iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
21,506 Blog Posts

A Special Message From Merlin

Poof. Your bullshit rally is gone!

-Merlin

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53 comments

  1. Mushroomz

    🙁

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  2. CubsRock

    Fuck off Merlin, you David Blaine wannabe

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  3. Ben B.

    Freddie and Fannie can borrow at the discount window? Uh huh. That’s like offering my 450lb brother Tom (the 4-time champion pie eater) an Oreo cookie. I’d be lucky to get my hand back.

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  4. TraderCaddy

    It’s been years since “Turnaround Tuesday” actually meant something.
    Just think what happens when Wall Street starts to discount an Obama win (if he wins).

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  5. nik

    fly you know it, but i say it again: you are a genius! thanks.

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  6. Jakegint

    Breaking!!

    Merlin Revealed!

    Confronted in an dark alley by a drunken gang of RIG bears and “upsided” in the back of the head with a lead & leather sap, Merlin was found to have been wearing a “bullshit beard and ‘stache” along with a $2.99 cardboard cone cap from Party Mart.

    Those items removed, it was easy to identify him.

    __

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  7. Richard Head

    LEH in the house of pain…Bank of America stepped up to take on Countrywide and all its skeletons. JPM Chase did its patriotic duty and absorbed Bear Stearns in 1 weekend…Who’s turn next?? Who’s the strongest?…Does Goldman Sachs come to the rescue??

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  8. mrkcbill

    Did Mackee just quote TC about capitulation?
    That Fucker must be reading IBC!

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  9. Anton Cigur

    After dodging pies from Freddie and Fannie this week, P-P-P-Paulson had better enjoy his weekend at Bernie’s. IndyMac splatterfest on schedule next week.

    This from Jim Jubak:

    Developments on a past column –

    “The next banking crisis on the way”: The big banks will start reporting earnings next week. Merrill Lynch (MER, news, msgs) leads off July 17, and Citigroup (C, news, msgs) follows July 18. The numbers are sure going to be ugly.

    Last year, Merrill Lynch earned a profit of $2.24 a share in the second quarter. Right now, Wall Street analysts are expecting a loss of $2.07 a share for this year’s second quarter. Citigroup is projected to show a swing to a loss of 14 cents a share from a profit of $1.24.

    Bank of America (BAC, news, msgs) is projected to post a profit of 64 cents a share, down from $1.28 in the year earlier period. For Wachovia (WB, news, msgs), a profit of 31 cents a share is expected, down from $1.23. Washington Mutual (WM, news, msgs) has a projected loss of 93 cents a share, after a 92-cent-a-share profit in the second quarter of 2007.

    But at least these banks will get to report. IndyMac Bancorp (IMB, news, msgs), a mortgage lender that has been absolutely destroyed by the rout in the California market, may not. Faced with massive losses on its mortgage portfolio and unable to sell those mortgages or to raise additional capital in the markets, the bank, once the country’s ninth-largest mortgage lender, has been forced to sell what assets it can, including 60 of its retail mortgage offices.

    Regulators have told the bank they no longer consider it “well-capitalized,” a downgrade that gives regulators more power over the bank. And they’re going to need it.

    The bank had $17 billion in federally insured deposits before recent withdrawals at what the bank has termed “elevated levels.” That’s a huge potential bill facing the Federal Deposit Insurance Corp., where the total insurance fund stands at just $53 billion.

    What will the Federal Reserve and other regulators do? Most Wall Street opinion favors an engineered deal, like the JPMorgan Chase (JPM, news, msgs) purchase of Bear Stearns. Unlike Bear Stearns, however, IndyMac doesn’t play a crucial role in any of the financial markets, and it’s certainly not too big to fail.

    Whatever the regulators decide to do here will set the precedent for a wave of failures and potential failures at smaller state and community banks.

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  10. boca

    Wall Street Journal just reported about 20 minutes ago that IndyMac was seized by regulators.

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  11. Nemesis

    Don’t worry per paulson and Bernanke it’s only a subprime problem and it’s contained.

