Comments on Andrew Hughes' articles RSS Syndication from SeekingAlpha.com http://seekingalpha.com/author/andrew-hughes/articles http://seekingalpha.com/article/109343-new-sec-regulations-fail-miserably-to-address-the-real-issues?source=feed#comment-609226 609226 To Dan Juran: The ratings agencies fueled the entire housing crisis > with their AAA ratings of junk. Get a clue. The SEC big shots get > a kushy job as soon as they leave the agency. The big Wall Street > firms have them in their pockets. Do your homework. Or perhaps you > know this and are deflecting... > ]]> Thu, 30 Jul 2009 23:15:26 -0400

On 2008 Dec 17 01:21 AM MakersMark wrote:

> To Dan Juran: The ratings agencies fueled the entire housing crisis
> with their AAA ratings of junk. Get a clue. The SEC big shots get
> a kushy job as soon as they leave the agency. The big Wall Street
> firms have them in their pockets. Do your homework. Or perhaps you
> know this and are deflecting...
> ]]> http://seekingalpha.com/article/117312-derivatives-and-bank-collapse-the-scam-that-went-largely-unreported?source=feed#comment-408473 408473 I don't have any problem with the general thrust of your article, > but tossing around notional amounts of derivatives is pretty much > useless (and potentially quite misleading) as a measure of the ultimate > exposure (potental losses) in the market. See "Everything You Wanted > to Know about Credit Default Swaps--but Were Never Told" by Peter > J. Wallison for a good explanation of this. > > http://www.rgemonitor.com/globalmacro-monitor/255257/everything_you_wanted_to_know_about_credit_default_swaps--but_were_never_told]]> Sun, 01 Mar 2009 18:27:51 -0500
The assumption is that premiums charged for CDS's adequately represent the amount of risk transferred.

Remember, these are the same banks that could not even safely extend something as simple as a retail mortgage!

If risk is not reflected in premium, then the uncollateralised risk in the system has increased every time a CDS was sold.

While agreeing that the notional value of the CDS is not all at risk, if the premium inadequately reflected the notional risk by only 10% then the figures in the article imply unrealized interconnected losses of around $1trillion. And the author only cites 4 banks!

Assuming that each CDS was "resold" 3 times, this still represents a roughly $330 billion potential loss for the 4 banks, which is enough to wipe out the remaining common equity in all of them.

I am not confident that my analysis is complete, but I think there are still big questions here. Are you REALLY confident that this market is not in at least as big of a mess as plain vanilla mortgages?

On Feb 01 09:35 PM Ronald Pires wrote:

> I don't have any problem with the general thrust of your article,
> but tossing around notional amounts of derivatives is pretty much
> useless (and potentially quite misleading) as a measure of the ultimate
> exposure (potental losses) in the market. See "Everything You Wanted
> to Know about Credit Default Swaps--but Were Never Told" by Peter
> J. Wallison for a good explanation of this.
>
> www.rgemonitor.com/glo...]]> http://seekingalpha.com/article/117312-derivatives-and-bank-collapse-the-scam-that-went-largely-unreported?source=feed#comment-372838 372838 Sun, 01 Feb 2009 21:35:01 -0500
www.rgemonitor.com/glo...]]> http://seekingalpha.com/article/117312-derivatives-and-bank-collapse-the-scam-that-went-largely-unreported?source=feed#comment-372631 372631 Sun, 01 Feb 2009 14:32:21 -0500 ]]> http://seekingalpha.com/article/117312-derivatives-and-bank-collapse-the-scam-that-went-largely-unreported?source=feed#comment-371275 371275 mauijeff - I agree on the collapse theory. So far, I've set up a > hedging strategy... For every 100 shares I buy, I also buy 100 rounds > of ammo. One of the two is likely to prove the more prudent investment. > Which one is anyone's guess.]]> Fri, 30 Jan 2009 13:31:03 -0500

On Jan 29 09:36 AM ecliptix543 wrote:

> mauijeff - I agree on the collapse theory. So far, I've set up a
> hedging strategy... For every 100 shares I buy, I also buy 100 rounds
> of ammo. One of the two is likely to prove the more prudent investment.
> Which one is anyone's guess.]]> http://seekingalpha.com/article/117312-derivatives-and-bank-collapse-the-scam-that-went-largely-unreported?source=feed#comment-370962 370962 The whole derivative market is a casino. Most people have no ability > or inclination to understand how it works. When the casino went bust, > the banksters held up the taxpayer to pay off casino debts. We are > witnessing the biggest rip off of all time. United States citizens > are asleep upstairs and the bankers are in he house taking everything > they can get. Criminal behavior in now being passed off as capitalism. > After the looting is complete our bankrupt country will fall into > chaos and then tyranny. Wake up people, this is no recession, it's > the collapse of our country.]]> Fri, 30 Jan 2009 09:44:09 -0500

On Jan 29 08:59 AM MauiJeff wrote:

> The whole derivative market is a casino. Most people have no ability
> or inclination to understand how it works. When the casino went bust,
> the banksters held up the taxpayer to pay off casino debts. We are
> witnessing the biggest rip off of all time. United States citizens
> are asleep upstairs and the bankers are in he house taking everything
> they can get. Criminal behavior in now being passed off as capitalism.
> After the looting is complete our bankrupt country will fall into
> chaos and then tyranny. Wake up people, this is no recession, it's
> the collapse of our country.]]> http://seekingalpha.com/article/117312-derivatives-and-bank-collapse-the-scam-that-went-largely-unreported?source=feed#comment-369928 369928 Thu, 29 Jan 2009 11:16:27 -0500 No sane investor is going to pump capital in to a bank without inspecting it's balance sheet and credit exposure.
With the OCC data out in the open, any further capital injection or purchase of "bad assets" without bringing the data and the balance sheets to the table and dealing with the neutralization of the derivative instruments only amounts to either incompetence on a monumental scale or, more likely, a deliberate fleecing of the taxpayer.]]> http://seekingalpha.com/article/117312-derivatives-and-bank-collapse-the-scam-that-went-largely-unreported?source=feed#comment-369877 369877 The whole derivative market is a casino. Most people have no ability > or inclination to understand how it works. When the casino went bust, > the banksters held up the taxpayer to pay off casino debts. We are > witnessing the biggest rip off of all time. United States citizens > are asleep upstairs and the bankers are in he house taking everything > they can get. Criminal behavior in now being passed off as capitalism. > After the looting is complete our bankrupt country will fall into > chaos and then tyranny. Wake up people, this is no recession, it's > the collapse of our country.]]> Thu, 29 Jan 2009 10:53:43 -0500 IMHO, all what is needed is an International Clearing House, where
all non balance sheet credits and debits of all major banks are summed up and then matched (credits against debits between banks) The net sum would probably come down from trillions to billions and once the net figures are established, a settlement can be made.


On Jan 29 08:59 AM MauiJeff wrote:

> The whole derivative market is a casino. Most people have no ability
> or inclination to understand how it works. When the casino went bust,
> the banksters held up the taxpayer to pay off casino debts. We are
> witnessing the biggest rip off of all time. United States citizens
> are asleep upstairs and the bankers are in he house taking everything
> they can get. Criminal behavior in now being passed off as capitalism.
> After the looting is complete our bankrupt country will fall into
> chaos and then tyranny. Wake up people, this is no recession, it's
> the collapse of our country.]]> http://seekingalpha.com/article/117312-derivatives-and-bank-collapse-the-scam-that-went-largely-unreported?source=feed#comment-369800 369800 Thu, 29 Jan 2009 10:02:43 -0500 Singhash my best wishes and commiserations. I agree your worst fears wiil probably be realised.]]> http://seekingalpha.com/article/117312-derivatives-and-bank-collapse-the-scam-that-went-largely-unreported?source=feed#comment-369755 369755 Thu, 29 Jan 2009 09:36:28 -0500 http://seekingalpha.com/article/117312-derivatives-and-bank-collapse-the-scam-that-went-largely-unreported?source=feed#comment-369730 369730 Thu, 29 Jan 2009 09:21:18 -0500
At the end of the day, it matters not one jot precisely how many times those idiots sold each other a dead donkey. Their paper debts to each other are easily written down, because they represent nothing of value. It's pretend money that has been completely dissociated from any tangible assets.

