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Random Thoughts: What Inning is the Credit Crunch In?

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Much two-sided risk remains.

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  • I've been watching alotta movies with sub-titles lately. Do you think that's some sorta allergy or something?

  • Coops DeVille is eying S&P 1340 (the recapturing thereof) as his upside "wink" and a failure at S&P 1327 as a downside "nudge." He scribes vibe every day, set-ups and all, so if you've got an interest, click here for a free trial yo.

  • As go the piggies, so goes the smoke. Along those lines, watch BKX 75 on a closing basis. If Hoofy can't hold that line in the sand, it'll be an ominous omen for the broader market.

  • Blondie and The Clash are competing for top honors today. Me? I'm stuck in the middle with you, of course.

  • We can discuss how the structural machination got to this point until we're blue in the face (cumulatively, with some greed sprinkled in).

  • The truth, right here and right now, is that hundreds of trillions of dollars tie together ever-changing underlying collateral assets moving in many directions at the same time.

  • It's virtually impossible-yes, impossible-to know how far the fuse runs, which is why such massive two-sided risk remains. It's also why guys like Jeff Immelt, Stan O'Neal, Chuck Prince and Warren Specter didn't see the fuse lit in the first place and by the time they did, the multiplication of risk made it impossible to stamp out.

  • As a wise man once said, "Hope is a dangerous thing. Hope can drive a man insane." It's no coincidence that that man was named Red.

  • This has made it around the worldwide web many times but for those who haven't seen it, it's most worthy of a watch.

  • Minyan T-Neuhaus offers the following perspective with regards to a potentially painful proxy. "General Electric (GE) dropped to $23 in the beginning of 2003 and topped out around $42 in October of last year. The midway point of that range is about $32. If you view GE as a proxy for the entire market, the S&P needs to drop to about 1,200 ((828 + 1561)/2) to make an equivalent move. That's a painful 140 points below where we stand right now."

  • What would you do if you found half a million dollars that didn't belong to you?

  • Snaps to Professor Sedacca, Mr. Practical and Minyan Peter, all of whom were in front of the curve with regard to the "dilutive issuance" we're gonna see (and have seen) from the financials.

  • The upside of those offerings? It staves off potential insolvency, bankruptcies and systemic contagion. The other side? It's the definition of deflation and indicative of continued and cumulative imbalances in the system.

  • Lehman Brothers CFO, during an interview with Bloomberg on Friday, offered that "March was a very, very tough month… I don't see what the real catalyst for change would be over the next several months. We've got to look out to 2009 for where we're going to change.''

  • Her assessment was in stark contrast to Morgan Stanley's John Mack and Goldman's Lloooooooyd Blankfein, both of whom said that the credit crunch was in the late stages.

  • Dr. John weighs in with his thoughts on what inning we're in with regards to the credit crunch.

  • If earnings continue as they are, Boo is gonna grill a lot more than this…


R.P.

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