End is in Sight for Writedowns. 3/13/08

[GRG55]

Re: End is in Sight for Writedowns. 3/13/08

S&P Says End in Sight for Writedowns on Subprime Debt (Update5)

http://www.bloomberg.com/apps/news?p...l.E&refer=home

Do you reckon this is correct?

Great question Jim. Evidently even S&P has decided the answer is NO...

"...Bear Stearns's long-term counterparty credit rating was reduced three levels to BBB by Standard & Poor's. The rating may be cut further, New York-based S&P said..."

What is truly interesting is that S&P decided to downgrade Bear's credit rating even though it is about to be backed by the taxpayer...

"...The Fed is taking on the credit risk from collateral supplied by Bear Stearns, which approached the central bank for emergency funds, Fed staff officials said today..."


http://www.bloomberg.com/apps/news?p...d=avLUWqqZsG7s

[jk]

Re: End is in Sight for Writedowns. 3/13/08

Great question Jim. Evidently even S&P has decided the answer is NO...

"...Bear Stearns's long-term counterparty credit rating was reduced three levels to BBB by Standard & Poor's. The rating may be cut further, New York-based S&P said..."

What is truly interesting is that S&P decided to downgrade Bear's credit rating even though it is about to be backed by the taxpayer...

"...The Fed is taking on the credit risk from collateral supplied by Bear Stearns, which approached the central bank for emergency funds, Fed staff officials said today..."


http://www.bloomberg.com/apps/news?p...d=avLUWqqZsG7s

the s&p statement just said we were more than halfway through the write downs of SUBPRIME paper. next comes alt-a, prime, cmbs, leveraged loans, and so on. so downgrading bear doesn't really change the answer to whether we've written off enough subprime. but it might shed some light on write-downs of other kinds. especially in light of the fact that bear's "long term counterparty credit rating" relates to the $13.4 TRILLION in derivatives to which it is a counterparty. gee, given bear's downrating, i guess that means that those derivatives aren't worth $13.4 trillion anymore to whover is on the other side of those derivatives. think those unidentified counterparties will write down the value of their derivatives on monday? wednesday? june?

[GRG55]

Goldman Sachs Poised to Write Down $3 Billion

the s&p statement just said we were more than halfway through the write downs of SUBPRIME paper. next comes alt-a, prime, cmbs, leveraged loans, and so on. so downgrading bear doesn't really change the answer to whether we've written off enough subprime. but it might shed some light on write-downs of other kinds. especially in light of the fact that bear's "long term counterparty credit rating" relates to the $13.4 TRILLION in derivatives to which it is a counterparty. gee, given bear's downrating, i guess that means that those derivatives aren't worth $13.4 trillion anymore to whover is on the other side of those derivatives. think those unidentified counterparties will write down the value of their derivatives on monday? wednesday? june?

The end is nowhere in sight...

Goldman Sachs Poised to Write Down $3 Billion, Telegraph Says

By Sarah Jones
March 16 (Bloomberg) -- Goldman Sachs Group Inc. will announce asset writedowns of about $3 billion this week, partly based on the declining value of its stake in Industrial & Commercial Bank of China Ltd., the Sunday Telegraph said, without citing anyone.

The investment bank may report a decline in first-quarter earnings of about 50 percent, the newspaper said.

Goldman will write down about $1.6 billion from its leveraged loans business and a further $1.1 billion from assets owned by the bank's private equity arm, the Sunday Telegraph said.

Shares of ICBC, which is held separately on Goldman's balance sheet, have fallen by 12 percent in Hong Kong so far this year.
Paul Kafka, a spokesman for Goldman Sachs in London, declined to comment when contacted by Bloomberg news.
http://www.bloomberg.com/apps/news?p...d=aky9fO4tfhl4

The original fallacy was the belief that the credit issue was isolated (contained) to subprime. The current fallacy is the belief that the credit problems are sequential and will move in some semi-orderly fashion from one credit sector to the next ("...next comes alt-a, prime, cmbs, leveraged loans, and so on...").

Sure the problems are moving up the food-chain, but it's not a one-way trip. I think there's a mandatory return stub on that ticket; sub-prime is no where near over. As the economy spirals down, layoffs continue, people get into more trouble with their credit cards & car loans, it will feed back into the mortgage market and we'll see even more defaults, including more - many more - sub-prime defaults, than the S&P models show today. In recent years S&P has not demonstrated any particular competence making sound assumptions to put in their models. Why on earth should we expect they have suddenly improved?

We now have the Goldman wizards taking a writedown, in part on a Chinese bank, which just goes to show that the Chinese, who bought a stake in Blackstone, aren't the only ones stupid enough to overpay for shares in a financial company at the end of a credit bubble.

This stuff is all interlinked and we are no where near half-way through sub-prime, or anything else in the credit universe, I suspect.

[bart]

Re: End is in Sight for Writedowns. 3/13/08

Is the St. Louis FRED one of the ours (that EJ lends out from time to time), or do they have one of their own?? Just wonderin' ;)

Cage. You. Now. :eek: ;)

[jk]

Re: Goldman Sachs Poised to Write Down $3 Billion

The end is nowhere in sight...

