credit crisis

EDIT: sorry i forgot to post the link.
http://www.youtube.com/watch?v=AsfQsUYZ5Y8

Have you ever had a professional give you an estimate on a home or car repair? I always assume that the final bill will be at least 10-20% higher. Whenever the final bill is lower I am always shocked and surprised. Well it turns out the bailout’s are going to be significantly more costly than anyone was told.

What I find shocking is how this is unfolding. Normally when taxpayers are duped, it takes years for the public to find out how horribly we’ve been misled. The trick with this one is that anyone with an excellent sense of economics and a calculator can predict the numbers. Only two weeks ago the current years U.S. federal deficit was being calculated at being almost $1.5 trillion dollars. That in itself is staggering. Two weeks later the current deficit for this single year is expected to be closer to $2 trillion. Expect it to be more.

So I am wondering how the big hedge funds out there are doing in this environment. I have heard rumors some some of the big names SAC Citadel are getting pounded pretty hard. Im looking for more to read on the subject. All the people that made ridiculous returns while applying leverage are now being slapped in the face. Every major strategy that was working has blown up during this deleveraging. Equity markets have collapsed, risk arb spreads have dramatically widened, commodity markets have collapsed, credit trading is frozen, even the major currency pairs against the dollar have collapsed. Basically every trade that was working has blew up. It seems that the only trade out there that is working is long VOL.

Who has benefited? My guess is the short term traders that trade small enough size to get in and out of positions at a moments notice and anyone who had the courage to fade the dominate strategies of the past few years.

What are everyone thoughts?

I've been reading many articles, such as the following, that spell death for the investment banking industry.

http://www.ft.com/cms/s/0/ccc6d456-8fd7-11dd-9890-0000779fd18c,dwp_uuid=...

Yet, it is really S&T that they are talking about. After all, M&A only boutiques and middle market firms seem to be doing alright. So what does that really mean for IBD's outlook? Is Corp Fin going to regain its position in the forefront? How will the banking industry as a whole recover and regain its luster?

We will all remember today as the beginning of the new market. Congress has apparently come to terms on a bailout plan and, barring any last minute shenanigans in the House or Senate, it will be voted on and passed this week. We all have a new managing partner in D.C., whether we like it or not.

It is times like these that require perspective, and I assure you that the cooler heads will not only prevail, they will profit. I've been around awhile, and I managed to make enough money during the last major crisis to step back and casually observe the current mayhem. The lesson I took away from the Long Term Capital Management debacle and the Asian Flu (and, for that matter, the bear market following Black Monday ten years before that) is that the market is the market, and always will be.

Well, Lehman’s is going Chapter 11, Merrill Lynch was lucky enough to get bought by BofA. Oh, not to forget that Morgan and Goldman are looking at a potential meltdown as well, in desperate need to shore up stable deposits. Oh, right, and AIG looking down the barrel as well.

Well, the good news is, that we’re in the middle of the mess finally. It’s taken it’s time to get around to it, the mess that is. It’s little consolation to the thousands of people who can expect pink slips in the next few weeks, but we are finally here.

How is that the bright side? Well once this finalizes and a few more banks fail or get bought for pennies on the dollar, then and only then can we breath easier. For that my friends will mean that we’re on our way to a true recovery. Not one bolstered and touted by the Fed as the bottom, but the real bottom means there is only one way to go and that will finally be UP!