So far, they guys hit badly in the financial sector: Merrill, BOA, UBS, Goldman (more to come for these guys), Citi, Morgan Stanley, Bear Stearns, AIG...Nomura USA is completely out and I guess Lehman, CSFB, BNP are yet to come out of the closet.  All in all, prime brokerage guys can get ready to have their heads rollled in 2008 or transferred to another division.  And in more headline news, a lotta shake-ups in management and the newly appointed CEOs (and remaining ones) can expect not much recovery from this mess until a couple more quarters.

BTW, Shouldn't they have realized and made the laws more stricter after the ripple effect caused by Amaranth last year when one sole trader lost them 6+ billion in energy realted trades.  And the Sarbanes Oxley was supposed to prevent another Enron fiasco but looks like all the IBs in the street have found a way around that too.  As per the Economist 3 years ago, "The houses that saved the world" are the same houses that eventually destroyed everything.

Bhaley, sub-prime is the reason behind the current fiasco thats caused most major IBs to stumble (and some of them real badly) and on a more layman's terms, the reason why the whole Dow index has been tumbling recently.  The blue-chips somehow have all been hit bad.  Why did this happen?  Because of unscrupulous banks and brokers who under the ever rising housing market were giving out mortgages to any individual out there (who could pay their fees) even if they in reality couldn't afford for example a $ 500,000 house.  They did this through stated and no-docs appplications where one's mortgage rate is given through one's credit score only disregarding income or debt.  Also, for brokers and banks, there is more money in commisions in doing these types of loans since the buyer being desparate and with a "sub-prime" credit are willing to give more to get that house/property than someone with an unblemished credit history and high income (low debt to income ratio) would.  These "low credit score, low income and high debt to income ratio" home buyers (which according to estimates are more than 20% of the total $1 trillion+ US housing sector) are given all sorts of financing by the brokers/banks so as to make them think they could afford the house.  Once such tactic is the interest only payments and also the ARM, where a fixed rate is set for a year or more (5 yrs max) and after that period, the variable rate kicks in.  And since these are buyers with "sub-prime" credit, their mortage could rise 3 fold that what they paid in an ARM.  Most think they can refinance, but to refinance its the same as getting a new loan and paying all the closing costs including taxes and broker fees again.  On top of that, with the tightening credit, most of these home owners do not qualify for a refinance.  What happens then?  They cannot afford the payments and the house goes into foreclosure and the bank is stuck with a bad loan often losing hundereds of thousands in one deal thereafter.  How were the IBs affected?  Most banks sell their "sub-prime" risk associated securities in the open market and IBs buy them after recommendations from analysts for what they think is a good price...But with defaults and foreclosures on the rise (and more expected), these securities have backfired as in all cases.  A few Banks and IBs even had$10 billion plus in such securities.  All I can say is that the ever rising housing market was one big party back then for the seller, buyers, Banks and IBs...Finally, the hangover as expected is here.

Loote, USD/INR as of today's fix is 39.34.  So USD/NPR = 62.944 (with 1.6 as INR/NPR).  Not much change here but in the EUR side, the USD hit an alltime low.  Against CAD, all time low since 1974, against AUD, lowest since 1984 and Gold prices is at its highest since 1980...Look for more battering to come for the already Knocked-Out USD.