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NEW -> Contingent Buyer Assistance Program
<p>Let me put it this way, profette: My wife has been completely skeptical of my take on things, comparing me to Chicken Little and calling me paranoid. This morning, while browsing the business headlines, she said "I'll look at what it will take to close out my 401k by Tuesday morning". My wife is not given to panic or spontaneous actions, so when that woman gives in to fear and looks for a way out it is a clear sign that something finally got through to her. It may be anecdotal, but if my fiscally conservative wife suddenly becomes willing to sacrifice 36% of her retirement account to avoid huge losses, it's not a stretch to think that other, normally calm and conservative, people are thinking the same thing. The futures reflect that now, and if the international markets follow today with another round of 5-7% losses tomorrow, the stage will be set for a full panic sell off when our own markets finally open... two trading sessions behind the world. There aren't enough blankets to hide from that.</p>

<p>I resisted the urge to tell my wife "see, I told you so" because tomorrow may see a huge rally in those same markets that got killed today. I also told her to forget about closing out her 401k; her retirement is so far away that she can weather any downturn, even if it is biblical in proportion, but if it does go to zero we've got bigger problems than loss of money. It's clear that fear has set in among the pros. Let's hope that the phone lines are not clogged with normal people trying to beat everyone else through the door tomorrow.</p>
 
<p>There's a posting on Institutional Risk Management, which I came by via comments on Calculated Risk, which says that B of A does not really intend to stand behind CFC, specifically its bondholders. Instead of a direct merger, it is creating an separate entity for Countrywide to merge with, where it will stay in limbo for an indefinite period. The I


RA posting sez that FSDIC insured entities can't go bankrupt, they are taken over by a receiver. B of A is therefore allowing for the non Federally insured part of Countrywide to go bankrupt separately, if necessary. The bonds are trading at the 10% yield level, which IRA regards as on the high side.</p>

<p>And boy, am I glad that I got rid of about 2/3rds of my stocks months ago.</p>

<p>Nude, really, the sock is much less pretentious. And poor Adam is not very well endowed. And by cutting out god, the focal point of the picture, which is the empty space between the fingers (very zen, that, the focus being empty), is no longer the focus. The focus as you've redone it is Adam's armpit. Gosh, you've cut out the empty space too.</p>

<p> </p>
 
<p>Liz, you overanalyze things. He's nude, 'nuff said. I also cutoff his fingers and right foot. Do you want to opine on the symbolism of that as well?</p>

<p>ASX 100 is down 3% at open.</p>
 
<p>I did analyze the fingers. The fingers of God and Adam and the space between are the soul of the picture. (The electric spark, tho nobody knew much of anything about electricity then. Except that amber had strange properties.) The fact that Adam is nude is almost irrelevant. My undergrad degree was in art. Hence the over analysis. Actually, under analysis. I could go on for pages on that fresco, and others have spend lifetimes analyzing it, and tens of thousands of pages. Use one of the iconic pictures of western civilization and don't be surprised that someone comments.</p>

<p>I wonder what Europe and Asia will end up at by dawn tomorrow.</p>

<p> </p>
 
Oh, and there is the whole spaghetti god thing. I think that is based on that picture. But I could be wrong. Now, if it was and you wanted to use nude spaghetti, I would think it was hilarious and entirely appropriate.
 
<p>CNN is talking about "pent up demand" in Mexico.</p>

<p>Hmm, what happens when the remittances drop like a stone and the remitters come home.</p>
 
Hat tip Calculated Risk. Here is the <a href="http://www.cbot.com/cbot/pub/page1/1,3248,432,00.html">linky to the live CBOT Dow futures</a>. About a 500 point drop as I type this.
 
<p>Good paper on effect of baby boomers on demand/supply for different types of housing, and in different states. </p>

<p><a href="http://www.informaworld.com/smpp/content~content=a789053981~db=all~order=pubdate">http://www.informaworld.com/smpp/content~content=a789053981~db=all~order=pubdate</a></p>

<p>IR - see figure 2 'Ratios of median home sales to median incomes of household heads aged 30 to 34 by state" in the pdf file - make a nice graphic for an article</p>

<p>Nice quote on p. 13</p>



<p align="left">Members of the baby boom generation themselves who are homeowners could be losers. As home values decline, so will home equity, shrinking retirement savings. For example, Nothaft and Chang (2004) recently reported that home equity—the difference between the home value and the amount of mortgage debt on the property—comprised at least 50% of net wealth for one-half of all households. Home equity is not only the single largest component of net wealth for most families, but it is also held by a broader cross section of families when compared with other assets. (p. 2)</p>
 
Watch ACA's counterparty risk to the tune of $60 billion of credit default swaps. The dominos are falling and picking up speed. How much will Bernanke lower by? 1%? It won't help. There will be a suckers capitulation and then, "Look out below."
 
