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KABOOM! 54T up in smoke next week...

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KABOOM! 54T up in smoke next week...

Unread postby Roccland » Sat 04 Oct 2008, 21:02:29

Link

And discussed here at TF...

Got bunker?
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Re: KABOOOOOOOOOOM! 54T up in smoke next week...

Unread postby Tyler_JC » Sat 04 Oct 2008, 21:38:31

For those of us without an account at FT.com, here's the text

This should be an interesting event to watch.

Maybe those Lehman money wizards will get temporary work explaining what all of these derivatives are supposed to be worth.

My guess is somewhere between zero dollars and face value... probably leaning more towards zero.
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Re: KABOOOOOOOOOOM! 54T up in smoke next week...

Unread postby shortonsense » Sat 04 Oct 2008, 21:50:54

$this->bbcode_second_pass_quote('Tyler_JC', '
')
This should be an interesting event to watch.

Maybe those Lehman money wizards will get temporary work explaining what all of these derivatives are supposed to be worth.

My guess is somewhere between zero dollars and face value... probably leaning more towards zero.


Has anyone ever placed a public value, or at least ventured a way to calculate such a value, based on some REAL information, like what someone has sold these things to someone for?

It strikes me that it would depend on the combination of good credit / bad credit weighting inside a particular tranche.
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Re: KABOOM! 54T up in smoke next week...

Unread postby Mo_Oil_Dave » Sat 04 Oct 2008, 23:40:18

Here is something I found on a tin foil hat site.

The Fed has informed Bank of America to be ready for a one-week universal shutdown of the banking system, including access to checking accounts, savings accounts and credit cards.

If you Goog the first sentence it pops up in different places. My question Is Why just B of A?

No sources, of course.

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Re: KABOOOOOOOOOOM! 54T up in smoke next week...

Unread postby perdition79 » Sat 04 Oct 2008, 23:49:08

$this->bbcode_second_pass_quote('shortonsense', 'H')as anyone ever placed a public value, or at least ventured a way to calculate such a value, based on some REAL information, like what someone has sold these things to someone for?

It strikes me that it would depend on the combination of good credit / bad credit weighting inside a particular tranche.


A recent credit default swap auction, for a Canadian lumber company, was settled at 83 percent. Source. That's a high settlement. The Fannie CDS is estimated at $500 billion, and is expected to settle below 50 percent. $250 billion in wealth will evaporate if this happens, and debt insurers will certainly feel such a large amount of money.

Good thing our boy Hank has a brand-new $700 billion dollar checkbook. Between Monday's auction, and the WaMu and Lehman auctions later this month, we should have just enough to hold us over before next month's bailout proposal.
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Re: KABOOM! 54T up in smoke next week...

Unread postby Goatlady » Sun 05 Oct 2008, 00:04:11

Don't know if Bob Chapman at TheInternationalForcaster.com is a 'tin foil hat' site, but his latest entry dated October 4, 2008 talks about the bank holiday in the last paragraph....
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Re: KABOOM! 54T up in smoke next week...

Unread postby DantesPeak » Sun 05 Oct 2008, 00:15:09

I've been saying for a few weeks that we will incredibly bad news as October 1 comes around, as losses from Lehman have to be realized.

So far I've been mostly wrong, because I thought companies would comply with accounting rules right away. However I don't think I will be wrong much longer. Whether these derivatives are settled or not, companies will have to estimate losses and report them in third quarter reports coming soon.

As I said a week ago, the Lehman problem was a nuclear explosion in the financial markets, but it's exploding more slowly than we had thought.
It's already over, now it's just a matter of adjusting.
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Re: KABOOM! 54T up in smoke next week...

Unread postby Eli » Sun 05 Oct 2008, 00:24:17

yup 5 trillion in secured bonds 60 trillion in cds taken out on those 5 trillion bonds, yeah we got problems.

There is no way to bail out this.
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Re: KABOOM! 54T up in smoke next week...

Unread postby ReverseEngineer » Sun 05 Oct 2008, 00:28:46

The Black Hole is pulling it ALL in.

My dad ( a Vice President at Chase Manhattan through the 60s and 70s) used to say, "There is no problem you cannot solve by throwing enough money at it". His two other favorite aphorisms were "There is No Free Lunch" and "There is nothing more satisfying than a good $hit."

