Come for the politics, stay for the snark.

Polls are now a reliable indicator of what corporate Republicans want us to think.

I am pretty sure these ‘journalists’ were not always such a bootlicking sycophants.

It’s easy to sit in safety and prescribe what other people should be doing.

One of our two political parties is a cult whose leader admires Vladimir Putin.

It may be funny to you motherfucker, but it’s not funny to me.

It’s pointless to bring up problems that can only be solved with a time machine.

I’d like to think you all would remain faithful to me if i ever tried to have some of you killed.

The gop is a fucking disgrace.

Take hopelessness and turn it into resilience.

Republican also-rans: four mules fighting over a turnip.

When I decide to be condescending, you won’t have to dream up a fantasy about it.

President Musk and Trump are both poorly raised, coddled 8 year old boys.

Anyone who bans teaching American history has no right to shape America’s future.

Let’s not be the monsters we hate.

“Jesus paying for the sins of everyone is an insult to those who paid for their own sins.”

Trump should be leading, not lying.

Their freedom requires your slavery.

The arc of history bends toward the same old fuckery.

Stop using mental illness to avoid talking about armed white supremacy.

“The defense has a certain level of trust in defendant that the government does not.”

This isn’t Democrats spending madly. This is government catching up.

Of course you can have champagne before noon. That’s why orange juice was invented.

It is possible to do the right thing without the promise of a cookie.

The cruelty is the point; the law be damned.

You are here: Home / Politics / Domestic Politics / More Losses

More Losses

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Merrill Lynch:

Merrill Lynch said Thursday that it lost $1.96 billion for the first quarter this year, as the meltdown in the housing and credit markets continued to batter the firm.

Much of that stemmed from more than $9.4 billion in write-downs and “credit valuation adjustments” tied to the firm’s holdings in mortgage securities and loans meant to finance leveraged buyouts. The firm also said it intends to cut 4,000 jobs, or 10 percent of its workforce.

The loss, which amounts to $2.19 a share on revenues of $2.93 billion, is a sharp reversal from the $2.16 billion in profit and $9.6 billion in revenue it earned in the same time last year. Analysts surveyed by Bloomberg News had expected on average a loss of $1.79 a share.

John A. Thain, the firm’s chairman and chief executive, acknowledged that the quarter was trying by any measure.

While that is important and everything, and probably a bit depressing, I really wish ABC would get some reporters to the main office and start asking Thain the important questions- does he wear a flag lapel pin? Is his minister patriotic? Will raising the capital gains tax make it tough for soccer moms to fill their Mercedes? Has he ever received sniper fire in Bosnia?

I wish journalists had their priorities straight and would get to the bottom of these pressing questions.

Reader Interactions

25Comments

  2. 2.

    Punchy

    Ok, can someone (TOS?) explain in simple, idiot-proof terms, exactly what is a “write-down” loss? Everywhere I look, I see really big numbers followed by the word “billion”, followed by “write offs” or something. dont understand this stuff at all.

    So are they just losing the value? Losing the mortgage? Who the fuck can afford to lose 2 bill in one quarter?

  3. 3.

    John Cole

    Punchy- When I see write-off, what I think it is actually saying is:

    “That fur-bearing trout farm you thought was worth 20 billion? It isn’t.”

    A more in depth analysis would be appreciated, though.

  4. 4.

    Hillary

    I really wish ABC would get some reporters to the main office and start asking Thain the important questions- does he wear a flag lapel pin? Is his minister patriotic? Will raising the capital gains tax make it tough for soccer moms to fill their Mercedes?

    Well you know John, these are issues that raise lots of questions in people’s minds. There are a lot of people out there with a lot of questions like these floating around, and I think they’re entitled to answers. Because if ABC doesn’t ask these questions, Fox News will.

  5. 5.

    Zifnab

    So are they just losing the value? Losing the mortgage? Who the fuck can afford to lose 2 bill in one quarter?

    Every so often, companies are required to value their assets. Merril Lynch has tens or hundreds of billions of dollars in investments. But as the various markets ebb and flow, those valuations change. If – for instance – Merril Lynch were to invest strictly in the DOW, and the DOW were to drop 2%, then Merril Lynch would be looking at a 2% write-down of assets.

    Because mortgages are a funny creature – in that we know how much we loaned you, but we can’t guarantee how much you’ll pay us back – the “value” of a mortgage is more abstract than the value of a stock. Given the vast number of house foreclosures, the declining real estate market, and the loaming recession, Merril Lynch was forced to evaluate its billions and billions of dollars in mortgage-backed securities and declare that a large swath of them weren’t worth the full value of the loan (much less the X% interest they expected to receive from said loan). Instead, they were worth whatever pittance they could get for the foreclosed house at auction.

