Musings

This is one of the most historic weeks in US financial history. That was a period. And I'm not excluding black monday, the great depression, the S&L crisis, or any of the other monumental events that shaped our financial history. If you're not reading every possible thing you can get your hands on, if you're not reading the Journal and soaking it up, you're an idiot. That was a period.

I'm not going to reiterate everything that's happened over the last few days, if you don't know go read the news paper.

-The housing starts number sucked today. Guess what? That's great news. Housing starts will be the last part of the housing market to recover. Right now the biggest problem in housing is the inventory (the amount of houses on the market). If more homes are being built, that number goes up by more. Starts going down let's us rip through the inventory and go through the price discovery process. Let's not forget what started this shit show, housing. What's going to lead us out? Housing.

-The journal had a phenomenal article on the AIG mess front and center on pg 1. Go steal a journal from the front of an apartment building or go to this thing they call the library. Read the article, study the chart at the top of the second page of the article, it's a great simplification of how AIG got in trouble. AIG got killed by the credit default swaps they helped create, which are basically insurance on banks' debt, or in other words: insurance against a firm going bankrupt. Think about how the value of that has changed over the last few months.

-Barclays got the deal of the century yesterday. They bought the good parts of Lehman for $1.75bn. Included in this is Lehman's main office building which the Journal reported valued at $600-900 million. Essentially, Barclays bought one of America's best financial services institutions and investment bank for $1.15BN max. And they didn't have to tke any of the toxic paper with them because LEH was already in bankruptcy. For comparison purposes, Bank of America paid in the neighborhood of $50BN for Merrill Lynch. In my opinion Barclay's got a much better deal than even JP Morgan did when they were wed with Bear Stearns.

Those are some of my quick musings. I will write another post about the underlying theme of this whole mess, greed, shortly.