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"There's Some Crap Getting Done": BlackRock Scared We Are Going Back To "Ponzi Finance Excesses" Of 2007

Tyler Durden's picture




 

We have now officially gone full circle. Even as CMBS delinquencies are at all time highs, Wall Street's scramble to generate yield on other people's money (which will be completely lost once the liquidity tsunami ends) is back in 5th gear, as securitizations backed by commercial mortgages are flying off the shelves. It is so bad, that even S&P (!) is questioning the sanity of all those using LP capital to sign the dotted line in pursuit of a few quarters of yield. “There’s some crap getting done,” David Jacob, an executive managing director at credit-rating company S&P, said today during a panel discussion at the American Securitization Forum trade group’s annual meeting in Orlando, Florida. “It’s surprising to me this early in the cycle that some of that could be happening.” Don't be surprised David, after all it is your company that is rating it AAA (we realize you, too, have to eat), and never ever forget that if this was merely an indication of unseen market exuberance the Chairsatan would have long since popped the latest (and luckily last - after this one, there will be no one left to bail out the world) bubble. And someone else scratching their head at the current round of irrational exuberance that would make the dot com era look like dress rehearsal for "Spiderman: The Musical" is none other than some guy from Blackrock. "It’s been surprising how quickly investors have returned to
accepting transactions with numerous AAA rated classes, said
Blewitt, co-head of securitized assets at BlackRock, the world’s
largest money manager. Some bond buyers may not be scrutinizing
offering documents closely enough to find “hidden” dangers, he
said. “I don’t think we’re going back to the Ponzi finance
excesses that we had in 2006 and 2007 just yet, but when I get a
little bit scared is when I see the old game of, ‘These are not
your droids, look over there, not over here.
" Blewitt is right: the current round of 'Ponzi finance excesses' is like nothing ever seen before. But then again we have QE2 (then 3, 4, 5, 6, 7, 8, etc) to mask just how enamored with droid chasing we all are. When this last bubble pops, it will be monumental.

More from Bloomberg on the biggest and most naked emperor the world has ever seen.

Sales of commercial-mortgage backed securities will rise to $45 billion this year after banks arranged $11.5 billion of the debt in 2010, according to JPMorgan Chase & Co. Issuance plunged to $3.4 billion in 2009 compared with a record $234 billion in 2007, according to data compiled by Bloomberg.

“Commercial banks and Wall Street firms are building out platforms that will feed the beast,” said Martin Hughes, chief executive officer of Redwood Trust Inc., which in April completed the only private residential-mortgage deal in almost three years and last year began lending in the market.

The market for securities backed by automobile debt is in many ways now no different than in 2007, before the financial crisis, said Scott Krohn, director of asset-backed securities and long-term funding at Ford Motor Co.’s finance arm.

The company will probably sell $12 billion to $16 billion of the bonds this year, up from $11 billion last year, in part reflecting growing car sales as the economy strengthens, he said.

“In my estimation the auto ABS market is all the way back in terms of spreads and liquidity,” he said during the panel. “In our last transaction, we had subordinate classes that were as many as six times oversubscribed,” he said later.

When the music ends, many will part with their careers, cushy paycheks, momo trading accounts, imported sport cars, imported wives, imported cocaine and, yes, lives. Until then, as the poet and the corrupt CEO said (before he blew up his company), we must all dance. So be it.

 

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Tue, 02/08/2011 - 15:59 | 943857 oogs66
oogs66's picture

This is why Greece and Ireland should just default.  Screw austerity, and no matter what the bankers tell you, they will lend to you hand over fist again, sooner than you can believe.

Tue, 02/08/2011 - 16:08 | 943895 Mad Max
Mad Max's picture

Case in point, Iceland.

Tue, 02/08/2011 - 16:32 | 943966 Rick64
Rick64's picture

 Iceland hasn't defaulted on anything that I know of. They have recieved loans from the IMF from 2008-2010. They are still debating on whether to make UK and Netherland depositors whole from the Icesave bank collapse.