Well, you just CANNOT throw enough money at this problem, no matter HOW fast you print it. So he was wrong there. He was RIGHT that there is no free lunch, and somebody has to pay for this somewhere. Far as the last one goes, going down the toilet might be satsifying temporarily, but all the $hit has to go SOMEWHERE. With 6B people, we now live in a WORLD of $hit.

My dad died last year, we were not great friends.

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Re: KABOOM! 54T up in smoke next week...

Unread postby jbrovont » Sun 05 Oct 2008, 02:12:41

The only things that have inherent value, are things that have inherent value. That may sound tauistic, but that's the way it is. If you can eat it, find shelter in it, defend yourself with it, or use it to get anything that does the above, it has value. If you can't, it doesn't.
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Re: KABOOM! 54T up in smoke next week...

Unread postby DantesPeak » Sun 05 Oct 2008, 20:35:02

Nice 60 Minutes video on derivatives:


CBS News
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Re: KABOOM! 54T up in smoke next week...

Unread postby Spanktron9 » Sun 05 Oct 2008, 21:07:40

$this->bbcode_second_pass_quote('DantesPeak', 'N')ice 60 Minutes video on derivatives:


CBS News


Excellent piece, thanks Dante.
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Re: KABOOM! 54T up in smoke next week...

Unread postby Daniel_Plainview » Sun 05 Oct 2008, 21:50:31

$this->bbcode_second_pass_quote('DantesPeak', 'N')ice 60 Minutes video on derivatives:


CBS News


Awesome, thanks!

$this->bbcode_second_pass_quote('', '[')b]"The instruments themselves are at the heart of this mess," Grant says. "They are complex, in effect, mortgage science projects devised by these Nobel-tracked physicists who came to work on Wall Street for the very purpose of creating complex instruments with all manner of detailed protocols, and who gets paid when and how much. And the complexity of the structures is at the very center of the crisis of credit today."
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Re: KABOOM! 54T up in smoke next week...

Unread postby smallpoxgirl » Sun 05 Oct 2008, 21:59:40

$this->bbcode_second_pass_quote('DantesPeak', 'N')ice 60 Minutes video on derivatives:


Very informative. Thanks Dantes.

Who holds most of these CDSs? Does anyone know? If they're central in this, and it seems like they are, then somebody should be making a lot of money right? A CDS just says that if this financial instrument fails, I'll give you the instrument and you give me cash. There's a giver and a recipient. Obviously Bear Stearns, Lehman and AIG were heavy into writing them. Who bought them?
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Re: KABOOM! 54T up in smoke next week...

Unread postby Snowrunner » Sun 05 Oct 2008, 22:12:54

$this->bbcode_second_pass_quote('smallpoxgirl', 'W')ho bought them?
Soveriegn Wealth Funds from what I have read.

Yep, this will be Asia's century. *squeeze*
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Re: KABOOM! 54T up in smoke next week...

Unread postby Eli » Sun 05 Oct 2008, 22:20:52

$this->bbcode_second_pass_quote('smallpoxgirl', '')$this->bbcode_second_pass_quote('DantesPeak', 'N')ice 60 Minutes video on derivatives:


Very informative. Thanks Dantes.

Who holds most of these CDSs? Does anyone know? If they're central in this, and it seems like they are, then somebody should be making a lot of money right? A CDS just says that if this financial instrument fails, I'll give you the instrument and you give me cash. There's a giver and a recipient. Obviously Bear Stearns, Lehman and AIG were heavy into writing them. Who bought them?


Everyone bought them listen to that NPR this American life podcast, it is excellent.

And it is a much worse situation than that, it is more like when one CDS goes boom, then 100 more go boom too.
Last edited by Eli on Sun 05 Oct 2008, 22:23:26, edited 1 time in total.
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Re: KABOOM! 54T up in smoke next week...

Unread postby smallpoxgirl » Sun 05 Oct 2008, 22:21:09

$this->bbcode_second_pass_quote('Snowrunner', 'S')overiegn Wealth Funds from what I have read.

Yep, this will be Asia's century. *squeeze*


So that's what that giant sucking sound is.

If that's the case, we should ban these things, quickly, before any more money exits the country.
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Re: KABOOM! 54T up in smoke next week...