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  12. Jakegint

    WSJ just reported about 20 minutes ago that IndyMac was seized by regulators.

    Seized by the lapels and slapped about the head and face with a bullshit straw boater:

    Susquehanna Hat Company??

    Susquehanna Hat Company?!

    Susquehanna Hat Company!!

    _

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  13. boca

    “Seized” was the WSJ’s word in the headline.

    http://online.wsj.com/public/us

    It’s Friday night, and I’m tired, so maybe that’s why I’m not getting the Susquehanna Hat Company comment, Jake.

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  14. Aris

    poor IMB. gone to the wolves.

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  15. Aris

    kudlow is pissed. he just called ofheo a ‘pissant little government organization’

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  16. TraderCaddy

    IndyMac? Why did they seize all of the McDonalds restaurants in Indianapolis? Bad tomatoes?

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  17. Anton Cigur

    Can’t believe it. Posted the IndyMac article from Jubak, went out for an hour and heard it was “seized” listening to NPR in the car.

    I guess they think this way it will just evaporate into the newscycle, like so many taxpayers’ dollars. And maybe they’re right.

    But figuring out how to anesthetize the market isn’t going to fix anything. Nor will it won’t give us the capitulation we need.

    _________________________________________________________________________________

    Jake – A punched-out straw boater to YOU. Now who’s on first again?

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  18. boca

    The bank, TC, IndyMac Bank… as in the large mortgage lender, IndyMac Bank. Sheesh.

    Aris, you’re the only person I know who has the patience to watch Larry Kudlow. He’s like fingernails on a chalkboard to me.

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  19. Donald Trump

    I just poofed my hair… it needed it.

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  20. Anton Cigur

    Boca,
    Thanks for the link to WSJ article.

    ________________________________________________________________________________

    Anybody know what happens to the roughly $2 billion in deposits that was not FDIC insured? Will those depositors actually lose their money? I’m thinking that many of these are old folks or very conservative investors or just unsophisticated people who would rather have CD or savings account interest income than any risk. So they pile a bit more than $100k into the bank, thinking that it’s “safe.”

    If so, this is the kind of shit that can lead to runs on small and regional banks. Look for a series of “How safe is your savings?” stories on the teevee, mags, daily rags and “the internets” that will help stir the panic.

    Also, anybody know if this means IndyMac’s debts to credit rating agencies and other vendors go into the “uncollectible” pile?

    _________________________________________________________________________________

    “The” Donald: You sure you didn’t just “poop” your hair?

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  21. Crude Broker

    Does it amaze anyone that the dollars that are in your wallet are worth really nothing? I mean really, it’s just a bunch of paper/cotton mashed together with some water with funny numbers and sayings on them.

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  22. boca

    You’re welcome, Anton. I used to know all the FDIC rules, but haven’t kept up with them the last few years. Looks like now might be a good time for me to brush up on them.

    From Bloomberg and WSJ, it sounds like FDIC will take over the actual running of the bank. The FDIC probably has a whole set of protocols for every aspect of the operation. I’m thinking the bank will be open for business on Monday AM, with FDIC as the new boss, and extremely large withdrawals would be limited (maybe over the 100K limit?).

    Off to watch the new season of Stargate Atlantis, hoping I like it.

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  23. Jakegint

    Boca, when I was a kid, there was only “early stage” cable, with the punchbutton box and maybe – what? 17, 18 channels? We got it in the house about 1979, for all of about 30 minutes.

    The first movie that was featured on (I think) HBO at the time was “Rollerball” -rated egregiously “R.” My Mom decided she was having none of that with her babies in the house, so she had it yanked and gone by the time we got home from school that first day. To this day she still does not have cable in the house. It drives her grown children crazy.

    So suffice it to say, I grew up with limited choices in quality programming. One thing we always looked forward to as kids was coming home after church on Sunday morning and watching the Abbot & Costello feature on at 11:30 am on WPIX (if I recall correctly). We followed this routine for years, and, as a result, I probably know all their famous routines very close to heart.

