Comments on: Whitney: What Are They Waiting For? http://www.ritholtz.com/blog/2009/01/whitney-what-are-they-waiting-for/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 20:08:08 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Jyohe http://www.ritholtz.com/blog/2009/01/whitney-what-are-they-waiting-for/comment-page-1/#comment-141098 Jyohe Thu, 22 Jan 2009 22:28:22 +0000 http://www.ritholtz.com/blog/?p=17019#comment-141098 Whitney is right in that the banks need to hold a 'Yard Sale" and/or be liquidated through bankruptcy. However; having government provide guarantees, or cheap liquidity to the buyers, would cause the assets to be overvalued on those balance sheets as buyers would now bid more money for them than they would if their funding were not guaranteed or provided by governments. There would also be the same moral hazard problem with the 'clean balanced" sheet buyers, why not pay more to ensure you receive the assets, and if you over bid, don't worry the governments will guarantee the loans. Funds will flood into firms that recieve the backing, increasing the prices these firms will pay to acquire assets.As such, the fire sale should take place in a free market without "guarantees or concessions" Whitney is right in that the banks need to hold a ‘Yard Sale” and/or be liquidated through bankruptcy. However; having government provide guarantees, or cheap liquidity to the buyers, would cause the assets to be overvalued on those balance sheets as buyers would now bid more money for them than they would if their funding were not guaranteed or provided by governments. There would also be the same moral hazard problem with the ‘clean balanced” sheet buyers, why not pay more to ensure you receive the assets, and if you over bid, don’t worry the governments will guarantee the loans. Funds will flood into firms that recieve the backing, increasing the prices these firms will pay to acquire assets.As such, the fire sale should take place in a free market without “guarantees or concessions”

]]> By: Thisson http://www.ritholtz.com/blog/2009/01/whitney-what-are-they-waiting-for/comment-page-1/#comment-140948 Thisson Thu, 22 Jan 2009 16:43:53 +0000 http://www.ritholtz.com/blog/?p=17019#comment-140948 More anecdotal support that we are in a depression: 1) The coffee cart vendor that I visit in the morning was bitching again: today it was about how quiet Manhattan is in the morning. 2) Last night I took a taxi cab: he was telling me that "nobody is taking cabs anymore." He said that between 8pm-10pm is when taxi drivers usually make most of their money (generally short trips, so the % of tip to fare is high) but that business is down substantially even during those hours. More anecdotal support that we are in a depression:

1) The coffee cart vendor that I visit in the morning was bitching again: today it was about how quiet Manhattan is in the morning.

2) Last night I took a taxi cab: he was telling me that “nobody is taking cabs anymore.” He said that between 8pm-10pm is when taxi drivers usually make most of their money (generally short trips, so the % of tip to fare is high) but that business is down substantially even during those hours.

]]> By: Bruce N Tennessee http://www.ritholtz.com/blog/2009/01/whitney-what-are-they-waiting-for/comment-page-1/#comment-140898 Bruce N Tennessee Thu, 22 Jan 2009 14:59:59 +0000 http://www.ritholtz.com/blog/?p=17019#comment-140898 Ok...the unadjust initial claims is 768k today, and with last week's 950k you are looking at unadjusted numbers of 1,718,000 or so initial claims for the last 2 weeks. The adjusted numbers for the same time period would be 524k and 589k or1113k total. Only a 600k difference... http://www.dol.gov/opa/media/press/eta/ui/eta20090066.htm A recent thread asked if this was as bad as 1982...well, now we are right on the edge of that time, and getting worse rapidly as anyone with 4 brain cells and half an eye can tell... http://www.newsdaily.com/stories/tre50l36c-us-usa-economy-jobs/ "was the highest level of initial claims since a matching reading in the week of December 20. The last time claims were higher was in 1982, when they notched a weekly rise of 612,000. Analysts polled by Reuters had forecast 540,000 new claims versus a previously reported count of 524,000 the week before." Now back to my off-topic troll cave... Ok…the unadjust initial claims is 768k today, and with last week’s 950k you are looking at unadjusted numbers of 1,718,000 or so initial claims for the last 2 weeks. The adjusted numbers for the same time period would be 524k and 589k or1113k total. Only a 600k difference…

http://www.dol.gov/opa/media/press/eta/ui/eta20090066.htm

A recent thread asked if this was as bad as 1982…well, now we are right on the edge of that time, and getting worse rapidly as anyone with 4 brain cells and half an eye can tell…

http://www.newsdaily.com/stories/tre50l36c-us-usa-economy-jobs/

“was the highest level of initial claims since a matching reading in the week of December 20. The last time claims were higher was in 1982, when they notched a weekly rise of 612,000. Analysts polled by Reuters had forecast 540,000 new claims versus a previously reported count of 524,000 the week before.”

Now back to my off-topic troll cave…

]]>