Unread postby aflatoxin » Sun 05 Oct 2008, 22:32:25

$this->bbcode_second_pass_quote('smallpoxgirl', '')$this->bbcode_second_pass_quote('DantesPeak', 'N')ice 60 Minutes video on derivatives:


Obviously Bear Stearns, Lehman and AIG were heavy into writing them. Who bought them?


Here's a clue:

(From a ML Retirement Account 2007 shareholder report) Just a small sample of what is "cash equivalent/stable value" in a MM account

AIG Financial Products Corp.: AA/Aa2 5.03%(1) $ 242 $ 9,425
Bank of America N.A.: AA+/Aaa 5.20%(1) 175 9,055
ING Life Insurance and Annuity Co.: AA/Aa3 5.01%(1) $ (81) $ 14,844
JPMorgan Chase Bank: AA/Aaa 5.56%(1) 111 1,497
State Street Bank and Trust Co.: AA/Aa1 5.01%(1) (116) 14,336
Transamerica Life Insurance Co.: Aa/Aa3 5.07%(1) $ (237) $11,633
UBS AG: AA+/Aaa 4.64%(1) 412 27,835

Each of the above are "wrappers" for the bonds/CDS/CDO's, and whatever else they call them. The "Children" of the above parents are:

Ginnie Mae
Lehman
GE Capital
GMAC
Freddie
Fannie
Countrywide
BofA
WaMu
Bear stearns
Wachovia

From this, My conclusion is that anyone that holds "cash" in a MM account gets to enjoy a little slice of this crappola.
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Re: KABOOM! 54T up in smoke next week...

Unread postby Eli » Sun 05 Oct 2008, 23:03:17

$this->bbcode_second_pass_quote('aflatoxin', '')$this->bbcode_second_pass_quote('smallpoxgirl', '')$this->bbcode_second_pass_quote('DantesPeak', 'N')ice 60 Minutes video on derivatives:


Obviously Bear Stearns, Lehman and AIG were heavy into writing them. Who bought them?


Here's a clue:

(From a ML Retirement Account 2007 shareholder report) Just a small sample of what is "cash equivalent/stable value" in a MM account

AIG Financial Products Corp.: AA/Aa2 5.03%(1) $ 242 $ 9,425
Bank of America N.A.: AA+/Aaa 5.20%(1) 175 9,055
ING Life Insurance and Annuity Co.: AA/Aa3 5.01%(1) $ (81) $ 14,844
JPMorgan Chase Bank: AA/Aaa 5.56%(1) 111 1,497
State Street Bank and Trust Co.: AA/Aa1 5.01%(1) (116) 14,336
Transamerica Life Insurance Co.: Aa/Aa3 5.07%(1) $ (237) $11,633
UBS AG: AA+/Aaa 4.64%(1) 412 27,835

Each of the above are "wrappers" for the bonds/CDS/CDO's, and whatever else they call them. The "Children" of the above parents are:

Ginnie Mae
Lehman
GE Capital
GMAC
Freddie
Fannie
Countrywide
BofA
WaMu
Bear stearns
Wachovia

From this, My conclusion is that anyone that holds "cash" in a MM account gets to enjoy a little slice of this crappola.


True and this is the reason the commercial paper market froze up and is in deep. MM managers have seen other money markets break the buck. Now these guys are no longer loaning out there money overnight to businesses who need it. No one trust the other guy and they know these guys are hiding tons of bad debt.
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Re: KABOOOOOOOOOOM! 54T up in smoke next week...

Unread postby copious.abundance » Mon 06 Oct 2008, 23:49:22

$this->bbcode_second_pass_quote('perdition79', '')$this->bbcode_second_pass_quote('shortonsense', 'H')as anyone ever placed a public value, or at least ventured a way to calculate such a value, based on some REAL information, like what someone has sold these things to someone for?

It strikes me that it would depend on the combination of good credit / bad credit weighting inside a particular tranche.


A recent credit default swap auction, for a Canadian lumber company, was settled at 83 percent. Source. That's a high settlement. The Fannie CDS is estimated at $500 billion, and is expected to settle below 50 percent. $250 billion in wealth will evaporate if this happens, and debt insurers will certainly feel such a large amount of money.

Freddie and Fannie made out better than this Canadian lumber company:
--> 92% <--
No "bunker" needed - so far.
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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