    Appropriately, “Susquehanna Hat Company” is about crazy people:

    _

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  24. Jakegint

    Crude —

    Not these dollars.

    __

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  25. boca

    Jake don’t feel bad, we had no TV until I was ten – but I learned to read very early and entertained myself mightily with books from the library. Little did I know I would turn out to be a bookseller later in life.

    thanks for explaining about the Abbott and Costello.

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  26. BOOMER

    The IMB news is bad, but weren’t they expected to fail?

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  27. TraderCaddy

    Reading is overrated anyway. Ouch. My wife who has a Masters Degree in Education (specializing in reading) just hit my arm. Actually, I have been known to lock myself in the library for hours reading.
    It looks like Chucky Schumer had a hand in the collapse of IndyMac. Another nice move by a NY politician.

    http://latimesblogs.latimes.com/laland/2008/07/feds-cite-schum.html

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  28. BOOMER

    Am I to understand that FDIC has 53 B in reserves, and this failure alone took 17 B of that?

    UPDATE: I keep reading articles and the numbers are different. What is the FDIC reserve? What is the size of the IMB failure? How much was uninsured? Anyone have this?

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  29. Aris

    haha, boca, i tend to leave cnbc on in the background all day, so i pick up a little of every show, i guess.

    maybe i’m a masochist. although, there are a lot of laughs from the insanity they spew.

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  30. zuzu

    everytime a bell rings…

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  31. mrkcbill

    Crude- to me the dollar is a way of life.

    I think this pickle will be a little tougher than the .com – 9/11 attacks..the only way you lost money back then is if you were in dreck stocks and the gogo stuff….today everyone is getting adjusted from homes–vehicles—groceries—–energy–shitty mutals….oh yeah and good ole DOW stocks.

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  32. Anton Cigur

    Jake –

    A six pound steel ball, motorcycles and fewer rules as you progressed through the championship. At about 13, I came out of the theater after Rollerball knowing with great certainty what I wanted to do with my life.

    Even if it meant learning to rollerskate, which is kind of gayish.

    “…Go ahead. Say something bad about my brother. Say he shouldn’t get a parole…” Still one of my favorite lines ever.

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  33. BOOMER

    I just called 866-806-5919, the FDIC IMB line and asked a few questions. A polite, fast-talking young woman read a script, paraphrased below:

    Q: What happens if my deposits were over the FDIC limit?
    A: Fill out a declaration form on FDIC website and submit it.

    Q: What next? Is there a review process.
    A: Yes.

    Q: What if I have money over the 100k limit? Can I withdraw that on Monday?
    A: I can’t answer that. You’ll have to go through the process described earlier.

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  34. Anton Cigur

    Boom,

    The only thing I’ve read with the numbers you ask about is the WSJ article Boca linked to. Even under Murdoch ownership I think their numbers would be accurate in this case.

    As to whether this was expected, it seems like this is the worst possible way to handle it. If execs at the bank or at FDIC truly saw this coming they would have tried to work things out quietly even after the big withdrawals. An outright failure and ensuing panic can be contagious.

    And this had just about jack shit to do with Schumer’s comments. $2 billion is withdrawn from a bank because a politician sends a letter to a regulator? Fuck that little hack appointee at the FDIC. A “good job, Brownie” to him. Just a way for some Rep a-hole to throw dirt on a Dem a-hole. Talking points for O’Reilly and Limbaugh.

    I hope McCain doesn’t pick up this line. Lots more failures ahead. Easier to find blame than solutions.

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  35. oops

    if you still had over 100k in IMB you deserve to lose it

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  36. TraderCaddy

    Boca- Ever been to Powell’s Books in Portland or Tattered Cover in Denver? It’s been awhile but I recall the both being impressive. Charlottesville, VA (in the downtown area) has many smaller book stores selling some good used books.

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  37. Granny

    There goes the $5 in your Christmas card, you little bastard.

    Always thought you were a retard who looked a little too much like the Filipino mailman, anyway.

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  38. B Fleck

    Danger: Crash Odds Scream Higher!