Tue, 02/08/2011 - 17:04 | 944086 DonutBoy
DonutBoy's picture

Exactly.  Iceland did not nationalize their bank's debts.  I believe Ireland will be a sovereign default when the ECB tells them to stop printing their own Euros.  Quite a difference from the 'c' to the 'r'.

Tue, 02/08/2011 - 16:16 | 943925 Pladizow
Pladizow's picture

So is the squid already praising, selling and shorting yet - Abacus 2.0?

And how do I get in?

 

Tue, 02/08/2011 - 15:58 | 943858 Ragnarok
Ragnarok's picture

TSCGD! Yes, new saying.

Tue, 02/08/2011 - 16:05 | 943882 papaswamp
papaswamp's picture

Auto backed securities? Housing appreciates (supposedly)...autos depreciate....suckers born every nano second I guess.

Tue, 02/08/2011 - 16:29 | 943958 SheepDog-One
SheepDog-One's picture

'Auto backed securities', thats hillarious. Hey I know a guy down the street with a newly leased BMW, he'll probably lose his job in the next couple of months, hey lets base an economy on that! 

Tue, 02/08/2011 - 16:32 | 943963 rational
rational's picture

There has been an Auto ABS market for years and it performed very well throught the recession.  Largely because it does not rely on recovery values from the vehicles but discounted cashflows on relatively short-term obligations.  In recent years people are more likely to pay the car loan than the mortgage.  You need the car to get to work but you can always default on the mortgage and live in the house for a couple of years...

Tue, 02/08/2011 - 17:00 | 944071 Joe Davola
Joe Davola's picture

Those guys on operation repo are pretty tenacious.

Tue, 02/08/2011 - 16:06 | 943885 thepigman
thepigman's picture

These idiots are going

to repeat the 2008

crash all over again.

They've learned nothing

other than they can get

away with it.

Tue, 02/08/2011 - 16:17 | 943930 SheepDog-One
SheepDog-One's picture

Well they refuse to take a haircut, this time theyll see as thru history that a guillotine cut awaits them next.

Tue, 02/08/2011 - 16:57 | 944056 cougar_w
cougar_w's picture

they certainly did get away with it and made a ton of money.

round 2. more of the same.

Tue, 02/08/2011 - 17:20 | 944157 TruthInSunshine
TruthInSunshine's picture

Why not?

Ben Bernanke, Timmy Turbo Geithner & ObaMao will have their backs.

These guys tell the aforementioned three WTF they can, can't and must do.

Tue, 02/08/2011 - 16:08 | 943890 Mad Max
Mad Max's picture

So the full collapse is no later than Q2-2012, eh?

Tue, 02/08/2011 - 16:08 | 943891 william the bastard
william the bastard's picture

The Rise and Fall of a Foreclosure King

"Stern's caseload rose from 15,000 foreclosures in 2006 to 70,400 in 2009. His staff tripled to more than 1,200. To keep up with demand, Stern set up offices in the Philippines.

..a one-time file clerk named Cheryl Samons who rose to become the firm's chief operating officer, signed as many as 1,000 foreclosure affidavits a day without reading a single word. The employee said Samons' hand got so tired that she told three other employees to forge her signature."

http://www.washingtonpost.com/wp-dyn/content/article/2011/02/06/AR2011020601899.html

Tue, 02/08/2011 - 16:09 | 943904 Hephasteus
Hephasteus's picture

So you're reverting back to being  a cut n paste troll?

Tue, 02/08/2011 - 16:08 | 943892 Hephasteus
Hephasteus's picture

LOL. He thinks the fraud has lessened since 2006. What an IDIOT.

Tue, 02/08/2011 - 17:07 | 944103 cougar_w
cougar_w's picture

Sounds like you are questioning mark-to-unicorn. You know, they can toss you into Gitmo for that kind of thing.

