[Running_Man]

I don't disagree that the govt will do something stupid with SIVs.

That being said, I'm looking at the disclosures now that Citigroup made. They're pretty darn clear about what they were doing. If they were trying to hide it, they weren't trying very hard.

This is referring to October 18th when Citicorp announced they would have slightly over 1 billion in writeoffs and they expected market conditions to return to normal by the 4th quarter. In lieu of activity in the last 18 days, I don't think it was ever very clear to anyone what they had in terms of risks NOT on their books.
MY QUOTE
I disagree that people are hating the bank stocks they are down some but most unless they are specifically in the subprime area are down less than 20% from their peaks and are not much below 2006 levels when the excess was in full throttle. Having seen the devestation that can hit banks in times of financial difficulty they are the first stocks to be avoided. Losses of 50 percent are all too frequent in their history.
There will be plenty of time to wait to see how the air will clear without stepping into an industry where even the CEO's such as Citicorp say they really are surprised with how much the market is changing on them.

Since this point only 18 days ago Citicorp has announced the writeoffs need to be 6.5 +8-11 billion and perhaps more. The banking stocks have continued to be the worst performing industry in the stock market. Now the realization phase is fully hitting that this may not be the golden era for banks as further rate cuts are probably on hold with the collapse of the US dollar. I will stick by my prediction of March 3, 2007, predictions for which I have earned animal abuse analogies and metallic headgear claims:

The subprime market collapse is a BIG deal in my opinion. 17.86% of all subprime loans are in default. In the New York Times today it was disclosed that forclosures have hit their highest level ever since the forclosure rate has been measured. General Motors is injecting 1 billion dollars into GMAC for bad subprime loans. General Motors is really not in a good position to bail out their credit arm.

The decline in this segment is due IMO to the decline in housing values of 8 percent over the last year. When you borrow 100% there are no gains to bail you out and no reason to not default. As these mortgages fail the homes will be put for sale and credit terms will be tightened. This will insure fewer buyers, more houses so lower prices and sales for '07. This unfolding process will first hurt:

Homebuilders (already obviously affected)
Financial Institutions lending to home buyers (bearing the brunt now)
Home supply centers - Home Depot, Lowe's thumped, shares downgraded - Nov. 5, 2007
Paint manufacturers (fewer houses painted for sale) realization:soon
Chemical companies - supply raw materials for the paint industryEarnings Preview: Dow Chemical: Financial News - Yahoo! Finance
Auto Manufacturers/Suppliers - car sales will slow drastically as basic industry slows


I would hate to have investments in the above group but from there later it will spread to non-cyclicals.