    About midnight Eastern time last night, the New York Times broke a story that the government might be forced to nationalize Fannie and Freddie. Unbelievably, that was perceived to be bullish, as the S&P futures immediately shot about 0.5%. By this morning, though, a different view had emerged, as the S&P futures were lower by about 1% preopening. But no sooner had the market opened than a furious rally began, which cut the losses by about 0.33% to 0.5%, depending on which index one looked at. That, as folks waited in breathless anticipation of comments by Hank Paulson — as though they expected him to wave a magic wand and make all the problems go away.

    Land of Opportunity, Where Everybody Gets to Cosign for Fannie/Freddie

    Where this is headed is the nationalization of Fannie and Freddie, as I said yesterday. Which will mean some variation of Ginnie Mae abboxscoresorbing those two entities. Equity holders of Fannie and Freddie will get zero. Bond holders will be made whole. This way, the liability for $5 trillion’ worth of debt obligation, and God knows how many derivatives, will be the liability of the U.S. government. And, let’s not kid ourselves. The government will put it off-balance-sheet and try to pretend like it’s not going to cost the taxpayers any money, which of course is absurd.
    Apparently, the Treasury market thought the same, because it was lower even as stocks were under pressure in the early going. This is a de facto weakening of the credit of the United States and its currency. Apparently, some people understand that, even though the bullish masses operating in the equity markets seem not to. Even Standard and Poor’s seems to get the “joke” — as a research report of theirs was making the rounds, written on April 14, headlined: “For the U.S. Triple-A Rating, the Government-Sponsored Enterprises Pose Greater Fiscal Risks Than Brokers.”

    What, Me Feel Guilty?

    It appears to me that the moment of truth has finally arrived: Greenspan’s 25 years of Operation Enduring Bubble (handed down to Bernanke) have come to an end. Now, as I just noted, the government is likely to step in and take on the liability created by the housing bubble’s bust.
    While I made it seem like the problem could be quickly solved (and it can, on the surface), the devil will be in the details: just who has to pay on their mortgages and who gets forgiven (after all, now the government would be in charge of foreclosing for nonpayment), and all sorts of other particulars that I haven’t had time to think through. But let’s be clear: This is a massive inflection point in the financial history of the United States — brought to you by the incompetence of Alan Greenspan, the Fed, and those government agencies that didn’t bother to lift a finger to speak out when the housing/credit bubble was roaring at warp speed. The truly sad part is that it didn’t take any particular genius to see that this would end in disaster. Many of us saw this coming and warned of the dangers several years ago.
    Turning to corporate news, another data point on spending in technology was “released” last night — that, as Emulex (which operates in the storage business, another hot area) preannounced lower results. Thus, more evidence to dispel the illusion of tech somehow being immune to the turmoil in financial institutions and generalized economic weakness.
    As for the action, after the initial rally in anticipation of Hank, the market sold off, tried to stabilize, then sold off again a couple times. Shortly after midday, the S&P was down about 2%, with the other averages similarly heavy. From there we saw a bounce (based on a rally in FNM and FRE), but it fizzled and the market rolled over again.

    Comic Relief Rally

    Then, with about 90 minutes to go, the S&P leapt 20 handles (1.75% or so) in the space of 20 minutes — after Reuters carried a headline about Bernanke having told a GSE chief that Fannie and Freddie would be eligible for the discount window. I’m not sure why everyone would think that would solve any problems. It certainly wouldn’t solve the problems at Lehman, which has already had access to the Fed) — nor would the problems there (or at any other financial institution) disappear if Fannie and Freddie could somehow be merged into Ginnie Mae. Nevertheless the headline precipitated quite a rally (with tech sort of leading the charge.) The last hour was another story, as that triple-headed FNM/FRE/discount window rally fell apart and we closed pretty weak.
    Today was just another surreal day, where despite these massive problems, folks seem to be looking for a chance to buy the bottom at every juncture. I suspect this decline can’t be over until we see some real white-knuckle panic. It seems premature to expect a big rally until the Goldilocks crowd recognizes our problems as they are. Having said that, these are wild times. I guess anything’s possible in the short run.
    To my eye, far too many people continue to believe that somehow, something magical will happen to save the day. That is not going to happen. The fact that the Treasury market tanked today, along with the currency, even as stocks did, means that the Fed is in a straight jacket. This is precisely what happened in the fall of 1987. I was there, and I happened to have been short stocks for reasons similar to why I am short stocks now — only the problems now are far, far greater. Not only is the Fed trapped, but our currency and our Treasury market are being viewed as suspect.
    This is a very dangerous moment. However high the odds of a crash were last week, I would say they are several times higher, and the highest they’ve ever been in my 30-year investment career. I would not be a bit surprised to see a dislocation happen in the very near future.