Tue, 02/08/2011 - 17:22 | 944168 Hephasteus
Hephasteus's picture

I just don't understand why they are having so much trouble with this. The dollar is going to collapse. The fraud has not gone away at all. The fraud will simply grow and increase and spread until it collapses. I mean you didn't see people sucking it up and dealing with in 2000. No they are doing more and more increasingly dangerous things to hold on to it.

People are dumping the dollar. We know it they know it. Trying to make your hay now is a bit off the rocker.

Tue, 02/08/2011 - 16:08 | 943893 Sabremesh
Sabremesh's picture

 “It’s surprising to me this early in the cycle that some of that could be happening.” 

The reason that numbnuts is surprised is because he thinks that we are somehow in the beginning of a new cycle when we are actually witnessing the catastrophic implosion of an entire financial system.

 

PS Is it just me, or ZH dumbing down their captchas?

Tue, 02/08/2011 - 16:25 | 943947 SheepDog-One
SheepDog-One's picture

'Early in the cycle'... what cycle is he talking about, never-before even imagined levels of printing trillions in order to buy 100 P/E stocks and bonds? 'Cycle' my ass. Well when even book-wormy kooks like this can clearly see that SOMETHING is very wrong, it shows its quite near something really bad going down.

Tue, 02/08/2011 - 17:09 | 944108 cougar_w
cougar_w's picture

I read that and had the same reaction.

It's not a cycle, it's a slide over a cliff.

But I guess everyone has to come up a narrative that allows them to sleep at night.

Tue, 02/08/2011 - 17:40 | 944246 Apocalicious
Apocalicious's picture

Cougar, it's only a cliff once you get to the edge. Until then, it's just a nice flat footpath. These guys are clawing and scratching and fighting to keep from getting to that edge, and they do whatever it takes to keep upright, even if it means the fall will be bigger once we get there...

Tue, 02/08/2011 - 16:09 | 943898 alien-IQ
alien-IQ's picture

judging by the (seemingly) new market "standards"...the S&P still has about another 300-500% upside before it gets into truly bubblicious territory.

Tue, 02/08/2011 - 16:11 | 943910 b_thunder
b_thunder's picture

"When the music ends, many will part with their careers, cushy paycheks, sporty cars, imported wives, and, yes, lives"

The music already ended once, but other than Winkelried who went from the top floor of GS to his horse farm volumtarily, and Berie madiff who went from the penthouse to the Big house involuntarily, nobody else really paid the price.  And the same people that will bail them out during the next crisis.

 

Tue, 02/08/2011 - 16:15 | 943921 SheepDog-One
SheepDog-One's picture

'Ponzi finance excesses of 2007'? NAH! The present Ponzi pyramid farce is thousands of times BIGGER!

Tue, 02/08/2011 - 16:18 | 943932 Convolved Man
Convolved Man's picture

As Ben is a fiddling, the bankers be a diddling.

Tue, 02/08/2011 - 16:22 | 943941 SheepDog-One
SheepDog-One's picture

Yea little boys probably.

Tue, 02/08/2011 - 16:19 | 943935 topcallingtroll
topcallingtroll's picture

Ok any of you day traders dumb enough to.follow the advice of an anonymous troll take your psdv profits at 4.20 otherwise i revommend a collar if you want to.continue to swing, but intermediate term i wouldnt expect it to go higher than 4.40 and there still could be.some big.downside lurking at the fda.

Tue, 02/08/2011 - 16:24 | 943945 topcallingtroll
topcallingtroll's picture

Intermediate term is two weeks to a swinger.

Tue, 02/08/2011 - 16:39 | 943988 RobotTrader
RobotTrader's picture

Unreal moves in WFC, COF, AXP today

No doubt, the "fix is in"...

Tue, 02/08/2011 - 16:41 | 943995 joseywales
joseywales's picture

Mr. Blewitt's first name is  . . . .  Dick.  No joke.  I recall an ex-BofA slinger of credit derivative sheit.

Tue, 02/08/2011 - 16:41 | 943997 RobotTrader
RobotTrader's picture

Amazon's warning completely erased...

