Larry Kudlow of CNBC Reporting of Emergency Federal Reserve Meeting Tonight

CNBC television | 7/23/2002 | Larry Kudlow

[rumrunner]

Larry Kudlow mentioned that the Federal Reserve may be meeting tonight to discuss the exposure of Citibank and JP Morgan Chase to derivatives and the stock market collapse.

Possible that both banks have billions of derivatives that need to be unwound. Would collapse the banking industry.

[Scott from the Left Coast]

Similar to Washington state: The Vancouver and Victoria areas -- where all the population is (and all the immigrants) is way, way, way far left. The rest of BC (especially the interior, due east of Vancouver over two mountain ranges) and in the large expanse to the north is becoming Alberta-like, even more to the right than similar areas of the western U.S. The taxes on business there are unbelievable, and the really lousy Canadian dollar hurts them as well.

Forget Bellingham, next to Seattle and Olympia (where I live), it is the most radically left wing area of the state.

[Travis McGee]

This thread is really worth wading through to understand the danger our entire economy is in today.

There is a very good primer on derivatives posted just above.

[backhoe]

Civil War II, by Thomas Chittum
... whether he wishes this country well or ill, should read a dire warning of the consequences
of mass immigration and ethnic separatism called Civil War II: The ...
home.earthlink.net/~karljahn/cw2.htm - 7k - Cached - Similar pages

[Travis McGee]

THANKS!!

[Scarlet Pimpernel]

"Like it or not, this will go down in the history books as the Great Bush Depression."
Yep.

[RightWhale]

the derivatives in which Citigroup and especially Morgan have such exposure are gold derivatives, and that, if the price of gold goes above a certain amount (I think he said 332,) Morgan will default

This is getting way too complicated.

[Robert357]

Very interesting. Thank you.

An official familiar with the investigation will testify at today's hearings before that panel that Yosemite, Mahonia and other deals allowed Enron to understate its debt by 40% while overstating cash flow by as much as 50%, according to a draft of his statement. Cash flow is a crucial measure of financial health for energy companies such as Enron.

The comment about a repeat of the S&L crisis struck home to me. Particularly, the fact that the S&L crisis was triggered by a lot of shaddy transactions that could not be sustained when the tax laws were changed and market demand for property fell away.

The parallel I see is that the market was deregulated and all kinds of shaddy transactions happened but could not be sustained once price caps and refusals by State's like California (and its ISO) to play by the previously agreed upon "rules."

As in the S&L crisis, the change in tax laws was not the "critical event," but the underlying shadding transactions. I see in the power crisis, that the "critical event" will be remembered as the Enron, A. Anderson, various banks pushing up their revenues and volumes to falsely enhance stock price.

My question is that it has been a long time since I heard all the Democratic national party leadership chant Enron, Enron, Enron. They were the folks who wanted to investigate Enron for "gouging California electric power ratepayers" in the hope of discrediting the Bush Administration. They found that Enron did some shaddy things, but that in turn has snowballed into a real economic crisis. While the underlying economic crisis would have occurred anyway at some point in time, I think it will be interesting to see this November whether the Dem's loose more controll because of this or gain more control at the federal and state level. My hope is that they loose control, big time.

Until state bonds and RAW's are issued by California, the whole short term market could be a real crap shoot.

[SierraWasp]

This just off the wire at BigCharts.com!

1:34PM S&P says Citi, Morgan liquidity worries unfounded (JPM, C) by Greg Morcroft
Rating agency Standard & Poor's said Wednesday market concerns about liquidity at J.P. Morgan Chase (JPM) and Citigroup (C) are unfounded, and retained its current credit ratings on the nation's two largest banks. S&P said Citi has considerable resources to manage through some very adverse circumstances. Regarding J.P. Morgan S&P said the firm's having no trouble meeting its obligations or accessing capital markets, and "Cash and liquid assets at the holding company exceed the amount of debt maturing over 12 months."

[Timesink]

Yep, $23.4 trillion is a stack of $1000.00 bills 313.4 miles high.

And since they don't even make $1000 bills any more, you'd never be able to find enough of them, so you'd have to go down to $100 bills, and bump up the height by an order of magnitude. 3134 miles high!

[Mr_Magoo]

I am a dummy when it comes to big finance. However a question (senerio) popped into this brain of mine. Please explain why this could not work.

Our Fed.gov has a huge debt on the books already. This debt is held by the Federal Reserve, which is run by the same big banks in trouble now.

What if the Fed.gov allowed JP Morgan to close. The outstanding debt of the 23.4 trillion that is lost could be negated by a 23.4 trillion dollar reduction in our National debt.

IOW, if a holder a debt dies without a heir than the debt ownership passes on to the gov. If the gov. holds both the debt and the debt paper, they negate eachother.

You know, Enron bookeeping fedgov style.

[Endeavor]

Hah! too funny. two of my 3 appts today were at Harvard and the other was MIT. I hope that doesn't make me one of the Ivy League! I went to Texas A&M, thank God!

[antivenom]

OMG...what is he gonna secrete?

[antivenom]

Try "Dynergy"...that will be one of the names for sure...and probably El Paso....

[Endeavor]

Uh, common sense. The leadership of Andersen encourages creative accounting and takes down the company. The leadership of Enron encourages creative accounting and takes down the company. The leadership of Global Crossing encourages creative accounting and takes down the company. The leadership Adelphi encourages creative accounting and takes down the company. The leadership of Citibank and Morgan Stanley encourage creative accounting and almost take down their companies (Citibank loses 25% of its value in two days). You do the math.

[plain talk]

How about - no sense. Reread the post I was referring to. Making up theories about papers in the twin towers and stuff. Some people need to get a grip.

[joanie-f]

Thanks for the ping, John. Interesting article.

Check your mail.