    Yellow Dog Wolfs Down the Bailout Talk

    Away from stocks, oil was initially up about $5, before closing up $3.50. The xera was weaker, indicating that perhaps foreigners understand the insidious ramifications of the looming Fannie/Freddie bailout. The most interesting development was that the Treasury market did not like it one iota, either, as it was clubbed almost from the get-go today, with the 10-year future dropping over a point. Precious metals obviously understood what a bailout might mean, as I noted they might yesterday. Silver was initially up almost 4% and gold was up nearly 3%.

    Positions in stocks mentioned: Short FNM.

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  39. BOOMER

    “Regulators to run IndyMac until buyer found”

    spin starting already

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  40. Name

    I used to love my Friday nights. Why did they have to mess with the weekends?

    Sneaky bastards.

    I dread the weekends now.

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  41. Q4

    Unsecured deposits may take a “haircut”.

    OUCH

    http://www.fdic.gov/bank/individual/failed/IndyMac.html

    What’s in yo wallet?

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  42. Aris

    i’m upping my SKF price target to 275.

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  43. Aris

    “The bank will be run by the FDIC and reopen Monday. The FDIC typically insures up to $100,000 per depositor. IndyMac had roughly $19 billion of deposits. Nearly $1 billion of those deposits were uninsured, affecting about 10,000 people, the FDIC said.”

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  44. doubtful

    pretty stunning that 10,000 people had over 100K in IMB. To the very end. They all lived on Mars perhaps?

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  45. gmac

    I owned ONE call (in HK) and the rest of my portfolio were puts. banked green and reset for for the following week.

    Well, i bought USO calls too… dont mess with oil… that last dip strengthened it for the summer.

    I will sell any profit quickly… Oh and Hotels (namely MAR & HOT) are still put holds…

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  46. nullpointer

    so i guess i am going to have to stay awake and monitor the news all fucking night sunday to see what the fuck i do at the open on monday

    the PPT knew all about IMB, and there is a plan for sunday night

    i see a replay of january

    10733 is the 50% fib..either we bounce off that, or we crash

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  47. nullpointer

    mind wandering…

    what if a sovereign fund came in and bought all the FRE/FNM paper

    they have the money

    sad times

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  48. Gregory

    Question: Are my funds in my brokerage account safe with this 100k rule ? I have well over that in two accounts with two different online discount brokerages. Think 7 figures.

    Is this money safe ? I am assuming the brokers (excluding e*trade) are safe from this kind of problem ?

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  49. boca

    Brokerage accounts have different rules than bank or savings accounts/deposits. You need to contact your brokerage companies and make sure what is insured and how much.

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  50. boca

    My belief is that the US Government is ready and waiting to intervene in a positive way if needed, and if necessary Congress will make sure that happens. I’ll bet Congress is itching to intervene, they live for this stuff, it makes them look like heroes and get reelected if they have a hand in solving the situation.

    I wouldn’t be surprised if there is a new version of GNMA’s soon.

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  51. BOOMER

    .

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  52. Ben B.

    Well whatdya know. Turns out that story about getting access to the discount window was a steaming load of horseshit:

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a79GKfbIbW10

    Yeah, that made a lot of sense. The Fed has, what, $400B left? vs a possible max of $5000B?

    The only viable tool the government has on this one is jawboning.

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