As Morgan Stanley Unwinds Its Massive MBIA CDS Losing Position, Is A Billion+ Hit To Earnings Coming?

Tyler Durden's picture

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Quinvarius's picture

Proving yet again that no matter how much money we give the banks and financial institutions, they will blow it in a massive fashion.

Sudden Debt's picture

oké, their system may be a bit flawed...






SheepDog-One's picture

Morgan Stanley cant even make money in a rigged game? Who at MS peed in Timmahs Cap'n Crunchberries?

Sudden Debt's picture

It's Goldman's and JPM's game and Morgan isn't invited.


as Kadafi would say:


oogs66's picture

I wouldn't get too excited about this.  Its probably largely a hedge against positions it owns, so their exposure is likely only to the basis and has probably been leaked in quarterly.  Could be wrong, but I would be shocked if they have such a large outright position.

SteveNYC's picture

Quick, get Bernanke on the phone pronto! We have a hole that needs to be filled with some paper, ink and linen....

Cdad's picture

Nah...Morgan Stanley just reduces its cash reserves, calls them earnings...presto...hole filled.

All America needs right now, more than it needs more criminal syndicate Wall Street bankers, is more creative accountants.

All is fine.  After all, how much is $1 billion anyway?  Nothing....loose change scraped out of some Fed budget somewhere.  Joe Taxpayer is always there to need to hit the bonus pool or anything.

ummm  /f'n sarc4

jkruffin's picture

Who didn't realize that Morgan was next to go.....First Lehman, then Bear, then Merrill, and next up is Morgan.  Who else is left?  None.  That leaves GS and JPM to rule the world again having taken out all the competition.  Until they collapse themselves.

Fíréan's picture

Morgan Stanley made huge losses on real estate investment previous and Barclays ( owed bilions by MS) came to the rescue, same Barclays which took up Lehman ( at a discount and made huge profit from it) . Now Barclays looking for way out of UK., where  considered too big ( bigger than UK GDP), rumoured to be also looking for USA bank to purchase.  Will Barclays come to "rescue"  of MS again, or eat it up at a discount, as exit strategy ?

FunkyMonkeyBoy's picture

Stick it on the taxpayers tab of this generation, the next generation, and the next...

...courtesy of your criminal overlords.

Dan The Man's picture

i sure wish i understood this one

TwoShortPlanks's picture

Wow, maybe they wanna buy some Gold and cover those losses? LOL

RobotTrader's picture

Sorry, but gold and silver will get decimated if MS, GS, and the rest of the financials suddenly hit the airball zone and start freefalling.

I'm still amazed at how the gold bulls still don't get it.  PM's and PM stocks are the first items dumped in a crisis.  Just look at the horrid action in AEM, NEM, etc., a clear example of how these stocks are crapped upon at the slightest hint of a derivatives or banking crisis.

Yes, these stocks will come rocketing back, but only if the Dow turns around and starts heading back up to 15,000.

Dr. Engali's picture

That's true  gold and silver will get smacked but  it will present a great buying opportunity.

fredquimby's picture

Gold "paper" may get "smacked" but physical is physical is physical.

There ain't no substitute. Certainly not a paper one.




cowdiddly's picture

PMs are the first things dumped in a crisis? I think you are in for a history lesson. PLLLLUUULEEEEEEESSS. Just like 2008 Huh. Keep holdin that paper mate and praying for momo or pomo and I will spend one of my Buffaloes to set your broken arm after you have to jump out of your trailer house window.

LawsofPhysics's picture


Any smart investor knows that "paper" gold and silver is not trustworthy.  I dumped half my paper holdings in November to buy more hard assets and land for my business.  Still have plenty of physical.  Now get the Fed out of the way so we can get back to work.  If they keep fucking things up by allowing blatant fraud at all levels to persist, then all bets are off.  People starting to wise up to the banking cartel and their monopoly.  If the global puppet masters were smart they would prosecute ALL the fraud and allow some genuine competition and deflation to continue.  Greed may be their own undoing, eventually ALL things paper go bidless.

RobotTrader's picture

It really doesn't matter.

The Fed will simply allow the banks to mark to "make believe".

