FLASH FLASH FLASH: Markets fear banks have $1 trillion in toxic debt

MortgagePANIC is here.

And then, HP'ers, the real ugly truth started to (finally) come out. Funny though, they're still talking about losses on the toxic stuff. Don't they understand the conforming stuff is getting killed too? And that this meltdown will put most loans underwater?

Soft landing right? Credit crunch over right? A few billion in markdowns and call it a day righ?mort

I don't think so.

Banks will fail. Trillions will be lost. CEOs will go to jail. And the biggest bubble and mania in history will be followed by the biggest crash the world has ever seen.

It hath been foretold.

Get ready for more dollar destruction, more Fed injections, more rate cuts, more inflation, more market turmoil and more HousingPANIC. We've got a long way to go.

Markets fear banks have $1 trillion in toxic debt

A new phase in the credit crunch, one of “$1 trillion losses” seems to be dawning. The crisis at Citigroup and renewed doubts about some of the world’s leading banks disquieted stock markets on both sides of the Atlantic yesterday, with the fractious mood set to continue.

Bill Gross, the chief investment officer of Pacific Investment Management, said US mortgage delinquencies and defaults would rise in 2008. “There are $1 trillion worth of sub-primes, Alt-As [self-certified] and basically garbage loans,” he said, adding that he expects some $250bn in defaults. “We’ve only begun to see the pain from rising mortgage payments,” he added.

Samir Shah at Landsbanki Securities said: “People thought most of the bad news had been priced in. It seems we’re entering a second phase of the credit squeeze. We’re going back to a place where liquidity is drying up and volatility is increasing.”

FLASH - Right on schedule, panic and the run on the banks has now commenced. No surprises for HP'ers, shock and awe for everyone else

Even I'm surprised and amazed at what a Great Unwinding and Panic looks like in real life. Theory is one thing, and damn, we nailed it there, but to see it in action is, well, quite stunning. Trillions are going to be lost over the next few months. Trillions.

Prepare for more of this run on bank stuff... And if you have more than $100,000 exposed in any FDIC account, or if your accounts aren't FDIC insured, or god forbid, if you have ANY funds with Countrywide or IndyMac (I'm short), then what are you doing reading this blog - get down to the bank and get your cash out now!

A rush to pull out cash - Worried about the stability of mortgage giant Countrywide Financial, depositors crowd branches.

Anxious customers jammed the phone lines and website of Countrywide Bank and crowded its branch offices to pull out their savings because of concerns about the financial problems of the mortgage lender that owns the bank.

At Countrywide Bank offices, in a scene rare since the U.S. savings-and-loan crisis ended in the early '90s, so many people showed up to take out some or all of their money that in some cases they had to leave their names.

In West Los Angeles, a Countrywide supervisor brought in from another office served coffee to more than 25 people waiting calmly for their turn with the one clerk who could help them.

Bill Ashmore drove his Porsche Cayenne to Countrywide's Laguna Niguel office and waited half an hour to cash out $500,000, which he then wired to an account at Bank of America.

"It's because of the fear of the bankruptcy," said Ashmore, president of Irvine's Impac Mortgage Holdings, which escaped bankruptcy itself recently by shutting down virtually all its lending and laying off hundreds of employees.

"It's got my wife totally freaked out," he said. "I just don't want to deal with it. I don't care about losing 90 days' interest, I don't care if it's FDIC-insured -- I just want it out."

In honor of today's Fed meeting, and the mortgage panic underway, HousingPANIC changes its name for a day

Note the one-day new title above.

Waddaya think?

Any suggestions for honorary one-day titles in the future?