Imminent and severe market correction

[pepperoni]

I dont think a bankrupt aig is an option for the us ... without intervention it could mean instant default/unraveling of all the bs deals they gteed.

I think the aus exposure to aig is worse than to US banks (ie would effect alot of our big deals as i dont think we have any such domestic insurers).

So could be worse than a lehman IMO

http://www.bloomberg.com/apps/news?pid=20601087&sid=a_Cds_O.VT1w&refer=home

 

[dhukka]

news on AIG is worse as there are reports that the global insurance giant will file for bankruptcy Wednesday if they don't find capital today.
I smell capitulation, of the short term variety, in the air but there are two more events that must take place first - the FOMC meeting and Morgan Stanley Q3 earnings Wednesday before the bell.

Cheers...I tink
.................Kauri

Incidentally... of course...The Russian stock exchange has been closed for an hour after a 16.6% collapse on the day; the Ruble has strengthened but only because the central bank has kept a lid on it; USD/ZAR has jumped to 8.1800 after a respite to 7.9900 yesterday; USD/TRY hit 1.2765; and in Asian markets the KRW was under huge pressure hitting 1165, the first time in 4- yrs. USD/PHP hit a 1-yr high; and USD/TWD tested the "08 highs.

Slainte
...........Lauri

Weird stuff happening, former AIG CEO Greenberg is jawbowning the market saying everything is fine with AIG. Guess we'll see.

 

[Kauri]

Weird stuff happening, former AIG CEO Greenberg is jawbowning the market saying everything is fine with AIG. Guess we'll see.

Yep, after hearing greenpeasandham I must admit I have realized the folly of my ways and have rushed out and applied for two more credit cards, drawn down on the equity on my home, and instructed my broker to look for non-earning blue sky promise tech stocks... I'm not missing out on this one....

Cheering
............Kauri

 

[davo8]

It is not ALL doom and gloom. There are some wonderful buying opportunities out there at the moment.

Not as many as there are going to be. When the tide goes out all the boats go down. This is not the bottom. Things that have not happened yet in the US (but they will):

• JP Morgan, Goldman Sachs & AIG bust or taken over
• 150+ bank failures
• Another 10+% drop in house prices
• Bankruptcies in the "real" economy eg GM

In AUS:

• A drop in the housing market (how deep?)
• Downturn in property development
• More nasty surprises from people owning worthless paper
• Tighter credit and higher interest rates for most borrowers.

The current events were all reasonably forseeable in Feb. From here on it gets really nasty, and far harder to predict.

 

[wayneL]

 

[noirua]

That's the best one so far. UK's Halifax Bank of Scotland (HBOS) have fallen a further 30% today and there are strong rumours that the Halifax, former building society, is wobbling badly under the weight of its mortgage problems.
Further cash raising may well be needed otherwise this could be the UK's next big disaster.

 

[CanOz]

For those that think last night's recovery by the markets is a good sign:

"AIG is toast. This is the massive counterparty failure everybody's been scared of, and frankly I'm astonished that the broader stock market isn't plunging as a result. No one is prepared for the repercussions here: The failure of AIG is likely to be an order of magnitude more harmful than the failure of LTCM would have been. And it's not even happening on a Friday, where we could have yet another Emergency Weekend to try to work things out."

http://seekingalpha.com/article/95745-aig-is-toast?source=wildcard

Tick, tick, tick, tick

CanOz

 

[Kauri]

For those that think last night's recovery by the markets is a good sign:

"AIG is toast. This is the massive counterparty failure everybody's been scared of, and frankly I'm astonished that the broader stock market isn't plunging as a result. No one is prepared for the repercussions here: The failure of AIG is likely to be an order of magnitude more harmful than the failure of LTCM would have been. And it's not even happening on a Friday, where we could have yet another Emergency Weekend to try to work things out."

http://seekingalpha.com/article/95745-aig-is-toast?source=wildcard

Tick, tick, tick, tick

CanOz

more to do with FX but is based on the crisis which is driving everything...AUD/USD fell below 0.7900 after the FOMC left rates unchanged and didn"t include any special items in their statement that would alleviate fears over the AIG situation. The AUD/USD then staged a vicious reversal higher after Bloomberg reported that the Fed was working on a rescue loan to keep AIG from declaring bankruptcy. This was followed shortly by Morgan Stanley reporting their results after Wall Street closed and they were better than expected. The AUD/USD soared to 0.8038 while the AUD/JPY traded back to 85.30 after hitting a low on Tuesday around 81.50. This was followed by a NY Times report saying that AIG had hired a law firm to draw up bankruptcy papers in case they couldn"t get funding and could file as soon as Wednesday. The AUD/USD collapsed to 0.7920 while the AUD/JPY fell to 83.50. The AUD/USD has settled between 0.7940/50 while the market awaits/creates further rumours.

