Economics Update

It appears that US banks have borrowed massive amounts of money from the Federal Reserve, over $50 billion, using assets that have very little value in the market right now. They get money for shovels of the big sh&#pile

Credit Suisse will be writing down $2.8 billion because of "pricing errors" of assets (also here), and has suspended the traders involved.

Errors, my ass. If these were "errors" as opposed to fraud and/or bad systems, the net would be closer to $0.

The Forthcoming “Jingle Mail” Tsunami: 10 to 15 Million Households Likely to Walk Away from their Homes/Mortgages Leading to a Systemic Banking Crisis

It is now expected that the U.K. government will keep British home mortgage giant Northern Rock nationalized for years, in order to avoid a massive exposure to the taxpayer.

In the increasingly dire world of insurance, we have predictions that bond insurer splits may lead to an explosion of lawsuits, as the separation valuable (municipal) side and the insolvent (big sh$%pile) side involves a lot of loss for the holders of non-municipal paper. Additionally, MBIA's CEO has stepped down, and has been replaced by his predecessor.


Deck chairs, Titanic.

In the lawsuit category, we have investor activists calling for more accountability in management, which is generally a prelude to shareholder suits and the like.

Finally, we have inflation in China hitting an 11-year high, 7.8%. It's likely that this will drive interest rates up in China, placing downward pressure on the US dollar.

And if that doesn't make you think that it will soon be raining brokers in Wall Street, Noriel Roubini is predicting between 10 and 15 million home owners simply walking away from their homes, because they will be underwater with their mortgages, and cannot afford their resetting mortgages.