Thursday, September 11, 2008

What If?

Listen, I'm not an economics guy. My background isn't in finance. So I'm largely confused by all the possible bank failures and brokerage house disasters.

My question is this... what if all these big houses fail? With all the derivative shit and "counterparty risk" what would it mean to regular people?

If our country basically goes bankrupt, if the FDIC doesn't have enough money to insure the deposits of just the WaMu customers, what happens?

The Pixies, "Dig For Fire"

The RO Report, "Pigs Flying In Frozen Hell" Edition

The tone in the chat room this morning was unbelievably bearish. Not one trader was considering buying stock... we all thought the "end was nigh," and that every company that has any exposure to "American dollars" was suspect and secretly on the verge of bankruptcy.

God Bless Bank Of America for once again, saving the market.

Apparently, rumors were circulating all day about a BAC buyout of LEH, but it wasn't reported until the very end of the day, so that panic short covering would paint the tape at the close most effectively, before people had time to think things through.

Just because BAC has a penchant for throwing good money after bad doesn't mean we're not doomed. Remember, they were the geniuses who threw 2 billion at CFC back when CFC was trading over $20. Remember that? ROTFLMAO!

Anyway, doom was the theme for the RO today. Out of 21 traders, 5 were gross positive, or 24%. Worse still, I, "Trader S" was the top dog. Trust me, I'd rather be top dog on a good day, so today's victory is bittersweet at best.

Here's the top 5:

1. Trader S, $1,474 on 37,000 shares traded.
2. Trader I, $744 on 18,000 shares traded.
3. Trader H, $469 on 2,700 shares traded.
4. Trader G, $463 on 220,400 shares traded.
5. Trader J, $336 on 100 shares traded.

And the bottom:

1. Trader B, -$22,043 on 1 million shares traded.
2. Trader Z, -$20,379 on 190k shares traded.
3. Trader F, -$8,600 on 258k shares traded.
4. Trader L, -$5,624 on 122k shares traded.
5. Trader O, -$5,602 on 112k shares traded.

I Call Bullshit

At 3:55 they announce BAC for LEH talks.

Maybe the PPT is real afterall... I mean, you see that move in the futures?

Hey, you know what's really funny? Remember this? That was when CFC was trading $21.82. I'm sure this LEH deal will be just as smart.

AIG Crumbling

Folks, this is getting ugly fast, but oddly enough, the Dow is only down 100 points.

Eerie again.

Meanwhile, "Trader D" made a good point earlier. If the government is going to nationalize everything, why wait until the companies are going bankrupt and suck? As he put it, "why not buy Goldman now and try to make a little cheese for the taxpayers?"


Lehman Crumbling

Down 44% pre-market, to about $4 a share. 158 years on Wall Street, dissolved in 2 years.

Check out the monthly, and this article from WSJ.

Also, "the Fly" has linked this guy a lot in the past, Denninger, but check out his post today about WaMu. These are scary times... to me, it feels like things are going to get a lot worse.

Here's a brief snippet, and Mr. Denninger, I couldn't agree more.

"Congratulations America; watching American Idol and now NFL Football instead of being responsible citizens and demanding that Congress do their damn job of oversight, instead screaming for bread and circuses means that you have screwed your children and grandchildren by ladling up even more debt on their shoulders - and lots of it."