Formerly About Advanced Micro Devices Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Advanced Micro Devices

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: bentway who wrote (367671)	1/21/2008 12:45:09 PM
From: tejek	Read Replies (1) of 1575955

Here Comes the Panic By Jim Cramer RealMoney.com Columnist It's here. The panic that comes when the central banks get it all wrong and the recession talk begins to seep worldwide. This is the self-fulfilling moment when we all recognize that any hopes we pinned on central bankers looks misplaced and the bears growl worldwide. I know domestically it makes some sense. I say some, because when you see the strong report from a company like GE (GE - commentary - Cramer's Take - Rating) you have to wonder whether all of this could have been prevented by swift action and large cuts when it was still easy to prevent. Remember our crisis here involved only housing. The rest of the world was strong. Had we cut aggressively to move the real estate overhang -- people still need homes! -- we had a shot but now it appears too late. What's the domino play? We know that what's left on the banks sheets after the selling is paper that looks like AAA but is actually lower because a lot of it was BBB but was enhanced by insurance that really isn't going to hold up so will instantly be downgraded to BBB where it will have to be sold by a great many institutions that insist on their holdings being all AAA. When that happens the glut will be catastrophic and the sell-off awful. While in the end it is only $400 billion in paper that is at risk, much of it is really is at risk with no hedge and when it goes there will be financial chaos, even though only a portion of it is really toxic. There is no plan to save the monolines, which would allow some of the insurance to make it so the bonds that the not great residential mortgage paper backs defaults. We have Darwinists in treasury and the Fed who truly believe that it won't matter. I often wonder if they are right and if we just crunch it all whether we can recover in a year and start over better than we were. But in the interim we simply can't handle that level of downgrades all at once and the agencies will have to downgrade without the patina of the insurance. It is too bad because if no one had to react it could be run-off. If the holders were all like AIG (AIG - commentary - Cramer's Take - Rating) instead of the real at- risk institutions like Citigroup (C - commentary - Cramer's Take - Rating) or Merrill (MER - commentary - Cramer's Take - Rating) or Bank of America (BAC - commentary - Cramer's Take - Rating) or Wachovia (WB - commentary - Cramer's Take - Rating) we could plod. But right now we can't. And what we are left with is financial chaos that will force the banks to stop lending so that it doesn't even matter where the rates are. That's why I believe this sell-off in equities must occur even though it is totally unwarranted and could have been dealt with before and still could if we put in place a plan to bail out the monoline policies, no matter how flimsy, to make it so we are more AIG-like than Wachovia or Bank of America like. Make no mistake about it, when looking at the portfolios generated by Ameriquest, New Century, Fremont and Countrywide -- the paper that is choking the system -- there are several hundred billion in losses still unaccounted for. But it could come to a head real soon with the downgrades of the monolines (PMI/MGIC on the personal mortgage and MBIA and AMBAK on the structured issues) and the report on Bank of America. I genuinely believe now that is BAC has to take delivery of Countrywide's bad loans, it will take BAC down with it. Yes, it can be that bad.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next