While We Patiently Wait: Ninja Cat!

"... iam pridem, ex quo suffragia nulli
uendimus, effudit curas; nam qui dabat olim
imperium, fasces, legiones, omnia, nunc se
continet atque duas tantum res anxius optat,
panem et circenses. ..." (Juvenal, Satire 10.77–81)

While we all patiently wait for Congress to decide how exactly they'll piss away your wealth...

I present to you: Ninja Cat!

Bread and circuses people. That's all it takes...


The Ninja Cat - Watch more free videos

What Would Jesus Do? He'd Hedge by Going Short!

What Would Jesus Do? Apparently, he'd hedge... by going SHORT.

Short-selling’ church leaders accused of failing to practise what they preach: “The Church of England was accused last night of having used short-selling to maximize profit on a £5 billion investment hours after its archbishops criticised banking practices.

After the call from the archbishops of Canterbury and York for tighter regulation of the markets, the liberal think-tank Ekklesia said that the Church was implicated in stock market speculation. It said that in 2006 the Church Commissioners, which manages the Church of England’s investments, set up a currency hedging programme against a fall in the value of sterling, effectively short-selling the pound to guard against rises in other currencies. It also criticized the Church for its shareholdings in oil and mining companies.

On Wednesday the Archbishop of York, Dr John Sentamu, branded the traders who cashed in on falling share prices in the troubled bank HBOS as “bank robbers” and “asset strippers”.”

*** Nobody’s allowed to go postal on me in the comments. This is not a religious blog. This is just funny AND something to reflect upon. ***

China LOVES the Short Selling

“It's quite positive for the market and will help attract fresh capital into equities.” –Wu Kan, fund manager

China LOVES the short selling.

You know you're FUCKED when the commies are capitalists and the capitalists are commies.

China Allows Short Sales, Margin Loans to Help Market (Update2): “China's cabinet agreed to let investors buy shares on credit and sell borrowed stock to help develop Asia's second-largest market after prices and trading volumes slumped, an official familiar with the plan said.

The State Council signed off on a China Securities Regulatory Commission plan submitted this month to allow margin lending and short selling, said the official, who declined to be identified as he isn't authorized to speak on the issue.

China's action contrasts with regulators in the U.S., Europe and Australia that have banned short selling in the past week to shore up financial shares battered by the global credit squeeze. China's government is betting the changes will boost trading without spurring further declines after state share buybacks helped the CSI 300 Index rebound from a two-year low.”

Hahahahahahahahahaha...

In other news, China’s first space walk is planned for Saturday: China Astronauts Braced for Walk.

The torch has been passed.

Game Theory: Why the Bailout Won't Work

[ via EconompicData ]

A GREAT post. This absolutely nails it on the head.

Read this carefully. Make sure you understand it. This is exactly what will happen. Each agent (bank) will act in their own self interest.

Ignore the clowns on CNBC. They're pumping a bailout that can't succeed.

More on general Game Theory here.

Game Theory: Why the Bailout Won’t Work: “Lets assume for the time being that there are only two banks; Bank A and Bank B.

The media / political pundits would have you believe the likely outcome of the bailout is the top-left box in which both Bank A and B sell risk assets to the Treasury. In this case, the result is a more regulated banking industry, with imposed limits to salary, but importantly markets clear.

HOWEVER, it is in BOTH banks interest to deviate from that.

Why? Simple. If Bank A (or B) believe the other is selling their risk assets to the Treasury; they will each be better off holding on to theirs.

Why? If the other bank sells and they hold, markets will still clear (in theory) and the bank that holds onto their risk assets can sell at the new market prices. This results in increased market share as they:

*Can pay more for talent
*Are less regulated
*Don’t have the stigma of selling to the Treasury (think of what selling portrays to the market)

This is even worse in the “real world” as all banks have the incentive to wait for other banks to sell risk assets to the Treasury to clear markets.

The likely result? The bottom right box in which no bank sells voluntarily and markets remain frozen. While there were many problems with the initial plan, at least there was a 100% incentive to sell the assets.”

BTW, EconompicData is a great blog I read daily. Complex economic 'stuff' made simple, and understandable... and full of pretty pictures.

Washington Mutual Implodes, JP Morgan Takes All the Risk

“We don't know and we don't care.” –Jamie Dimon, CEO JPMorgan, about rival bids for WaMu,

*BOOM*

We have a new record: Washington Mutual (WM) is the largest bank failure in U.S. history.

No surprise here. We all knew this one was a long time in coming.

JPMorgan Buys WaMu Deposits; Regulators Seize Thrift (Update1): “JPMorgan Chase & Co. became the biggest U.S. bank by deposits, acquiring Washington Mutual Inc.'s branch network for $1.9 billion after the thrift was seized in the largest U.S. bank failure in history.

Customers of WaMu withdrew $16.7 billion from accounts since Sept. 16, leaving the Seattle-based bank “unsound,'' the Office of Thrift Supervision said late yesterday. WaMu's branches will open today and depositors will have full access to all their accounts, Sheila Bair, chairman of the Federal Deposit Insurance Corp., said on a conference call.”

The thing to take away from this is that WM couldn’t even make it to ‘Bank Failure Friday’ and had to be shut down on a THURSDAY. That demonstrates just how quickly things can get that bad.

On September 15th I wrote FDIC Can’t Afford Washington Mutual Failure. This appears to have been true, because the failure and seizure of WM was done in such a way as to cost the FDIC nothing. Common equity will be wiped out as will all bond and note holders. (That could still change, but seems unlikely.)

“WaMu's balance sheet and the payment paid by JPMorgan Chase allowed a transaction in which neither the uninsured depositors nor the insurance fund absorbed any losses.”

JPMorgan has gobbled up WM… and with it all the risk as well. Don’t forget, everybody else took a look at WM and quietly backed away.

“Citigroup Inc., which had been among five potential acquirers, elected not to bid for WaMu because presumed loan losses outweighed benefits from the deposits, said a person familiar with the situation. Wells Fargo & Co., Banco Santander SA and Toronto-Dominion bank had expressed interest in buying all or parts of WaMu, said a person with knowledge of the process.”

Is JP Morgan being reckless? Merrill Lynch (MER) and Washington Mutual (WM) may come with a few embedded balance sheet surprises…

“New York-based JPMorgan, which separately announced plans to raise $8 billion by selling common stock, had its outlook lowered to negative by Moody's Investors Service. Moody's left its Aa2 rating on JPMorgan unchanged.”

Related Posts:
Paulson Bailout: The ABSOLUTE ASPHYXIATION of Taxpayers
Short Ban? What Short Ban?