgot about regulation( you forget it was the democrats who were so supportive of the government agencies get too big) and the american people. We are the ones who think 5% mortgages are our birthrate. We are the ones who if we can't afford something put it on credit.

Poiticians give the people what they want...you want to blame someone... blame yourself

steve - did you see William Isaac's commentary in the WSJ?

http://online.wsj.com/article/SB122178603685354943.html

This isn't a Republican or a Democrat issue, it's not about too much or too little regulation. It's about ineffective regulation, based on Depression-era laws that are unrealitic given how the industry is structured today. It's about whomever's been in Congress chairing the key posts in the House & Senate (who happen to be Democrats) and have made some, IMHO, damaging policy decisions (i.e. expanding Fannie Mae's powers).

It's easy to blame Bush because he's the guy in charge, and has been conspicuously silent this week. But he did appoint Paulson who at least seems to understand how to address things.

Bailouts suck, and no company wants one. But the alternative would have been much worse.

From the New York Times today: "Lenders of all types had already been raising the bar for borrowers, turning away all but the best customers. This week, they became even less willing to part with their money, further crimping budgets and family spending. American Express, to take one striking example, is reducing the maximum credit limit for half of its tens of millions of cardholders."

The credit crisis has just begun.

http://www.nytimes.com/2008/09/19/business/economy/19econ.html?partner=rssnyt&emc=rss

WSJ has 2 mentions and an op ed today on rescinding mark to market rules, which should have been done after Bear imploded.

LICComment---this is what I think should have been done straight away after Bear. Its an inherently stupid accounting rule which was meant for more mundane markets, not ones like this. It should have been suspended earlier in the cycle.

All of these talking heads referring to "bad debt" and "toxic" paper are not understanding that most of the MBS, ABS, CDO paper still has inherent value tied to valid assets. Its the paper thats illiquid, not the underlying assets necessarily. But "toxic paper" sounds better on MSNBC to the uninformed.

According to the papers there's another $1.5 trillion of ARMs that are going to reset over the next 2 yrs.

Democrat*IC*, uptowngal. Step away from the Limbaugh memo.

"All of these talking heads referring to "bad debt" and "toxic" paper are not understanding that most of the MBS, ABS, CDO paper still has inherent value tied to valid assets. Its the paper thats illiquid, not the underlying assets necessarily. But "toxic paper" sounds better on MSNBC to the uninformed."

I agree.

I thinks it's clear that fed is getting prepared for the next wave.