Tue, 02/08/2011 - 18:24 | 944421 Hephasteus
Hephasteus's picture

That must break poor general jim's heart.

Tue, 02/08/2011 - 16:46 | 944001 docj
docj's picture

Meanwhile, President "I'm all about cutting the budget" Barry is thinking that $53 BILLION for high speed rail that precisely nobody is going to use is a swell idea.

http://www.msnbc.msn.com/id/41021318/ns/business/

Beam me up, Scotty.

Tue, 02/08/2011 - 16:45 | 944009 UGrev
UGrev's picture

I'll give him +.5 for the attempted star wars ref. These certainly are not the ponzi's you're looking for. They can go about their business. Move along.  

Tue, 02/08/2011 - 16:49 | 944024 cougar_w
cougar_w's picture

A collapse in issuance from $234B to $3B in 2 years is like a total fucking meltdown.

And it's already back?!?

If this isn't front-running the next mega-giga-tera-bailout then I don't know what would.

Tue, 02/08/2011 - 16:50 | 944031 10kby2k
10kby2k's picture

 

i've been following markets my entire life.  Hence the screen name i made on AOL in 1995  10Kby2K!   Everyone laughed at me.  Well it made 10K by 1999 and I sold everything and vowed never to return to the stock market, because I knew I was riding a bubble and I got out on the right side and going 1-0 versus the market was good enough for me and my future.  I aslo kept my son and his cousins out of real estate over the last several years.  Boy, are they thanking me now! But I have been parked CDs for 12 years fearing the deflationary recession aka Japan 1989-present.

But then came Benny.  He can't have a prolonged recession and take the medicine like Japan.  Own the problem and try to work through it.  Japan is not that bad off.  They still have wealth, but there is NO froth. Its gone...they used up their lot. So, Benny can't just let us delever and grind through the situation we created, he has to pull out his 'nuke' and threaten destroying the whole game.  Security is one thing people crave and I'd rather be in japans position than the road we are on.  It scares my security outta me.  Benny is playing russian roulette.  Do or die.  All or nothing.

The house of cards is so much more fragile today than even 2008 or 2001. We aren't dealing with a run of the mill alcohol addiction here.....its equivilant now of a full blown $2000/day heroine addiction and the prognosis of a recovery is small.

DOES NO ONE HAVE ANY COMMON SENSE ANYMORE ? Hurry up and collapse the system.....i truly think I am going insane watching what is happening.  The king has no clothes.  The sun is yellow.   Water is blue.  Maybe, I'm wrong about the sun and water, too.

 

 

 

Tue, 02/08/2011 - 16:58 | 944062 Cocomaan
Cocomaan's picture

its equivilant now of a full blown $2000/day heroine addiction and the prognosis of a recovery is small.

Except in this case, it's a $47,000/second liquidity addiction. Note that this figure is actually more than the median household income for Americans.

Tue, 02/08/2011 - 19:03 | 944544 downrodeo
downrodeo's picture

$47,000/second liquidity addiction

 

Thats a lotta smack

 

Wed, 02/09/2011 - 01:35 | 945579 AsIseeIt
AsIseeIt's picture

"Hurry up and collapse the system"   Nice summation.    I can't come up with a better alternative that will gavanize America into the anger necessary to purge the crony-capitalist cabal currently in power.

Tue, 02/08/2011 - 16:55 | 944049 The Axe
The Axe's picture

The 2 year note has exploded !!!!!!!

Tue, 02/08/2011 - 17:00 | 944070 Misean
Misean's picture

Time bombs do that eventually. Best to avoid them when the clock dips down towards 007.

Tue, 02/08/2011 - 16:57 | 944058 Misean
Misean's picture

Blewitt...ROFL.

Tue, 02/08/2011 - 17:00 | 944072 doubleot
doubleot's picture

Has Trepp written any commentary lately on the CRE market?

Tue, 02/08/2011 - 17:16 | 944137 gwar5
gwar5's picture

This all reminds me what an 83 year-old guy told me while I watching the Superbowl.

