Report: Russia, China Biggest Bribers; Coffee Prices Continue Falling; October Existing Home Sales Slump; China Wants More Help From BHP; Yahoo Closing in on New CEO; FedEx Lowers Guidance 26%; Lehman Selling French Unit for $1; NFL to Cut 150 Jobs
There is a growing body of data that suggests banks have recognized only a fraction of the overall potential losses – approximately $50 billion to $75 billion so far on subprime debt alone. And a variety of estimates suggest that total subprime losses may be more than $300 billion before we’re through.
“It is not just a few investment decisions that are being corrected, it’s the delusions of an entire generation.” says Bill Bonner in The Daily Reckoning. What’s happening is “a huge anti-bubble is forming … a financial whirlpool marked by exaggerated thrift, debt destruction and sweaty-palmed investors.”
It remains to be seen whether fear takes control of the markets again today. So far, global equities have seen a reprieve from the brutal pounding they suffered last week.
The crash in stock prices has most investors spooked. But it’s worth keeping you head while others lose theirs, says Strategic Investment editor Dan Amoss.
Right now, there are some very healthy resource stocks are shockingly cheap. What Dan calls “screaming bargains.”
The market for credit default swaps is unregulated, untransparent, and highly dangerous. And its estimated worth is over three times the total value of US equities. “A CDS is a bit like a blind date,” says Andrew Snyder, “at first, they sound like a fantastic idea. But we all know differently.”
At 2pm New York time,the settlement auction for $400 billion of credit default swaps connected to bonds issued by Lehman Bros (NYSE:LEH) is due. This opaque derivatives market is a mystery to most investors. Dave Gonigam says the revelation of major losses is the last thing the market needs right now.
For about 10 years Simon Jenkins and I were both writing columns for the London Times. Simon is still writing a column for The Sunday Times, but has shifted his weekly column to The Guardian. However, he has written something in The Sunday Times that has provoked a very interesting reply from a reader, a copy of which has been sent to me.
The death the the US investment bank is greatly exaggerated, says Lynn Carpenter in Investor’s Daily Edge. Raymond James (NYSE:RFJ), Piper Jaffray (NYSE:PJC), Canaccord Adams are still in business. Some of the others didn’t really disappear. They’re either now paired with a commercial bank, like Merrill Lynch (NYSE:MER) or have turned themselves over the the Fed for regulation, like Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS). This, says Lynn is no bad thing…
We were all misled by the assurances of ‘experts’ over this crisis, says Gary North in The Daily Reckoning. The $700 billion Paulson plan will not be the last bailout. And the ever-growing national debt will never be paid off with the US dollar at its present value. Gary says it is time to name and shame those who tried to deceive us…
Are the American people really gullible enough to buy into Hank Paulson’s $700 billion bailout plan? Unfortunately, it seems so. After all, most bought into the Patriot Act in 2001 and the Federal Reserve Act in 1913. The consequences of Paulson’s bill, however, will be dire, says Dan Denning. For a start, it will involve the government buying bad debt from banksat “hold-to-maturity” prices – that is, a ways above their market price.