nonpretentious

Would you like to know what “financial crisis” means?

I know I did.

If you have not listened to the This American Life Episode #365, I highly recommend it.  It’s informative, impartial, and interesting.  (iii reflects !!!)

My favorite part of the program was the 2nd piece on credit default swaps.
Ira tells* us that “one way to think about this product is this: if bad mortgages got the economy sick, these next things you’re about to hear about spread the sickness into an epidemic. these are credit default swaps.”

And, Alex Blumberg says*, “Now normally when you think of physicists inventing scary things, atomic weapons come to mind. And credit default swaps have been called [by Warren Buffett]… financial weapons of mass destruction.”

*tells and says: what i heard & transcribed. but, have a listen for yourself!

Humpty Dumpty, or Can Anybody Spot AIG $75 Billion or So?

Humpty Dumpty sat on a wall.

Humpty Dumpty had a great fall.

All the king’s horses and all the king’s men

Couldn’t put Humpty together again.

Well, shit. Fat chance I’ll get a job in New York now.

In other news, the U.S. financial system appears to be imploding. The Dow was down 500 pts today, Lehman went bankrupt, Merrill Lynch is no more. Time for six or eight Tums and my predictions:

(1) AIG will fail this week. From what I’ve heard, this may be catastrophic in ways that nobody imagined even a few days ago, because frankly, nobody thought too seriously that it could happen. It’s happening, though.

(2) Either Morgan Stanley or Goldman Sachs (or both) will go under by the end of next week.

(3) Washington Mutual, the country’s largest savings and loan, will also declare bankruptcy by the end of next week.

(4) The Dow will drop another 500 points by the middle of next week.

(5) Disco, or some form of it, will make a comeback sometime in the next year. Disco makes people feel good.
Continue reading…

Nonpretentious: Your Home for Meltdown Madness

Well, it’s no catastrophe — yet. The Dow was down around 500 pts by the end of trading — its worst drop in 7 years. But we’re not out of the woods. When AIG goes under, there’s no telling how much farther it could go. Barring a miracle, AIG has a few days of life remaining at most. And then Lehman Brothers is going to have to liquidate its rather extensive real estate holdings, which could send real estate values even farther into the shitter (unfortunately, there’s no such thing as a bankruptcy reorganization for a financial service company like Lehman). Since a large part of the mortgage meltdown is tied to the drop in real estate values, this theoretically could cause further write downs by other large institutions. And who knows what firm will fall next. Plus, we’re not out of the woods entirely with commerical real estate. Will there be a crisis there? Who knows. We thought not, but I’m not sure anyone can predict what’s going to happen right now. If Washington Mutual goes under, as well, then I’m not sure where all this will end up.

Scary shit — especially if you’re hunting for a job in New York right now like me. Blah.

1929?

Will the financial system crash tomorrow? Will the stock market? We’re about to find out.

Lehman Brothers went bankrupt today (Sunday). AIG will go under mid-week. Merrill Lynch has just sold itself to Bank of America to stave off failure. Washington Mutual, the country’s largest savings and loan, is teetering on the edge of disaster.

Not to be a debbie downer, but shit, shittily, shit, shit.