CHINATOWN, New York (August 24, 2008)
econo lines commentary to The Economist
Fannie, Freddie and Lehman ensure August is anything but quiet
Still bleeding - american finance
Aug 21st 2008 The Economist Newspaper
No excuses: "They didn't see it coming." The professionals at Fannie, Freddie and Lehman were blinded by greed. Simple as the math of further system-wide losses due.
Writedowns are currently about $300 billion USD with projected losses at over a trillion. The amount of shakedown still due is pretty simple math and pretty ugly scenario.
Back in first quarter 2006, my hair was on fire with the view that Q3 2007 was piling up to about a trillion in ARM's needing re-fi. OK: September 2007 was the peak for that and the market peak was October 2007. Do not believe anyone "in the business" that says nobody saw it coming. At 2006 Q1, Nouriel Roubini (yeah, yeah, always the pessimist) and Stephan Roach at JP Morgan Asia were publishing that view...with clear stark apprehension.It was simple math.
I illustrated the impending circumstance as a wet sand castle at the beach...it is going to dry out and one of the corners is going to fall. Day and hour is as uncertain as a breeze at the beach. It's not a clock, it's a process. Fannie Mae and Freddie Mac and Lehman played on the thin ice with egos like heavy armor. //