Tuesday, November 11, 2008

Doom and Gloom on the Street

American Express was granted bank holding company status, and the Federal Reserve said that because of "unusual and exigent" circumstances, they granted the approval without the customary 30 day wait.

There hasn't been any securitizations of credit cards in the last 30 days, so that means AXP eats its own cooking. And with the delinquencies and the suspect nature of any revolving credit card portfolio, who would want want them? But American Express wants the Fed's cash--$3.8 billion or so, and now they are eligible for it.

Even AAA rated GE, has registered to sell $98 billion of commercial paper to the Government. The market is telling GE, to wean themselves off of commercial paper, but with $536 billion of debt at GE Capital, what are they supposed to do? Get a bank to lend them the money? At least they are hedging their fuel costs, now that oil is under $60 a barrel!

AIG is now up to $173 billion pumped in from the Government, and yet their CEO comes on television and says that AIG is still in strong shape. $173 billion from taxpayers, but yet, no one knows who is on the other side of the derivatives AIG wrote-besides Goldman Sachs of course!

Citigroup came out today and said they are now pro-actively going to seek solutions for homeowners underwater in their loans, even if they are not as of yet, late with payments. That just means Citigroup's book of mortgages is in far worse shape than what they want to tell the market. But then again, didn't the Government "force" these companies to take money? Money they said they didn't need, that they needed desperately?

Fannie Mae reported a $29 billion loss for the quarter, and said that it may soon have to hit up the Fed for money. No wonder the Fed is delaying the $540 billion money market bail-out!

Circuit City, was one of the few companies that actually did the right thing by going into bankruptcy. The only money they made was in the extended warranties that they sold. I suppose going bankrupt after Christmas, after selling these warranties would of brought more troubles; what it does show, however, is that the consumer has completely retrenched. That's why retail pre-sale orders are down 6-14%.

At least one thoing going down is gas. It is down to $2.19 a gallon, yet General Motors is hitting 50 year lows, as the TARP money hasn't yet been released to the automobile companies. $173 billion to AIG, and it didn't save a job, yet Paulson is hesitating about throwing some money at the car business and Bush wants this deal tied to a Columbia trade pact! In Detroit, they hire real workers, who make real contributions, by making real things in the real economy! AIG is just a bookie that made bad bets! But then, it's their buddies who want to collect on the bets they made with AIG!

AIG was Wall Street's neighborhood barber shop!

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