Goldman Sachs Poised to Write Down $3 Billion, Telegraph Says

By Sarah Jones
March 16 (Bloomberg) -- Goldman Sachs Group Inc. will announce asset writedowns of about $3 billion this week, partly based on the declining value of its stake in Industrial & Commercial Bank of China Ltd., the Sunday Telegraph said, without citing anyone.

The investment bank may report a decline in first-quarter earnings of about 50 percent, the newspaper said.

Goldman will write down about $1.6 billion from its leveraged loans business and a further $1.1 billion from assets owned by the bank's private equity arm, the Sunday Telegraph said.

Shares of ICBC, which is held separately on Goldman's balance sheet, have fallen by 12 percent in Hong Kong so far this year.
Paul Kafka, a spokesman for Goldman Sachs in London, declined to comment when contacted by Bloomberg news.
http://www.bloomberg.com/apps/news?p...d=aky9fO4tfhl4

The original fallacy was the belief that the credit issue was isolated (contained) to subprime. The current fallacy is the belief that the credit problems are sequential and will move in some semi-orderly fashion from one credit sector to the next ("...next comes alt-a, prime, cmbs, leveraged loans, and so on...").

Sure the problems are moving up the food-chain, but it's not a one-way trip. I think there's a mandatory return stub on that ticket; sub-prime is no where near over. As the economy spirals down, layoffs continue, people get into more trouble with their credit cards & car loans, it will feed back into the mortgage market and we'll see even more defaults, including more - many more - sub-prime defaults, than the S&P models show today. In recent years S&P has not demonstrated any particular competence making sound assumptions to put in their models. Why on earth should we expect they have suddenly improved?

We now have the Goldman wizards taking a writedown, in part on a Chinese bank, which just goes to show that the Chinese, who bought a stake in Blackstone, aren't the only ones stupid enough to overpay for shares in a financial company at the end of a credit bubble.

This stuff is all interlinked and we are no where near half-way through sub-prime, or anything else in the credit universe, I suspect.

i did not mean to imply that these things would unfold in a tidy sequence. sorry if i wasn't clear. nor do i believe s&p's statement about subprime. my point was that even if one believed it, it offered no real reassurance.

[FRED]

Re: Goldman Sachs Poised to Write Down $3 Billion

i did not mean to imply that these things would unfold in a tidy sequence. sorry if i wasn't clear. nor do i believe s&p's statement about subprime. my point was that even if one believed it, it offered no real reassurance.

We've corrected the MSM's misnomer "subprime crisis" by coming up with the term "American Bond Crisis." Wonder how various classes of bonds behaved during the Russian Bond Crisis? Bet it was chaotic.

[Slimprofits]

Re: End is in Sight for Writedowns. 3/13/08

useful table on Bloomberg.com

The following table shows the $396 billion in asset writedowns and credit losses at more than 100 of the world's biggest banks and securities firms as well as the $302 billion capital raised in response.

[Jim Nickerson]

Re: End is in Sight for Writedowns. 3/13/08

useful table on Bloomberg.com

The following table shows the $396 billion in asset writedowns and credit losses at more than 100 of the world's biggest banks and securities firms as well as the $302 billion capital raised in response.

Here's a post I put up yesterday, if these guys are referencing the same writedowns and losses, and if Paulsos in correct, it ain't over.

http://www.bloomberg.com/apps/news?p...f.o&refer=home 6/18/08

Paulson & Co. Says Writedowns May Reach $1.3 Trillion (Update3)


Quote:

By Tom Cahill and Poppy Trowbridge June 18 (Bloomberg) -- John Paulson, founder of the hedge fund company Paulson & Co., said global writedowns and losses from the credit crisis may reach $1.3 trillion, exceeding the International Monetary Fund's $945 billion estimate. ``We're only about a third of the way through the writedowns,'' Paulson, 52, told the GAIM International hedge fund conference in Monaco today. ``There are a lot of problems out there and it will continue to be felt through the year. We don't see any signs of stabilizing.'' . . Bill Browder, founder and head of Hermitage Capital Management, said securities firms have a ``vested interest'' in claiming an early end to the crunch. ``If we're in the seventh or eighth inning, this is a 100-inning game,'' he said.

[metalman]

Re: End is in Sight for Writedowns. 3/13/08

Here's a post I put up yesterday, if these guys are referencing the same writedowns and losses, and if Paulsos in correct, it ain't over.

http://www.bloomberg.com/apps/news?p...f.o&refer=home 6/18/08

Paulson & Co. Says Writedowns May Reach $1.3 Trillion (Update3)


Quote:

By Tom Cahill and Poppy Trowbridge June 18 (Bloomberg) -- John Paulson, founder of the hedge fund company Paulson & Co., said global writedowns and losses from the credit crisis may reach $1.3 trillion, exceeding the International Monetary Fund's $945 billion estimate. ``We're only about a third of the way through the writedowns,'' Paulson, 52, told the GAIM International hedge fund conference in Monaco today. ``There are a lot of problems out there and it will continue to be felt through the year. We don't see any signs of stabilizing.'' . . Bill Browder, founder and head of Hermitage Capital Management, said securities firms have a ``vested interest'' in claiming an early end to the crunch. ``If we're in the seventh or eighth inning, this is a 100-inning game,'' he said.

end is in sight for hank paulson and bernanke, if you ask me. if obama gets elected that's the first 'change' i'd expect.