It's all rigged.  Nothing will be marked to market.  They will just assign some fantasy value to it and let it sit on the books for 20 years or so, until the securitization market is once again booming, at which point MS and GS will offload this garbage to hapless speculators.

Within days, MS stock will get sold out, and mo-mo players will start jumping all over it in order to gun for another squeeze.

Earnings don't matter.

All that matters is price action, chart-painting, and momentum.

Cdad's picture


Ummmm....kinda.  Seems like you are missing something.  Seems like the underpants gnome thing.  You seem to be missing the third step, momentum breaks on [insert whatever stupid catalyst], and people turn and dump into a bidless book causing the shares to crash.  

Ummm...if you put that step back in don't got no underpants gnome cycle to book profits on.

But other than on, Robo!

SheepDog-One's picture

Ol Catfishmouth so nuff do loves his paper!

buzzsaw99's picture

the bernank buys the underpants.

Fearless Rick's picture

"until the securitization market is once again booming"

When's that? 2135? Maybe 2380? Those are dates, years, not the value of the S&P.

Securritization, like globalization, are dead, like all -izations.

How about you mortgagizate your FRNization with a bet on the complete iPadization of the world.

SwingForce's picture

Don't they read the TBTF guidebook?

buzzsaw99's picture

Morgan Stanley loses money the old fashioned way!

Dr. Engali's picture

Couldn't happen to a better group of people (except maybe Goldman slacks ). Unfortunately they will sluff it off on us.

Robslob's picture

1) Wake me up when banks are losing Trillions (Billion is so 2008)
2) Wake me up when Gold is $8,000 ounce
3) Wake me up when a dollar is worth a dollar
Strike that...if the dollar has value we would be in a Depression

reachsb's picture

The trillions of Dollars handed out to the bandits in the banking system till date will all eventually vaporize. The shadow banking system is caught up in this massive gordion knot from which it won't be able to extricate itself. Just imagine if instead of bailing out these parasites, we had poured all that money into our infrastructure, R&D, etc?

writingsonthewall's picture

For 0.5 Trillion would could have built a large solar powered moon base.


We blew 1 Trillion on bailing out the system - which looks like it didn't even get a result!


I know which one I would prefer. I quite fancy a moon trip.

reachsb's picture

Absolutely agree. We could have setup some rudimentary mining operations on the Moon or other nearby planets. In order to do so, the Govt would have had to invest in massive R&D to get our Aerospace program upto speed.

The Fed has always been accused of creating market distortions in order to solve minor problems. One of the distortions has been the undue weightage assigned to Finance as a career choice for some of the brilliant minds in the nation. We have nuclear physicists, PhDs from other engineering disciplines, etc. all transitioning into Finance from their core competencies. This translates into a net loss for the other productive sectors of the economy (Finance is not a productive sector of the economy. It's actually a parasite on the US Economy - sucking away the blood from the sectors that actually contribute to GDP growth).

As a society, how much arbitrage can we play or how much fine tuning do the CDS swaps need? It's insane to stand apart from the maddening crowd and observe the herd mentality of the lemmings. Wall Street is so ensconced in its own world, that it hasn't even realized that it has morphed into a parasitic species that is on its last legs - when parasites become cannibalistic and prey on each other after sucking the marrow of the host. Therefore the constant need to keep inventing one ponzi scheme after another to keep the revenues coming in and feeding the beast. The Abacus CDOs were a classic example of cannabilizing your own.

The sooner we cut off the food supplies to these parasites the faster the economy can heal.

Manthong's picture

"If... we had poured all that money into our infrastructure,"


How do you like your poison, corrupt banks or corrupt infrastructure contracts, politicians and unions?  

Robslob's picture

Or just poured it on ourselves and let us decide where to spend it...oops wait a minute, that is the difference between a "democracy" versus a "republic"....

Ben, No Weimar for you 1 Year!

Seasmoke's picture

Morgan Stanley is still in business ?

monopoly's picture

Except for the Giant Squid, could not have happened to a more worthy enterprise.

luk427's picture

On the bright side executive bonus packages will rise. It's tuff doing God's work these days.