[LA_Renter]

Roubini is on a roll right now. He wrote a 12 steps to a financial disaster earlier this year.

“Step 9 of the Financial Meltdown: “one or two large and systemically important broker dealers” will “go belly up”

Nouriel Roubini | Mar 14, 2008
In my February 5th piece on 12 Steps to a Financial Disaster I predicted – as Step 9 of the meltdown – that “one or two large and systemically important broker dealers” will “go belly up” and that other members of the “shadow financial system” – i.e. non-bank financial institutions that look like banks in terms of liquidity/rollover risk – will also go bankrupt.

And today the first one of these large broker dealers – Bear Stearns – in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.

So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up – like many other recent Fed actions – being paid for by the US tax-payer.”

http://www.rgemonitor.com/blog/roubini/249737

[LA_Renter]

Roubini is on a roll right now. He wrote a 12 steps to a financial disaster earlier this year.

“Step 9 of the Financial Meltdown: “one or two large and systemically important broker dealers” will “go belly up”

Nouriel Roubini | Mar 14, 2008
In my February 5th piece on 12 Steps to a Financial Disaster I predicted – as Step 9 of the meltdown – that “one or two large and systemically important broker dealers” will “go belly up” and that other members of the “shadow financial system” – i.e. non-bank financial institutions that look like banks in terms of liquidity/rollover risk – will also go bankrupt.

And today the first one of these large broker dealers – Bear Stearns – in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.

So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up – like many other recent Fed actions – being paid for by the US tax-payer.”

http://www.rgemonitor.com/blog/roubini/249737

[LA_Renter]

Roubini is on a roll right now. He wrote a 12 steps to a financial disaster earlier this year.

“Step 9 of the Financial Meltdown: “one or two large and systemically important broker dealers” will “go belly up”

Nouriel Roubini | Mar 14, 2008
In my February 5th piece on 12 Steps to a Financial Disaster I predicted – as Step 9 of the meltdown – that “one or two large and systemically important broker dealers” will “go belly up” and that other members of the “shadow financial system” – i.e. non-bank financial institutions that look like banks in terms of liquidity/rollover risk – will also go bankrupt.

And today the first one of these large broker dealers – Bear Stearns – in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.

So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up – like many other recent Fed actions – being paid for by the US tax-payer.”

http://www.rgemonitor.com/blog/roubini/249737

[LA_Renter]

Roubini is on a roll right now. He wrote a 12 steps to a financial disaster earlier this year.

“Step 9 of the Financial Meltdown: “one or two large and systemically important broker dealers” will “go belly up”

Nouriel Roubini | Mar 14, 2008
In my February 5th piece on 12 Steps to a Financial Disaster I predicted – as Step 9 of the meltdown – that “one or two large and systemically important broker dealers” will “go belly up” and that other members of the “shadow financial system” – i.e. non-bank financial institutions that look like banks in terms of liquidity/rollover risk – will also go bankrupt.

And today the first one of these large broker dealers – Bear Stearns – in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.

So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up – like many other recent Fed actions – being paid for by the US tax-payer.”

http://www.rgemonitor.com/blog/roubini/249737

[LA_Renter]

Roubini is on a roll right now. He wrote a 12 steps to a financial disaster earlier this year.

“Step 9 of the Financial Meltdown: “one or two large and systemically important broker dealers” will “go belly up”

Nouriel Roubini | Mar 14, 2008
In my February 5th piece on 12 Steps to a Financial Disaster I predicted – as Step 9 of the meltdown – that “one or two large and systemically important broker dealers” will “go belly up” and that other members of the “shadow financial system” – i.e. non-bank financial institutions that look like banks in terms of liquidity/rollover risk – will also go bankrupt.

And today the first one of these large broker dealers – Bear Stearns – in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.

So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up – like many other recent Fed actions – being paid for by the US tax-payer.”

http://www.rgemonitor.com/blog/roubini/249737

[LA_Renter]

I don’ t think Bear Stearns basically admitting they are insolvent is such a big deal. It’s just a flesh wound. It’s stuff like this that keeps me bearish on the market. It is very simple really, there is just way too much bad paper floating around out there and the source of that bad paper (housing bust) shows no signs of a bottom. The FED only has so many bullets they can shoot here and they are running low. There are going to be more Bear Stearns before this is all over, and the Govt will step in with a massive bailout. This is truly getting scary.

[LA_Renter]

I don’ t think Bear Stearns basically admitting they are insolvent is such a big deal. It’s just a flesh wound. It’s stuff like this that keeps me bearish on the market. It is very simple really, there is just way too much bad paper floating around out there and the source of that bad paper (housing bust) shows no signs of a bottom. The FED only has so many bullets they can shoot here and they are running low. There are going to be more Bear Stearns before this is all over, and the Govt will step in with a massive bailout. This is truly getting scary.

[LA_Renter]

I don’ t think Bear Stearns basically admitting they are insolvent is such a big deal. It’s just a flesh wound. It’s stuff like this that keeps me bearish on the market. It is very simple really, there is just way too much bad paper floating around out there and the source of that bad paper (housing bust) shows no signs of a bottom. The FED only has so many bullets they can shoot here and they are running low. There are going to be more Bear Stearns before this is all over, and the Govt will step in with a massive bailout. This is truly getting scary.

