hipmatt: I had a conversation with a buddy of mine who was a former Bear Stearns guy, and he indicated that if Bear was to come clean on their potential loss exposure, they would not have a sufficient capital base to cover it.
He also said that several of the other major investment houses (Merrill and Goldman Sachs among them) are in similar straits, despite reporting the contrary regarding their respective positions.
Another friend, who works at Wells Fargo, said that similar conditions exist at the major banks, and that Washington Mutual is in grave danger of falling below their FED reserve requirements, as is Citi.
All in all, I think we are in for a real bumpy ride, and your prediction of 50% off in Temecula is on the mark.
I also think TG’s reserve requirements regarding keeping adequate cash on hand for beer and margaritas will keep him from doing anything foolish (i.e. purchasing a home) in the near term.
