Remember NBER- National Bureau of Economic Research that is tasked with calling (identifying) recessions? Its former president has spoken. He doesn’t think the US is in a recession. He thinks it is in a severe recession.
That was news proper. Now to pass the rumor, on the econ blogs that had been talking about Bear’s imminent fall the last few days, the new names currently whispered are Citi and Lehman Brothers.

Posted by: Alamet | Mar 15 2008 0:08 utc | 4

CNBC has already noted high levels of “graveyard” puts (puts at prices far below market price for options expiring next week) on Lehman Brothers, so there may be your next victim.

Posted by: Brian J. | Mar 15 2008 2:58 utc | 6

The Australian’s Business section has two articles concerning the US economy’s downward spiral:

Exposure to the escalating housing crisis prompted Moody’s Investors Service to downgrade the debt of Washington Mutual to one notch above junk status.

Goes hand in hand with:

THE US economy lost the title of “world’s biggest” to the euro zone this week as the value of the US dollar slumped in currency markets.
Taking the gross domestic product of both economies in 2007, the combined GDP of the 15 countries which use the euro overtook that of the US when the European currency surged to a record high of more than $1.56 per euro overnight.

Posted by: Juan Moment | Mar 15 2008 4:32 utc | 8

Roubini: Step 9 of the Financial Meltdown: “one or two large and systemically important broker dealers” will “go belly up”

[T]oday the first one of these large broker dealers – Bear Stearns – in on the verge of bankruptcy. Let us be clear: given its massive exposure to toxic MBS and ABS product Bear Stearns is insolvent; the decision by the NY Fed to try to bail out Bear Stearns would make sense if this firm was only illiquid; the trouble that it is insolvent and thus such attempted bailout is altogether inappropriate. It is true that Bear is a large broker dealer; but its systemic importance is much smaller than that of much larger institutions. The world and financial market can survive if Bear disappears.
So the only possible justification for such Fed action is to engineer an orderly rather than a disorderly shutdown of this institution. But unfortunately the Fed is behaving as if Bear Stearns is illiquid but solvent. That is delusional and the official sector support of an otherwise insolvent institution will end up – like many other recent Fed actions – being paid for by the US tax-payer.
…
So the question is: if Bear Stearns screwed up big time – as it did – with huge leverage, reckless investments, lousy risk management and massive underestimation of liquidity risk why should the US taxpayer bail out this firm and its shareholders? First fully wipe out those shareholders, then fire all the senior management and have the government take over such a bankrupt institution before a penny of public money is wasted in bailing it out. Instead now the use of public money to bail out financial institutions is spreading from banking ones to non banking ones. The Fed should at least give a clear and public explanation of why such extremely exceptional – and almost never used – intervention was justified.

Posted by: b | Mar 15 2008 12:11 utc | 10

New York Times:

“You get to where people can’t trade with each other,” said James L. Melcher, president of Balestra Capital, a hedge fund based in New York. “If the Fed hadn’t acted this morning and Bear did default on its obligations, then that could have triggered a very widespread panic and potentially a collapse of the financial system.” Already, investors are considering whether another firm might face financial problems. The price for insuring Lehman Brothers’ debt jumped to $478 per $10,000 in bonds on Friday afternoon, from $385 in the morning, according to Thomson Financial.

AP via Globe & Mail:

Federal Reserve officials likely were worried about a domino effect if Bear Stearns were to fall into bankruptcy, leaving other companies who have lent money to the investment bank in the lurch. That could cause a chain reaction, potentially threatening the financial system. Indeed, fears have grown that other financial firms could be at risk. “It’s the cockroach theory: There’s never [just] one,” said Joan McCullough, an analyst with East Shore Partners Inc. in New York.

Posted by: Wolf DeVoon | Mar 15 2008 14:22 utc | 12

@6, Never heard of graveyard puts. Sounds like a melodramatic coinage for what are called out-of-the-money puts. Their price will change whenever the underlying changes, so buying puts like that is not a bet on ruin but on volatility, which is a safe, obvious bet. It doesn’t imply catastrophizing buyers. Interesting, though, to see how fast CNBC dropped their wonted lunatic optimism for blind panic. I ♥ blind panic.

Posted by: …—… | Mar 15 2008 15:30 utc | 14

& again dan
brecht’s dictum : on founding a bank & robbbin one – which is the more criminal ?

Posted by: remembereringgiap | Mar 15 2008 15:35 utc | 16

WSJ has a good report on the Bear Stearns issue Fed Races to Rescue Bear Stearns In Bid to Steady Financial System
Funny point – while all this happened the chairman of Bear Sterns was at a bridge competition in Detroit and one of the Fed governors was “unreachable” traveling in Europe …

Posted by: b | Mar 15 2008 17:27 utc | 18

I’m steamed over the fact that Bush browbeat Congress into passing his proposed budget for the current fiscal year last winter after repeatedly threatening to veto the Congressional version that added on $22 Billion or so in additional spending for domestic programs (environment, education, etc). He kept stating that he was upholding fiscal conservatism, the country couldn’t afford the additional $22 B (on a nearly trillion dollar total, mind you), those big-spending liberals were going to ruin our economy, he would protect the taxpayers, etc. etc. And Congress took it and backed down.
On Friday, Bush’s Fed chairman blithely set $200 B of our hard-working taxpayers’ funds on fire, or the equivalent thereof by bailing out Bear Stearns, and nary a peep about fiscal conservatism, big-spending liberals, protecting the taxpayers, etc.

Posted by: Maxcrat | Mar 16 2008 13:49 utc | 20