<p>liz-</p>

<p>For a general view you can go to <a href="http://money.cnn.com/data/world_markets/index.html">http://money.cnn.com/data/world_markets/index.html</a></p>

<p>For the Nikkei specifically, I like <a href="http://www.nni.nikkei.co.jp/CF/FR/MKJ/">http://www.nni.nikkei.co.jp/CF/FR/MKJ/</a></p>

<p>awgee-</p>

<p>I think "look out below" comes faster if they do lower rates by a large amount. I've given up trying to make sense of the Fed's actions, but if they panic and drop a full 100 basis points I think we'll skip right past the cheerleader's rally and get right to the 10/20/30% trading stops. As for ACA, I'd get a kick out of seeing the look on the CEO's face when the calls for payment start coming.</p>
 
Does anyone see a problem here?





<img alt="" src="http://www.irvinehousingblog.com/wp-content/uploads/2008/01/ratio-of-house-values-to-median-income-by-age.jpg" />
 
<p>awgee-</p>

<p>here's the link: <a href="http://www.nyse.com/press/circuit_breakers.html">http://www.nyse.com/press/circuit_breakers.html</a></p>

<p>and here's the text of Rule 80b:</p>

<p><em>Effective April 15, 1998 the SEC approved amendments to Rule 80B (Trading Halts Due to Extraordinary Market Volatility) which revised the halt provisions and the circuit-breaker levels. The trigger levels for a market-wide trading halt were set at 10%, 20% and 30% of the DJIA, calculated at the beginning of each calendar quarter, using the average closing value of the DJIA for the prior month, thereby establishing specific point values for the quarter. Each trigger value is rounded to the nearest 50 points. </em></p>

<p><em>The halt for a 10% decline would be one hour if it occurred before 2 p.m., and for 30 minutes if it occurred between 2 and 2:30, but would not halt trading at all after 2:30. The halt for a 20% decline would be two hours if it occurred before 1 p.m., and between 1 p.m. and 2 p.m. for one hour, and close the market for the rest of the day after 2 p.m. If the market declined by 30%, at any time, trading would be halted for the remainder of the day.</em></p>

<p><em>Under the previous Rule 80B trigger points (in effect since October 19, 1988) for a market-wide trading halt, a decline of 350 points in the DJIA would halt trading for 30 minutes and a drop of 550 points one hour. These trigger points were hit only once on October 27, 1997, when the DJIA was down 350 at 2:35 p.m. and 550 at 3:30, shutting the market for the remainder of the day.</em></p>

<p>Do I think we'll hit 10% in a day? Yes. Do I know when? No. If I had that kind of information I'd be setting up shell corporations in the Bahamas, hoarding every dollar I could beg, borrow, and steal, and shorting the whole market all the way to the bottom.</p>

<p> </p>
 
Keep in mind the herd behavior in the markets. If everyone thinks tomorrow is going to be a disaster, everyone will be short at the open, and the open will be very low. That sets the stage for a massive short cover rally. Whatever the herd believes is going to be wrong. Don't be too surprised if we see an open 600 points below Friday's close followed by a 400 point rally.
 
I agree that's possible IR, but if things really are unwinding as the other market drops seem to indicate, that 400 point rally could be followed by another 1200 point drop. Trading the VIX might be the only safe play.
 
<p><a href="http://tinyurl.com/2rlfwz">The Hang Seng Index shed 5.4% or 1,298 points to 22,517.26</a>. The 43-issue H-share index, Hong Kong's benchmark for China shares, plunged 7.3% to 12,536.47.





"We have yet to see the panic selling," said Andrew Clarke, a trader with S.G. Securities in Hong Kong. "Yesterday's sell-off all seemed kind of cool, calm and collected, and that's kind of worrying." </p>

<p><a href="javascript:void(0);/*1200981089864*/">India's Sensitive Index tumbled 2,029.05 points</a>, or 11.5%, to 15,576.30 in the early minutes, forcing trade to be halted for an hour. The index had finished 7.4% lower in the previous session, after dropping as much as 11% during the day. </p>

<p> "It doesn't look good at all. We expected it to fall, but nobody expected this kind of correction," said Sharmila Joshi, a trader with Prabhudas Lilladher in Mumbai. </p>
 
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