Imelda Marcos Market

Years ago the philippine president's wife Imelda Marcos was known for her ostentatious extensive shoe collection, one thousand-sixty pair by her admission. How many shoes are there to drop before we reach the capitulation point?

Some of the moments when we heard the worst is behind us are distant memories. The large write downs of Citibank and Merrill Lynch were the bottom. Then the demise of the largest mortgage broker, Countrywide, was the moment we hit bottom. No, wait, Bear Sterns imploded and had a shotgun wedding with Chase. All clear? Not quite.

IndyMac, the second largest savings and loan expired under the weight of its agressive mortgage business in July.

The stock that Money Magazine touted a few years ago as the "only stock you need to own" was taken into conservership by the US government. Fannie Mae and Freddie Mac, the cornerstones of the mortgage market collapses. Lest our international lenders lose hundreds of billions of dollars and close their lending facilities to the United States, they were bailed out at taxpayer expense.

Lehman Brothers, the 158 year old investment bank having read one of those bottoms as the all clear bought heavily in the mortgage market to make anticipated profits on the rebound. Lehman acting like a retail investor tried to call the bottom. It went elephant hunting and got crushed for the effort. Having weathered wars and depressions for a century and a half, it couldn't handle today's pummelling.

Merrill Lynch prempted its own demise by throwing itself into the arms of Bank of America and got married faster than a pregnant Alaskan seventeen year old.

AIG, the world's largest insurer has tin cup in hand and looking for $70 Billion by tomorrow. I believe AIG will not be allowed to fail. The derivative exposure across the world with entities such as PIMCO ($760 million) and AXA would have a knock on effect due to debt guarantees

The largest Saving and Loan, Washington Mutual, looks to be next unless a suitor steps up. IndyMac was the largest bank failure since the savings and loan crisis of the seventies. WaMu is ten times larger.

I am watching for signs of selling exhaustion as markets are getting a little punch drunk.

John Barnyak