Only Three Hundred Billion

Last week on CNBC while the price of oil was going up and the confidence in mortgage backed securities was going down, an economist stepped up and said that none of this matters in the global economic scale of things.

I don't have a good perspective, but I'd like to get that on the global economic scale of things. But he said, maybe we lose a couple of hedge funds and that costs about 300 billion dollars. But this kind of disruption is not going to hurt the big banks, and it's time for senior debt and longer term folks to move in. One commentator said he was surprised that so many of these more speculative players played for as long as they did. Well, I suppose you can always find somebody to say that, after all there are bulls and bears of every stripe and degree out there in the market.

Still, 300 billion? Mark Haynes kinda freaked and let the cat out saying that he had all kinds of friends who would be hurt if hedge funds went under. I rather suspected this for some time now, since CNBC has been over reporting the whole subprime drama. There's a certain kind of investor who has no business playing in the hedge fund market, and that includes anybody who doesn't own a significant piece of CNBC, but enough of that speculation.

When I did a minute of research for my last post on reparations, I discovered that the annual income of black America is about 500 billion dollars per year. In perspective, the annual budget for the entire US Armed Forces is about 430 billion. 430 billion is about 20% of the entire federal budget.

But back to subprime. Today Countrywide reported that it had about 150 billion in cash to weather any storm upcoming. Compare that with, say Bank of America which has about 1500 billion in assets. Citibank has 2200 billion.

So some people are going to lose their shirts, but it's not going to be the big banks. So I'm relatively confident that we'll muddle through. People are talking about a 10% correction in the Dow, which shouldn't be so devastating considering that it just broke through 14,000 two weeks ago.