He was 18 in the navy, in port in Greece, at the end of WWII. The ships captain gave him and 11 other guys $1 million each in USD. No shit. He was told to go have a good time and spend all the money and don't come back with any in a week. Good times and hookers for all. The plan was to stimulate the local economy with $12 million as part of a plan to befriend the Greeks and make them shun the communists. It was all part of the Marshall plan to rebuild Europe.

Bernanke is the Marshall plan for the cratered economy, but it's not going to the locals.

 

Tue, 02/08/2011 - 18:05 | 944362 Mark Noonan
Mark Noonan's picture

But, hey, people are still getting screwed in the deal and maybe Ben will send us all flowers when he's done...

Tue, 02/08/2011 - 17:24 | 944175 TruthInSunshine
TruthInSunshine's picture

10 year will be up 40% from where it is now by year end, if not higher.

Bernakicide - it's all fun until a hundred million of Americans lose their eyes and everything else (and billions around the globe pay 50% more for their necessities).

Tue, 02/08/2011 - 18:01 | 944349 savagegoose
savagegoose's picture

hey here in australia we got haliburton to build a rail form alice to darwin.

haliburton , because our ex PM was a good buddy of georgey, and you know cant trust open tenders to deliver a good product.

its not even high speed rail and price for a ride form adelaide to darwin, thats across the country, is $2000, less than air fair.

 

anyhoo , recent floods washed away the rail, and i guess it will be $2500 a trip after the repairs get finnished.

Wed, 02/09/2011 - 02:46 | 945681 StychoKiller
StychoKiller's picture

When I catch those jerks that spiked my coffee with brown LSD, I'm gonna rip off their heads!  Nothing seems to make any sense anymore!

Tue, 02/08/2011 - 18:02 | 944353 Mark Noonan
Mark Noonan's picture

I know I shouldn't be surprised at this, but I am.  I mean, in my life I've made some pretty stupid mistakes - but I don't tend to make the same stupid mistakes.  Once burned, I tend to stay away from the fire.  We were just burned to a crisp by this sort of nonsense just a few years ago...and now people are, what?, figuring it won't happen, again?

Are they all stupid, or just corrupt and figuring they'll ride the wave as long as it lasts?

Tue, 02/08/2011 - 18:12 | 944386 Tense INDIAN
Tense INDIAN's picture

INDIA is SICK....SOS:::

 

http://markettechnicals-jonak.blogspot.com/

Tue, 02/08/2011 - 18:54 | 944512 Obaminator
Obaminator's picture

Can somebody please get my crap done.?

crap...i didnt get my crap done.

I really do need to get my crap done...wait...what is crap?

Ahhh...screw it! I cant do crap!

crap.

Tue, 02/08/2011 - 20:17 | 944717 Rainman
Rainman's picture

' BR's afraid we're going back to 2007 Ponzi excesses ' ....?? I thought the train never even left the station. Silly me.

Wed, 02/09/2011 - 00:22 | 945436 mhjhnsn
mhjhnsn's picture

"Early in the cycle"????????

Cripes, this has been going since about 1997 and already popped twice. 

Wed, 02/09/2011 - 02:26 | 945654 Grand Supercycle
Grand Supercycle's picture

Interesting chart for anyone who hasn’t seen it yet :

S&P500 monthly chart January 15 2011

Wed, 02/09/2011 - 02:39 | 945664 Grand Supercycle
Grand Supercycle's picture

dupe

Wed, 02/09/2011 - 02:39 | 945670 something fishy
something fishy's picture

Yes, crap is getting done again, but I wonder if enough people have learned anything from their mistakes the last time around to at least be a bit smarter about it this time? At least some people may be quicker to act this time before things become totally unhinged? Then again, maybe not

Wed, 02/09/2011 - 03:24 | 945727 tom
tom's picture

When investors who earn losses are bailed out, they will of course go on to earn bigger losses. Trying to stop them from doing that with government regulation is idiocy. When investors are forced to eat the losses that they earn, they will implement their own controls on how their money can be used.

 

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