Andrew Butter

AIG Counterparties: The SIGTARP Report

If you didn't see it you might be amused by this:

epicureandealmaker.blo...

Interesting aside, a lot of the really lousy CDS were written by two people in the AIG office in London, I wonder if they have different laws about fraud over there?

If there was a fraud the place it was committed is an issue.

Special Inspector: AIG Counterparty Volunteered to Take Haircut, Geithner Refused

Good post, liked the line (which - I would argue - were all based on fraudulent representations concerning how safe an investment they were)

Did you see this?

epicureandealmaker.blo...

After Securitization: Who Owns America Now?

Sure, but when you are charging off debt, it's hard to get more.


On Nov 04 08:51 PM Gregman2 wrote:

> There's an old Chinese saying, "He who owes is King." The fact is,
> so much of the debt you list will ultimately need to be charged off.
> As with many of the formal unfunded liabilities...they'll need to
> be discounted.
> So, in terms of discounting to net present values...the actual numbers
> are much less. FYI;-)

After Securitization: Who Owns America Now?

Absolutely, it's called Jingle Mail.


On Nov 03 04:43 PM expatsp wrote:

> Great article as always, but isn't there a bit of a contradiction
> when you talk about collateral? If collateral on all the U.S.'s external
> debt is essentially the promises of citizens who can't pay back what
> they borrowed privately, then doesn't the U.S. have the option of
> screwing foreign investors, even if they start "coming after their
> collateral"?

After Securitization: Who Owns America Now?

1: If it wasn't a Treasure hunt (doesn't mean they found anything); I have no idea what it was, either way it doesn't sound like it was a good Return On Investment.

2: My thoughts exactly, particularly the bit about the corrupt elite.

3: I agree there is an honorable way out and the sooner Americans go with that the better off they will be, and the world too; American were conned into taking on too much debt, they didn't need it, they don't need it now.


On Nov 03 04:41 PM User 353732 wrote:

> 1. America does not send Armies around the world on treasure hunts.
> If that were so, the Chinese would not be the biggest investors in
> Iraqi oilfields.
> American blood so the Chinese can have Iraqi oil does not sound like
> a treasure hunt does it?
>
> 2. Americans cannot pay back private debts because the US Regime
> is destroying their capacity to do so via egregiously bad and malicious
> policies that tax , penalize and mock work, frugality, entrepreneurship,
> small businesses and middle class values while glorifying debt, consumption,
> entitlements, worthless government scrip and the privileges of a
> tiny, grasping and utterly corrupt elite. If Americans cannot redeem
> private debt they certainly cannot redeem public debt.
>
> 3. Americans have 3 choices: slavery, piracy ,honor.
>
> Historically, polities and peoples who have vast debts they cannot
> repay with money, are forced to repay with work and forfeiture of
> assets by creditors. This is economic slavery. The current US Regime
> will be quite content with this, provided they can be the Herods
> and Quislings to the foreign debt holders.
> .
> The US Regime could steal the money from foreigners and use force
> to defy the world. This is piracy. It takes courage , daring and
> a willingness to hang or be quartered if caught. The US Regime lacks
> any of these attributes, so piracy is out.
>
> Finally, Americans could choose honor. This entails purging or expelling
> the current US Regime, reclaiming the Constitution and historical
> American virtues. This leads to a nation, once again, dedicated to
> innovation, incentives, production, savings, investing and exporting.
> In turn this means that National assets and incomes grow rapidly
> and impressively. The consequence is that the National asset to liability
> ratio and the debt service to income ratio and the dollar to wealth
> creating capacity ratio are all restored to sane and sustainable
> levels.
> .
> The real choice then is: Either the US Regime goes or the American
> people go. Honor or slavery. Not choosing is ,of course, a choice
> as well since it means opting for enslavement via inaction.

Proposal for Fed to Become the Next AIG

Or alternatively the yield on the 30-Year which is one thing they can't control (long term, although I suspect they are manipulating it now) will climb up to 7.5%

So the next bubble to pop is Treasuries!


On Aug 23 04:30 AM Faisal Humayun wrote:

> While the private sector is deleveraging...the government sector
> is leveraging...So for sure there is a big bubble building up and
> that should ideally end with the demise of the Fed....

Proposal for Fed to Become the Next AIG

The problem with that strategy is that it failed with the "To Big To Fail", they were private sector "gamblers" who were responsible for their own losses, and then they gobbled up so far $4 trillion to cover their losses from the Fed (some of which they say they will pay back), because they were too big to fail.

I suspect that if push comes to shove the Fed will take that option too.


On Aug 21 03:44 PM doubleguns wrote:

> If congress has not approved any of this and the FED has entered
> the CDS arena I say let the FED pay for any losses. They are a private
> entity with profits. They can lose some of their profits.
>
> No more taxpayer bailouts for anyone including the FED.
>
> WHERE DOES THIS FU@KING END!!!!!

Four Reasons We're Headed Even Higher

Great article - so what happened to the Bears?

Was August 6 the Stock Market Top for 2009?

Take a look at your track record.

I would day that on average a very good guide is when you say "up" it goes "down" , in that regard your analysis is very reliable.

Revisiting the MBS Debate (Which We Should Already Be Past)

Nice article, broadly I agree with your sentiments, I was involved doing MBS and everyone I was involved with were very serious and very straight.

I think you have a few things not quite right though:

1: I'm pretty sure the stuff ML sold was CDO.

2: Most of the stuff that got left behind with the banks was lower than AAA which gets hit first, the reason for that was they couldn't easily sell that, the demand was for AAA and better.

3: The essential flaw that I saw then and which I believe was critical is that no one not the bankers (why should they) nor the rating agencies, really understood real estate or how to value it . When you value real estate seriously you do it three ways (a) sales comparison (price today) (b) depreciated replacement cost (that has today's land cost in so it's a hybrid) (c) income capitalization (you can do that for owner-occupied housing if you know how to do valuations), then you stand back, if all three don't give the more or less the same answer, you know you have a problem.

The problem I saw was that the people putting the deals together got paid for success on the deals, and they didn't ask the right questions, there was only one box..."what's the value today" - if there had been a box "what will the value be in three years time", then things would have been different.

The people who knew how to work that out reliably were not asked that question.

Banking Reform: Value for Value

The crisis would have been avoided if someone had paid attention when in July 2003 International Valuation Standards wrote to the Bank of International Settlements and told them in no uncertain terms that valuations used to assess capital adequacy (everywhere) were "fundamentally flawed and bound to be misleading".

Guess what - they were, my more than a few trillion dollars.

What I can't work out is why everyone is acting so surprised.