Cheers
.........Kauri

 

[noirua]

For those that think last night's recovery by the markets is a good sign:

"AIG is toast. This is the massive counterparty failure everybody's been scared of, and frankly I'm astonished that the broader stock market isn't plunging as a result. No one is prepared for the repercussions here: The failure of AIG is likely to be an order of magnitude more harmful than the failure of LTCM would have been. And it's not even happening on a Friday, where we could have yet another Emergency Weekend to try to work things out."

http://seekingalpha.com/article/95745-aig-is-toast?source=wildcard

Tick, tick, tick, tick

CanOz

I think they are hoping that the Fed can cobble together some sort of $70 billion package. Probably they will have to. The UK's soccer team, Manchester United has a sponsorship deal with AIG and financed by the new owners.

 

[wayneL]

Even if AIG is propped up, I find the market action today somewhat bemusing...

...but there is nothing unusual in that.

Although I wouldn't buy any of this shyte for the bottom drawer, that is for sure and certain.

 

[lumpdum]

The current events were all reasonably forseeable in Feb. From here on it gets really nasty, and far harder to predict.

Maybe it's for another thread.
Did no-one realise that it would end.
I mean EVERYTHING.Some dumb schmuck goes about their daily "schmuck' & the next thing is they have no job.The present madness to me was noticable when a dear friend was given money years ago, that a good audit then, & now, would show he's on borrowed time.Several homes + multiple re-draws later with a sub $400/wk other income, dunno how he does it. Voodoo+magik+redraw

 

[Kauri]

Even if AIG is propped up, I find the market action today somewhat bemusing...

...but there is nothing unusual in that.

Although I wouldn't buy any of this shyte for the bottom drawer, that is for sure and certain.

and the latest in the saga...metinks AIG is far too important to let flounder... moral hazard or no.. (MORAL hazard?? fancy using that word in relation the the goodhole USofA economic systemic shambles.. ) A report in the WSJ saying that the Fed is considering offering AIG a secured bridge loan has sent the USD/JPY back to 105.30 and the AUD/JPY and EUR/JPY higher again. If the Wall Street Journal report proves correct it should ??? bring some temporary calm to the markets and send the JPY lower again. Traders are weary and wary after the price action in the USD/JPY and JPY-crosses has been buffeted by conflicting reports on how the AIG saga will be resolved.

Cheers
..........Kauri

Cheers
..........Kauri

 

[Whiskers]

and the latest in the saga...metinks AIG is far too important to let flounder... moral hazard or no.. (MORAL hazard??

Now your talkin.

 

[Bushman]

I think they are hoping that the Fed can cobble together some sort of $70 billion package. Probably they will have to. The UK's soccer team, Manchester United has a sponsorship deal with AIG and financed by the new owners.

Good - I am a West Ham fan and this will hopefully mean they have to sell Ronaldo, Tevez and Rooney (maybe to Man City and its petrodollar backers). That should raise STG70m or so.

See this credit crunch ain't all bad. We will have the asset markets move back to parity and we will have parity on the football pitch.

'We're all blowing bubbles...'

 

[Glen48]

I see our very own Suncorp is going down now about $9.00 they were about that in 2001. They reckon if AIG sinks about 2M OZ will be in trouble with their super, how do you know where your super is ?
I triad to take mine out but you need to set uo a self funded Super to do it.

 

[wayneL]

and the latest in the saga...metinks AIG is far too important to let flounder... moral hazard or no.. (MORAL hazard?? fancy using that word in relation the the goodhole USofA economic systemic shambles.. ) A report in the WSJ saying that the Fed is considering offering AIG a secured bridge loan has sent the USD/JPY back to 105.30 and the AUD/JPY and EUR/JPY higher again. If the Wall Street Journal report proves correct it should ??? bring some temporary calm to the markets and send the JPY lower again. Traders are weary and wary after the price action in the USD/JPY and JPY-crosses has been buffeted by conflicting reports on how the AIG saga will be resolved.

Cheers
..........Kauri

Cheers
..........Kauri

It's a moral dilema!

A choice between moral hazard and a financial nuclear winter for the insurance industry, superannuants and pension holders.

Where were the regulators?

 

[explod]

It's a moral dilema!

A choice between moral hazard and a financial nuclear winter for the insurance industry, superannuants and pension holders.

Where were the regulators?

Ah well, they prolly hold on for the pollies day in the sunshine, keep Mckain out a de rain.

Problem is private outside finance from other nations has stopped in its tracks. The days of refinance is all over folks.

 

[mayk]

Regulators were sure that in this modern day and age of computerised system, such a non-sense should not have happened.


The blame should actually fall on the rating agencies. They didnot rate these companies down when they were dealing with subprime related securities, but when they see the public sentiment and sh*t hit the fan they are rating them down. They should be answerable to someone right?? In free market they were the regluators, they are the culprit to start with.

 

[wayneL]

Feds to buy an 80% stake in AIG.

Socialism is the new capitalism.

http://www.nytimes.com/2008/09/17/business/17insure.html?_r=2&hp&oref=slogin&oref=slogin

 

[Kauri]

It's a moral dilema!

A choice between moral hazard and a financial nuclear winter for the insurance industry, superannuants and pension holders.

Where were the regulators?

very very busy setting up their SMSF's me tinks..

cheers
.......kjauri