"weed through all of the media hype" Welcome aboard, Ronald!

HSBC (largest Bk in Europe) just threw the gauntlet in the dirt between them and Citi.

What did they do?

They did what they're going to be FORCED to do anyway, as European Banking runs on a tighter model than US Banking, but they stepped far out of bounds to "get rich" like we did - by going broke later.

Now, HSBC:

1. Bought lotsa Sub-P/Alt-A packages in bulk, paid for 'em and owned 'em, BUT didn't put them on their own balance sheet. How? Dunno, since the munny to buy 'em had to come from somewhere (first thing I'd look at, by the by). Probably a Central-Bank short-term gift/loan, or a simple entry reducing cash AND shareholder equity on the Balance Sheet, reversed before reporting required public view. The "missing funds" don't show in P&L at all (Balance Sheet - to Off-Book in short order), but the money's GONE for the moment. Use $200 for the cost of the whole package for example's sake, to keep math within the mind's tolerance for zero-stacking..

2. Bk uses Brokerages to sell PIECES of that package to me, I buy $133 of it, Bk considers it "MINE", not theirs, no liability, no asset on BS (but BS it is..). Since Bk doesn't own more than 50% of it, rules say Bk doesn't have to "book it, Danno". Bk owns $67 of it, I own $133, it's gaining ground, we're both smiling and clapping our hands. Even THEIR part isn't required to show on the balance sheet due to <50% of total - NEAT, eh?

3. Whahoppinttomymunnynext? NOBODY'S PAYING US? Huh? HEY - Look at this neat BROCHURE, it says "9% ROI" and stuph! WHATTHEHECK? Says I. GET ME OUT, says I, making me Mr. Next in the same victim line I was just in at the time of purchase before.

4. Bk says " Gee, market went sour, ASIG, your $133 is only worth $100, but if you want, I'll "sell" it for you, because I'm your friend and protector AND trustee and all dat stuph dere - times are TOUGH, ASIG, we don't know what went wrong or nuttin'. As your close and personal friend and business advisor, ASIG, I must assist you in your time of need. I says "YEAH, do dat - I gotta pay my SUBPRIME MORTGAGE, you know". So, I get my $100, am mad, but I'm GONE from this part of the Bank's cool deal, too. Who bought it? Mr. Bank bought it - at a HUGE discount, too. Heck, Mr. Bank might have found another "me" already, might not, but I gots my munny, so I'm outta there 'til my SubPrime Mortgage Payment's due to Mr. Bank again. Ain't about to do THAT again, am I? Well, not today, but if another get-rich-quick deal comes along and Mr. Bank will lend me the money to get in on the ground floor.. Well, maybe.

5. Ooops - if Mr. Bank can't attract another "Mr. Next" for his 100% position, it's ALL his - Mr. Bank owns ALL the package, so must report it on yon Balance Sheet as AN ASSET and potentially a liability to some extent, too - they'll call that GROWTH, you know... Hmmm - it's now "worth" $133 +/- or so in total, Bk has the original $67 plus the $100 they gave me for the $133 I used to own. If they sell it FAST at 67% of original "price" (not VALUE, shaman - chill!), they get $134, losing "only" 20% on the deal (not the 33% they would have lost if I hadn't taken the rest of the loss on "my share"). They won't sell it quite yet, since they'll find another "me" to sell it to later if they can "market" the future brightly enough for "me" to believe I'll make that happen. I will, too - for them.

6. End of this round is NOT clarity or ethical behavior working its way into HSBC, it's FORCING Citi and others to follow the lead of SHOWING THEIR LOSSES on their books while HSBC's losses are smaller than their competitors' losses.

THAT's one of the short & simple versions of how Banking is played on the large map - wait for the other guy to look dumber'n you, then hang out your dirty laundry, take your beating, then watch everybody flock back to you when the dirtier laundry hits the sunshine across "the street" and they FLEE where they ran to when escaping you.

A long time ago I was absolutely frustrated when my BIGNECKs told me "well, we're not as bad as our competition" in answer to my questions about why we didn't improve what we knew was so wrong.

Once I understood the game better, I started to "test" whether it was a few or the many who did "business" this way. Once I figured THAT out, I left it before it made one of "them" out of me.

Neat game, this one - may the least-criminal of them "win" the most, since we already know who's going to lose, just not by how much.

I passed on Citi stock a long time ago when it crashed to $10. Might get another shot at it, but I'll probably pass on it then, too. Year End's coming fast, the boiler's jumping around like it's going to blow, but all will be done to make it seem fine from the outside perspective to the degree possible.

Nothing wrong here, folks, we're in control, move along to your homes (while you have 'em).

Interesting times, indeed, but we WILL survive because we still have a capitlist barter system, not entirely taken down by the socialist's efforts to so do. Communists and Socialists never win economic wars, they just win some battles, declare victory and go on to stumble down the hill again.

We'll be fine, especially since ALL OF A SUDDEN the Chinese poison is poisonous (right after they declared they'd sell our 1.4TRILLION debt).

Wonder who HSBC will broker THAT package to, maybe the Russians or Canadians could get in line and Get Rich In The Junk Bond Market.

Ahh, but that criminal Milkin was the MAN for a while, but by today's standards, just another small thinker in piker history now.

Ron - Great way to break it all down and help us to see what it really is.

Ron, I agree with everything you say, but we are not in a position to compete with the constant barrage of media "gloom and doom" unless we are in contact with a prospect and many of them have crawled back into the woodwork and not made themselves available, Karen