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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (78736)	5/5/2008 3:05:03 PM
From: Jim McMannis	Respond to of 116555

"Countrywide Shares Worthless?" We knew that all along... Can BOA really back out or do they just want more gaurantees from the FED?

To: mishedlo who wrote (78736)	5/6/2008 12:07:08 AM
From: Jim McMannis	Respond to of 116555

Tired of paying through the nose, Americans try praying at the pump news.yahoo.com

To: mishedlo who wrote (78736)	5/9/2008 12:26:10 AM
From: Asymmetric	Respond to of 116555

Who Has More Level 3 Assets Than Capital? Bennet Sedacca / Minyanville May 07, 2008 Tags: MER, GS, C, LEH, BSC, FNM, MS, MORTGAGE, PRU, NWA, HIG, LEVEL, 3, New accounting rules allow for trading assets to be divided into three levels. Level One assets are the most liquid assets and therefore the easiest to price. They make up less than a quarter of most firms' assets. Level Two assets make up the majority of firms' assets but rely heavily on the firms' assumptions about things such as interest rates because they are far less liquid than Level One assets; according to regulatory filings by the five largest U.S. brokers and largest money center banks, there are more than $4 trillion in Level Two assets on their balance sheets. Finally, Level Three assets are the least liquid of the firms' trading assets and therefore are valued using what are called "unobservable inputs." Level Three assets include real estate, mortgage-backed securities, private equity investments and possibly even "undertakings of great advantage, but nobody to know what they are" (cf. South Sea Bubble). The three magic words that make an asset a Level 3 asset are "no observable inputs." What this means is that not only are they hard to price, but nearly impossible to sell. Recently there's been such deterioration in all types of mortgages that more and more assets are finding their way into this category. Also, this is the first time insurance companies have made the list. I think the list will continue to grow. Ten companies now have more Level 3 assets than capital. In order they are (as a % of total shareholder equity: 1) Bear Stearns (BSC): 313.97% 2) Morgan Stanley (MS): 234.88% 3) Merrill Lynch (MER): 225.4% 4) Goldman Sachs (GS): 191.56% 5) Lehman (LEH): 171.18% 6) Fannie Mae (FNM): 161.48% 7) Northwest Air (NWA): 142.02% 8) Citigroup (C): 125.06% 9) Prudential (PRU): 119.36% 10) Hartford (HIG): 108.52% So now we have insurance companies joining the party. Yes, the contagion is spreading and no, it's not over. Not even close. C just had to pay 8.5% for $2 billion in preferreds. One of these days, there will be no takers. minyanville.com