Quote:
Originally Posted by GreyWolf
This is probably just the tip of the economic iceberg showing in the distance.
It's an unknown entity, but estimates of around $300bn in loans could be at risk and likely there will be plug-pulling by the bankers/lenders to mortgage companies and more Chapter 11 filings.
Yesterday the Fed dumped another $3.5 bill into the banking system to keep some liquidity. So far they have dumped $71 billion since 9th-10th August - this is in the league of Fed support after 9/11.
All the other signs of economic problems already exist - eg tendency to use cards for basic needs like food, bill paying etc, and not for the traditional impulse buying - retailers are next on the hit list.
Overall - a very bleak economic outlook and most likely further reductions in dollar currency value which, in turn, is not helpful for costs of imports. It's a friggin economic horror story - but it started a long time ago  |
There were rally in mortage and banking stocks yesterday, I really dont get it, the worst times are in the front us, so I have some put options and these fucks go up, like everything was ok.
Going to buy put option on JPM:
"Back in 1998, at the time of the last debacle, JPMorgan Chase, the world's largest player in the derivatives market, had $3.80 in credit risk for each dollar of capital.
That was already over the top, in my view.
And now, the OCC reports that JPMorgan Chase has a whopping $7.99 in credit risk per dollar of capital, or more than double its 1998 risk level!
HSBC, which was barely a player in the derivatives market back in 1998, now has $5.65 in credit risk per dollar of capital!
Citibank: $2.03 per dollar of capital in 1998; $4.60 today.
Bank of America: 90 cents on the dollar in 1998; $2.88 today.
Wachovia: Just 18 cents on the dollar in 1998; $1.56 today.
This means that ?
Even though Wachovia has the least exposure to derivatives among the top five, it is still extremely vulnerable ? with more at stake than its entire capital.
America's largest bank ? Bank of America ? is also embroiled up to its eyeballs, risking over FOUR times its capital.
And the single largest player in the derivatives market - JPMorgan Chase - is taking the most risk of all: EIGHT times its entire capital, according to the OCC's data. "