FT Alpha.Indices Indicate Further Huge Writedowns Are Coming

ftalphaville.ft.com/blog/2007/10 … et-deeper/

And then there is everyone else with this crap on their books.

Thats good news ! Lets hope the corporate parasite that is Merrill Lynch goes out of business completely. They can be replaced with computers. Welcome to capitalism losers !

One fat lady has cleared her throat, The rating agencies are rerating a scad of this mush at present. More FT Alpha

ftalphaville.ft.com/blog/2007/11 … ritedowns/

AND Q4 figures for the likes of Citi and Merrill look very very ugly , just like q3 .

WHOOPS , the market noticed already .

And each downgrade in an index or by a rating agencies begets another round of downgrades . Its a quarterly cycle at this stage , March, August , November, Next year the same :frowning:

If I understand what the ABX index is telling me, there will have to be large writedowns in the coming months particularly as we enter audit season. There will be skin and hair flying with the auditors this year.

And what happens when the bonds of the bond insurance companies gets downgraded?

and the mortgage insurance companies report huge losses

this is one almighty circle-jerk gone wrong.

Classic negative feedback stuff.

The ABX is segmented like ABX-AA and ABX-BBB according to the crud it tracks.

The first real falls were in Feb 07 which was followed by the originating banks crashing in march/april time , then it went lower in May and Bear Stearns hedge fund followed the originating banks in June .

Each dip is followed by grief the following month .

This month will be the next round of it.

At the risk of sounding stoopid (well, more than normal), concerning all these billions of dollars worth of write-downs and write-offs…so what?

So a few banks make a billion less this year than they did last year. Big deal. In fact, if it wasn’t for this board, I’d never have known that there was (apparently) a financial crises going on, it has so little effect on normal people’s lives.

Or am I missing something?

I guess you’re missing the higher mortgage rates that people are having to sign up to?

Each downgrade cycle leads to less appetite for lending to the mortgage market …worldwide.

Each downgrade cycle reduces LTV and Income multiples available and each leads to a wider spread between base rate and mortgage rate .

In other words each leads to dramatically less liquidity in the Irish property market.

Simple cause and effect. Its a global economy.

  • As a normal person you might have queued up to get your money out of Northern Rock.
  • You might have worked for a Dublin hedge fund that closed its doors after August 2007.
  • You might have been had dealings with one of five solicitors being pursued by the banks to pay back loans.
  • You might be planning on going Christmas shopping in New York to take advantage of the weak dollar.
  • You might be paying more for food.
  • You might be paying into a pension fund that has exposure to a falling Irish stock market and some dodgy AAA rated crap on their books.
  • You might have shorted some companies on the Irish stock exchange.

top story on FT.com

[*Western banks suffer big losses * (Subscribe to read | Financial Times)

Will be interesting to see how the banking/construction-weighted ISEQ performs today. CitiGroup in trouble will have serious knock-on effects all over the world.