Wednesday, March 26, 2008


Hold up. I was reassured by many,many experts on Monday that the worst of the 'credit crisis' was over. Affter all Bear Sterns only lost 75% of its value instead of 95%. And housing sales in February were 2% higher than in January, as has happened since the Jan/Feb after Columbus sailed the ocean blue. The stock market orgasmed to the moon. Happy times were here once again.

Except reality has a habit of slapping these happy optimists in the face.

Here comes word from Goldman Sachs today:

March 25 (Bloomberg) -- Wall Street banks, brokerages and hedge funds may report $460 billion in credit losses from the collapse of the subprime mortgage market, or almost four times the amount already disclosed, according to Goldman Sachs Group Inc. Profits will continue to wane, other analysts said.
If they are saying $460B, then the real number is about $900B. And this is supposedly 4 times more than what was disclosed? Let's analyze what that says.

First off that means that lenders and bankers were either lying when they did the initial disclosure or simply have no clue what the number is and are making shit up as they go along. I think it's more b than a myself, but who knows?

Second if 1/4 of what has been disclosed has led to the mess we're in now, how can quadrupling that amount do anything but vastly expand the mess? How can any sane human being look at this data and say the bottom is here?

My only regret today is that I didn't buy more homebuilder puts.

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