    The reason Merril Lynch is so billions-deep in the red is because they decided to buy up tens of billions of dollars in mortgage-backed securities when owning said securities seemed like a good idea. And they can’t really afford to lose 2 billion in one quarter. That’s why they’re laying off ten percent of their work force.

  6. 6.

    4tehlulz

    >>That’s why they’re laying off ten percent of their work force.

    That and to be sure there is enough cash for senior-executive bonuses.

  7. 7.

    cbear

    Sorry, I’m having trouble feeling any sympathy for all the little people who didn’t have the financial acumen to predict our economic future.

    You see, when the Supreme Court installed Chimpy as The Preznit back in 2001, I had the foresight to put all my money in shares of K-Y Jelly and Anal-Glide.
    Unlike many of you, I realized three things were most assuredly going to happen:

    The price of oil was going to go up.
    The price of petroleum products was going to go up.
    A whole shitload of people were in for a serious ass-fucking.

    Looks like I hit the trifecta.

    BTW, I’m in the process of hiring several concubines. Apply at I’mRichBiatch.com.

  8. 8.

    Zifnab

    Because if ABC doesn’t ask these questions, Fox News will.

    I like that line of thinking for two reasons:

    1) Because more news stations should be like FOX News, right? Cause they’ve got high ratings, right? And the most informed viewer base? No? Not so much?

    and

    2) Remind me again how many Democratic Debates the FOX News channel has sponsored.

  9. 9.

    Dennis - SGMM

    Look for more write-downs (And more bailouts) in May as the next batch of ARM’s resets causing more homeowners to default on their mortgages. The problems will continue to spin out through 2011 at least as the effect of defaults in the ALT-A and no doc mortgages issued at the height of the bubble go into effect. A feedback cycle is being established wherein the decline of the economy, rising unemployment and tighter credit will cause even more defaults leading to more decline, more unemployment and even tighter credit.
    Add inflation, caused by rising fuel and food prices to this and we have the dreaded stagflation: inflation without economic growth.

  10. 10.

    qwerty42

    Look for more write-downs (And more bailouts) in May as the next batch of ARM’s resets causing more homeowners to default on their mortgages. The problems will continue to spin out through 2011 at least as the effect of defaults in the ALT-A and no doc mortgages issued at the height of the bubble go into effect.

    whoa, whoa, whoa … John’s right. I mean this kind of stuff is maybe important to some people, but we need to know more about flag lapel pins. I know if I’m forking over big bucks for medical treatment, I wanna be sure the doc is wearing a flag lapel pin. In fact, like most of us, that is the first thing I want to know. Hell, it’s the only thing I want to know. Same for investments. So maybe we’ll have billions in write-downs. As long as we are covered on the vital lapel pin issue, nothing bad can happen. right?

  12. 12.

    ThymeZone

    Accounting

    In business accounting, the term write-off is used to refer to an investment (such as a purchase of salable goods) for which a return on the investment is now impossible or unlikely. The item’s potential return is thus canceled and removed from (“written off”) the business’s balance sheet. Common write-offs in retail include spoiled and damaged goods.

    [edit] Banking

    Similarly, banks write off bad debt that is declared uncollectable (such as a loan on a business that is now defunct), removing it from their balance sheets.

    [edit] Write-down

    Many of the consequences of the subprime crisis at financial institutions are referred to as a “write-down”, which is synonymous with a write-off[1].

    While a write-off in banking refers to a bad loan that is declared uncollectable, removing it from its balance sheet, a write-down, according to Investopedia, means:[2]

    Reducing the book value of an asset because it is overvalued compared to the market value.

    So while a “write-off” removes the loan from the balance sheet, a “write-down” reduces the value of the loan in the balance sheet. Despite this difference, both terms indicate that the loaned money in question has no chance of being recovered.

    For example, on October 6, 2007, The Washington Post wrote:[3]

    “Washington Mutual will write down by $150 million the value of $17 billion in loans…”

    From Wikipedia.

    { add lapel pins to cart }

  13. 13.

    D. Mason

    John, if journalists were capable of getting their priorities straight we wouldn’t be in this shitty mess(read: Bush admin).

  14. 14.