[LA_Renter]

I don’ t think Bear Stearns basically admitting they are insolvent is such a big deal. It’s just a flesh wound. It’s stuff like this that keeps me bearish on the market. It is very simple really, there is just way too much bad paper floating around out there and the source of that bad paper (housing bust) shows no signs of a bottom. The FED only has so many bullets they can shoot here and they are running low. There are going to be more Bear Stearns before this is all over, and the Govt will step in with a massive bailout. This is truly getting scary.

[LA_Renter]

I don’ t think Bear Stearns basically admitting they are insolvent is such a big deal. It’s just a flesh wound. It’s stuff like this that keeps me bearish on the market. It is very simple really, there is just way too much bad paper floating around out there and the source of that bad paper (housing bust) shows no signs of a bottom. The FED only has so many bullets they can shoot here and they are running low. There are going to be more Bear Stearns before this is all over, and the Govt will step in with a massive bailout. This is truly getting scary.

[LA_Renter]

If you ask me yesterday was a classic textbook example of a short squeeze. There has been a very large amount of short interest in the market. Bear market rallies are to be expected in bear markets. They usually come in the form of violent upswings. Remember the 600 point advance (in one day) off the low in Jan. This last rally is the same one we have seen about 50 times in the last 9 months. Since they can’t use saving AMBAC as an excuse any more, they had to come up with something new…i.e. $200 Billion in Fed lending against junk paper. I could be wrong as the markets are oh so humbling to us all but i don’t see an inflection point here just yet. The S&P is still forecasting 20% growth in earnings during the second half of 08, I ain’t buying that. I hope this rally has some strong legs because I have my eye on several puts that are looking cheap in sectors that I follow. I will say this the juice on the downside will only get less and less as time passes. it’s just my opinion that there is going to be a more significant low during 2008. We will see good luck to all.

[LA_Renter]

If you ask me yesterday was a classic textbook example of a short squeeze. There has been a very large amount of short interest in the market. Bear market rallies are to be expected in bear markets. They usually come in the form of violent upswings. Remember the 600 point advance (in one day) off the low in Jan. This last rally is the same one we have seen about 50 times in the last 9 months. Since they can’t use saving AMBAC as an excuse any more, they had to come up with something new…i.e. $200 Billion in Fed lending against junk paper. I could be wrong as the markets are oh so humbling to us all but i don’t see an inflection point here just yet. The S&P is still forecasting 20% growth in earnings during the second half of 08, I ain’t buying that. I hope this rally has some strong legs because I have my eye on several puts that are looking cheap in sectors that I follow. I will say this the juice on the downside will only get less and less as time passes. it’s just my opinion that there is going to be a more significant low during 2008. We will see good luck to all.

[LA_Renter]

If you ask me yesterday was a classic textbook example of a short squeeze. There has been a very large amount of short interest in the market. Bear market rallies are to be expected in bear markets. They usually come in the form of violent upswings. Remember the 600 point advance (in one day) off the low in Jan. This last rally is the same one we have seen about 50 times in the last 9 months. Since they can’t use saving AMBAC as an excuse any more, they had to come up with something new…i.e. $200 Billion in Fed lending against junk paper. I could be wrong as the markets are oh so humbling to us all but i don’t see an inflection point here just yet. The S&P is still forecasting 20% growth in earnings during the second half of 08, I ain’t buying that. I hope this rally has some strong legs because I have my eye on several puts that are looking cheap in sectors that I follow. I will say this the juice on the downside will only get less and less as time passes. it’s just my opinion that there is going to be a more significant low during 2008. We will see good luck to all.

[LA_Renter]

If you ask me yesterday was a classic textbook example of a short squeeze. There has been a very large amount of short interest in the market. Bear market rallies are to be expected in bear markets. They usually come in the form of violent upswings. Remember the 600 point advance (in one day) off the low in Jan. This last rally is the same one we have seen about 50 times in the last 9 months. Since they can’t use saving AMBAC as an excuse any more, they had to come up with something new…i.e. $200 Billion in Fed lending against junk paper. I could be wrong as the markets are oh so humbling to us all but i don’t see an inflection point here just yet. The S&P is still forecasting 20% growth in earnings during the second half of 08, I ain’t buying that. I hope this rally has some strong legs because I have my eye on several puts that are looking cheap in sectors that I follow. I will say this the juice on the downside will only get less and less as time passes. it’s just my opinion that there is going to be a more significant low during 2008. We will see good luck to all.

[LA_Renter]

If you ask me yesterday was a classic textbook example of a short squeeze. There has been a very large amount of short interest in the market. Bear market rallies are to be expected in bear markets. They usually come in the form of violent upswings. Remember the 600 point advance (in one day) off the low in Jan. This last rally is the same one we have seen about 50 times in the last 9 months. Since they can’t use saving AMBAC as an excuse any more, they had to come up with something new…i.e. $200 Billion in Fed lending against junk paper. I could be wrong as the markets are oh so humbling to us all but i don’t see an inflection point here just yet. The S&P is still forecasting 20% growth in earnings during the second half of 08, I ain’t buying that. I hope this rally has some strong legs because I have my eye on several puts that are looking cheap in sectors that I follow. I will say this the juice on the downside will only get less and less as time passes. it’s just my opinion that there is going to be a more significant low during 2008. We will see good luck to all.

[Author]

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