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Urgent memo from the Reality Liberation Front
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by Hazel Burke, Unknown News
October 7, 2007
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I have a potential blockbuster of a scenario
in mind. This will, if it comes to pass, shake
the foundations of
consensual reality, both
on Wall Street and Main Street. Can I say honestly
that I hope I am wrong? Hell no.
The reality of last week was that all of the
big money investment banks reported massive
writedowns. Billions of dollars each. Merrill
Lynch wrote down $5 billion for the 3rd quarter
and as a result will record an actual loss
of 50 whole cents a share (whoo hoo, poor
babies...) Washington Mutual ("WaMu"), the
megasized bank and lender, reported that their
profits will fall by 75%.
And what happened
on Wall Street? All of their stocks skyrocketed
based on the theory that that is that, all
dirty laundry now clean, closet skeletons
safely interred, punishment meted to the
innocent, Medals of Freedom awarded to the
guilty, and so on.
Meanwhile, the mega-sized home builder
corporations were having fire-sales, marking
down their wares by 25% or more, holding
auctions with minimum bids 50% below asking.
For example:
So for homeowners in these developments that purchased
above the fire-sale prices and now face refinancing
needs? What about them? They're totally fucked because
they owe far more than their homes will sell for now.
It does not matter how far Fed Chief Ben Bernanke lowers interest
rates, they do not qualify for a refinancing loan!
And throughout the land, builder fire-sales have the
effect of setting the prices now for existing homes.
Why pay $400,000 for a used home when you could buy
a totally new home for $350,000 -- and tomorrow for
maybe $300,000?
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Now we are at the point where vast fortunes wait
to be won and lost.
One day, those who wager correctly
will make huge sums in no time at all -- or be
allowed to stay in business -- while those who
buy into the government propaganda stand to
lose everything in mere hours.
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SOoooo... here is the scenario: Bernanke and President Bush
are patting themselves on the back, and the Dow
is at record highs as everyone wanders out onto
the tidal flats looking at the pretty sea shells
uncovered by the receding waters... But what if
next quarter Merrill has to write down *another*
$5 billion dollars, and WaMu's reduced earnings
turn into losses, and so on?
I'll tell you. If we get into November and there is
even a faint odor of Shit waiting to come out, then
all hell will break loose.
If in fact this is not the end of the writedowns
but merely the beginning, then the souvenir
hunters looking for seashells will be blown out
of existence by a tidal wave of water that will
make Katrina look small.
Now we are at the point where vast fortunes wait
to be won and lost. One day, those who wager correctly
will make huge sums in no time at all -- or be
allowed to stay in business -- while those who
buy into the government propaganda stand to
lose everything in mere hours.
Stay tuned. This is going to be fucking great.
© by the author.
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