    ThatLeftTurnInABQ

    Dennis – SGMM Says:

    Look for more write-downs (And more bailouts) in May as the next batch of ARM’s resets causing more homeowners to default on their mortgages. The problems will continue to spin out through 2011 at least as the effect of defaults in the ALT-A and no doc mortgages issued at the height of the bubble go into effect. A feedback cycle is being established wherein the decline of the economy, rising unemployment and tighter credit will cause even more defaults leading to more decline, more unemployment and even tighter credit.
    Add inflation, caused by rising fuel and food prices to this and we have the dreaded stagflation: inflation without economic growth.

    nice summary Dennis.

    The are two other options I can see on the table (IMHO worse ones).

    The first is to suspend Mark-to-Market rules for valuing assets (basically the economic equivalent of sticking fingers in your ears and crying LA-LA-LA-LA-I-CANT-HEAR-YOU when write downs show up), and then we can drag the agony out s-l-o-w-l-y over a decade or two, just like Japan did we their real estate bubble popped back in the 1990’s. That means the tweens now watching “High School Musical” will be parents in their 30’s before we have economic growth again.

    The other would be to destroy the bad debt via hyperinflation. Ask Germany how well that worked.

  15. 15.

    The Other Steve

    So I learned something yesterday, I didn’t realize.

    In years past, they’ve had similar delinquency rates on loans. But because the houses were still going up in value, the bonds didn’t show losses. That is, someone stopped paying, and it takes them say 18 months to foreclose and then sell the property. But with housing going up 10% annual, they were actually selling the house for more than the mortgage value.

    What makes it more difficult today is because houses aren’t selling… the prices are going down, and on top of that they aren’t recovering hardly anything out of foreclosures. So rather than a small loss, it’s a big loss.

    This was after a presentation by one of our bond traders.

    What did irritate me is the guy was only about 30 years old, and while incredibly smart did actually say the words “Nobody could have possibly anticipated this, because it’s never happened before.”

  16. 16.

    The Other Steve

    The other would be to destroy the bad debt via hyperinflation. Ask Germany how well that worked.

    That’s going to happen. I think it’s happening now.

    It’s the Republican plan to get rid of the deficit.

  17. 17.

    Tsulagi

    Punchy- When I see write-off, what I think it is actually saying is:

    “That fur-bearing trout farm you thought was worth 20 billion? It isn’t.”

    That’s basically it. You brilliantly paid $20B for the trout farm, or valued it at that figure. Now, you and everyone else including independent auditors know you can’t find another idiot to pay that much to buy the farm. And as a publicly traded company, you’re not allowed to indefinitely keep worthless assets on the books.

  19. 19.

    Fledermaus

    The other would be to destroy the bad debt via hyperinflation. Ask Germany how well that worked.

    That’s going to happen. I think it’s happening now.

    I was talking with some friends the other night and in a discussion of how economically fucked we are I noted that “the only thing we make these days are dollars”

  21. 21.

    Rick Taylor

    A more in depth analysis would be appreciated, though.

    I haven’t had a chance to listen to this interview on npr’s Fresh Air, but it sounds interesting.

    Perplexed by the U.S. economy? You’re not alone. Law professor Michael Greenberger joins Fresh Air to explain the sub-prime mortgage crisis, credit defaults, the shaky future of other types of loans and what we can expect from the U.S. financial markets.

  22. 22.

    TenguPhule

    Ok, can someone (TOS?) explain in simple, idiot-proof terms, exactly what is a “write-down” loss?

    You bought a lemon that is now ripping your pants off and preparing to give you a good Rogering.

    There is no lube available.

  24. 24.

    Dr. BDH

    What did irritate me is the guy was only about 30 years old, and while incredibly smart did actually say the words “Nobody could have possibly anticipated this, because it’s never happened before.”

    This, as we all know, is the Rice Defence, which has nothing to do with the University or sports.

    Do these investment firms give anti-bonuses to their big boys when they lose money? If not, why not? Anybody? Bueller? Ben Stein? Milton Friedman?

  25. 25.

    erghammer

    I’m with you on most things, John, but I don’t understand what your beef is with Merrill. So they lost a bunch of money last quarter; stuff happens. I’m not sure why they have to answer to a bunch of reports (and indirectly, the public) for this. To their shareholders yes, but not to a buch of reporters. Besides, people complain when Big Evil Corporations (TM) make too much money; now we complain when they make too little?

    Finally, to the extent that Merrill lost any money, think who they lost it to. They lost it by loaning a bunch of money to a bunch of poor people who otherwise wouldn’t have been able to afford getting into a house at all. Yeah, some of those people are going to get kicked out of those houses, but a lot of them aren’t. So Big Evil Corporation (TM) got taken to the cleaners by a bunch of poor people looking for housing. Boo hoo.

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