What we have, in the end, is a country that has industrial, natural, and human resources. Whether it can grow up and start behaving rationally is immaterial: if self-indulged citizens won't get to work, a new crop of willing workers will happily take their place.

I can only pray -- fervently -- that the inevitable corrections will not unduly penalize those who did NOT play the credit game. If I'm debt-free, lived within my means, and spent only the money I had, then I shouldn't be burdened with my neighbor's payments. Realistically, however, I expect to be severely punished for my lack of indiscretions.]]> http://seekingalpha.com/article/117312-derivatives-and-bank-collapse-the-scam-that-went-largely-unreported?source=feed#comment-369707 369707 Thu, 29 Jan 2009 08:59:57 -0500 http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-365734 365734 The main reason the US economy finds itself in such poor health is > the Chinese / Asian dumping of goods on the US market. As long as > this dumping continues unabated, the US economy will be unable to > revover. So everything depends on whether Obama takes a pragmatic > approach and takes steps to save the US economy.]]> Sun, 25 Jan 2009 14:02:24 -0500

On Jan 22 10:47 AM LCACM wrote:

> The main reason the US economy finds itself in such poor health is
> the Chinese / Asian dumping of goods on the US market. As long as
> this dumping continues unabated, the US economy will be unable to
> revover. So everything depends on whether Obama takes a pragmatic
> approach and takes steps to save the US economy.]]> http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-364738 364738 Fri, 23 Jan 2009 23:32:18 -0500 Explains the history of fractional reserve banking in Europe and USA.]]> http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-364538 364538 Fri, 23 Jan 2009 16:52:13 -0500 http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-364188 364188 Fri, 23 Jan 2009 11:40:37 -0500
As recently as 2000 the US was running budget surpluses and was retiring debt. The 30 yr was even phased out.

So what happened since then? I'm sure it will come to me...]]> http://seekingalpha.com/article/115489-bad-bank-bad-idea?source=feed#comment-364103 364103 There is also something wrong when we enshrine housing at the center > of our economy. far too many people who have lost their homes or > who are at risk of losing them never should have been buying a house > in the first lace. They had no capital and no credit. They were in > reality simply paying on a very expensive rental plan. I agree with > the comments above namely: we need to force bankruptcies and let > the overhang work it's way through the system. Instead we are in > effect transferring the systemic risk from the private sector to > the US government under the delusion that a government - and especially > ours - can't fail. many great nations have lost their dominance over > the centuries while believing they could not fail. We are destroying > our national solvency. We will see capital flight before this is > over.]]> Fri, 23 Jan 2009 10:44:02 -0500
This should be required reading before submitting intemperate comments to SA.




On Jan 22 09:42 AM kelm wrote:

> There is also something wrong when we enshrine housing at the center
> of our economy. far too many people who have lost their homes or
> who are at risk of losing them never should have been buying a house
> in the first lace. They had no capital and no credit. They were in
> reality simply paying on a very expensive rental plan. I agree with
> the comments above namely: we need to force bankruptcies and let
> the overhang work it's way through the system. Instead we are in
> effect transferring the systemic risk from the private sector to
> the US government under the delusion that a government - and especially
> ours - can't fail. many great nations have lost their dominance over
> the centuries while believing they could not fail. We are destroying
> our national solvency. We will see capital flight before this is
> over.]]> http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-364101 364101 Fri, 23 Jan 2009 10:42:46 -0500 http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-364050 364050 Fri, 23 Jan 2009 10:15:08 -0500 Thank you for your clarification. I have followed some of your comments and find it excellent.]]> http://seekingalpha.com/article/115489-bad-bank-bad-idea?source=feed#comment-363858 363858 Fri, 23 Jan 2009 07:49:57 -0500 http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-363412 363412 Thu, 22 Jan 2009 16:40:22 -0500
The potential for dollar devaluation is enormous, and all the hard assets will do great, but during Mexico's devaluation in the 80's, real estate was the best return. I am about as anti-real estate as anyone you could find, but even I recognize that this is a potential home run setup. Another good play is short Treasuries, long Oil, or long Gold. I would however stay away from all currencies - even the Yen. Japan had their first trade deficit last month due to falling exports, so now even they are running in the red. ]]> http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-363231 363231 To Chris B > > I agree with: “…treasuries can hold their value in exactly one scenario: > a deflationary depression in which the dollar also stays valuable > vs. other currencies” and with “I think unprecedented money supply > expansion will kill deflation.” (I feel the same) . > > But I can’t understand why “…TBT and PST will pay off.” If “deflationary > depression in which the dollar also stays valuable vs. other currencies”. > > > Please can you make it clear to me. Thank you! > ]]> Thu, 22 Jan 2009 13:44:49 -0500
stagflation
recovery w/ high inflation
recovery without high inflation
rates are increased from near zero
USD collapses in international value

TBT and PST are short US treasuries, so their dollar value should increase if any of the above scenarios occur.


On Jan 22 12:48 PM IronCity wrote:

> To Chris B
>
> I agree with: “…treasuries can hold their value in exactly one scenario:
> a deflationary depression in which the dollar also stays valuable
> vs. other currencies” and with “I think unprecedented money supply
> expansion will kill deflation.” (I feel the same) .
>
> But I can’t understand why “…TBT and PST will pay off.” If “deflationary
> depression in which the dollar also stays valuable vs. other currencies”.
>
>
> Please can you make it clear to me. Thank you!
> ]]> http://seekingalpha.com/article/115489-bad-bank-bad-idea?source=feed#comment-363186 363186 Thu, 22 Jan 2009 13:14:53 -0500 http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-363157 363157 Thu, 22 Jan 2009 12:48:40 -0500
I agree with: “…treasuries can hold their value in exactly one scenario: a deflationary depression in which the dollar also stays valuable vs. other currencies” and with “I think unprecedented money supply expansion will kill deflation.” (I feel the same) .

But I can’t understand why “…TBT and PST will pay off.” If “deflationary depression in which the dollar also stays valuable vs. other currencies”.

Please can you make it clear to me. Thank you!

]]> http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-363134 363134 If foreign investors stop buying treasuries, the government will > resort to money-printing to fund itself. This would devalue the > currency, so this possibility suggests that US and foreign investors > should be diversifying out of the dollar. > > But what currency should we go into? The British pound is even worse > off, and Willem Buiter has suggested that it could go the route of > Iceland's currency. Both the Euro and the Yen seem unattractive > due to debt/GDP ratios that are far beyond even the US's levels and > demographic graying. The Canadian and Australian dollars seem to > track commodity prices more than fiscal policy or obtainable yields, > so you might as well be buying commodities. The Chinese yuan is > issued by a communist export country that has an interest in keeping > its value down. India has chronic inflation. Commodities such as > precious metals and oil are volatile gambles on future inflationary > sentiments, and don't really fit the definition of a safer investment > than the USD as their fluctuations are far greater than the dollar's. > What's left?]]> Thu, 22 Jan 2009 12:29:55 -0500

On Jan 22 10:37 AM Chris B wrote:

> If foreign investors stop buying treasuries, the government will
> resort to money-printing to fund itself. This would devalue the
> currency, so this possibility suggests that US and foreign investors
> should be diversifying out of the dollar.
>
> But what currency should we go into? The British pound is even worse
> off, and Willem Buiter has suggested that it could go the route of
> Iceland's currency. Both the Euro and the Yen seem unattractive
> due to debt/GDP ratios that are far beyond even the US's levels and
> demographic graying. The Canadian and Australian dollars seem to
> track commodity prices more than fiscal policy or obtainable yields,
> so you might as well be buying commodities. The Chinese yuan is
> issued by a communist export country that has an interest in keeping
> its value down. India has chronic inflation. Commodities such as
> precious metals and oil are volatile gambles on future inflationary
> sentiments, and don't really fit the definition of a safer investment
> than the USD as their fluctuations are far greater than the dollar's.
> What's left?]]> http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-363111 363111 If foreign investors stop buying treasuries, the government will > resort to money-printing to fund itself. This would devalue the currency, > so this possibility suggests that US and foreign investors should > be diversifying out of the dollar. > > But what currency should we go into? The British pound is even worse > off, and Willem Buiter has suggested that it could go the route of > Iceland's currency. Both the Euro and the Yen seem unattractive due > to debt/GDP ratios that are far beyond even the US's levels and demographic > graying. The Canadian and Australian dollars seem to track commodity > prices more than fiscal policy or obtainable yields, so you might > as well be buying commodities. The Chinese yuan is issued by a communist > export country that has an interest in keeping its value down. India > has chronic inflation. Commodities such as precious metals and oil > are volatile gambles on future inflationary sentiments, and don't > really fit the definition of a safer investment than the USD as their > fluctuations are far greater than the dollar's. What's left?]]> Thu, 22 Jan 2009 12:14:04 -0500

On Jan 22 10:37 AM Chris B wrote:

> If foreign investors stop buying treasuries, the government will
> resort to money-printing to fund itself. This would devalue the currency,
> so this possibility suggests that US and foreign investors should
> be diversifying out of the dollar.
>
> But what currency should we go into? The British pound is even worse
> off, and Willem Buiter has suggested that it could go the route of
> Iceland's currency. Both the Euro and the Yen seem unattractive due
> to debt/GDP ratios that are far beyond even the US's levels and demographic
> graying. The Canadian and Australian dollars seem to track commodity
> prices more than fiscal policy or obtainable yields, so you might
> as well be buying commodities. The Chinese yuan is issued by a communist
> export country that has an interest in keeping its value down. India
> has chronic inflation. Commodities such as precious metals and oil
> are volatile gambles on future inflationary sentiments, and don't
> really fit the definition of a safer investment than the USD as their
> fluctuations are far greater than the dollar's. What's left?]]> http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-363012 363012 Thu, 22 Jan 2009 10:47:40 -0500 http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-362997 362997 Thu, 22 Jan 2009 10:37:14 -0500
But what currency should we go into? The British pound is even worse off, and Willem Buiter has suggested that it could go the route of Iceland's currency. Both the Euro and the Yen seem unattractive due to debt/GDP ratios that are far beyond even the US's levels and demographic graying. The Canadian and Australian dollars seem to track commodity prices more than fiscal policy or obtainable yields, so you might as well be buying commodities. The Chinese yuan is issued by a communist export country that has an interest in keeping its value down. India has chronic inflation. Commodities such as precious metals and oil are volatile gambles on future inflationary sentiments, and don't really fit the definition of a safer investment than the USD as their fluctuations are far greater than the dollar's. What's left?]]> http://seekingalpha.com/article/115489-bad-bank-bad-idea?source=feed#comment-362987 362987 Thu, 22 Jan 2009 10:29:52 -0500
seekingalpha.com/artic...
]]> http://seekingalpha.com/article/115910-are-uncle-sam-s-creditors-heading-towards-the-exits?source=feed#comment-362969 362969 Thu, 22 Jan 2009 10:20:45 -0500
"Treasuries offer little or no margin of safety if the economy unexpectedly strengthens in 2009, or the dollar weakens significantly, or inflation shows signs of reaccelerating."

As they illustrate, treasuries can hold their value in exactly one scenario: a deflationary depression in which the dollar also stays valuable vs. other currencies. That's why I bought TBT and PST. We're not following the policies of the early 1930's anymore and I think unprecedented money supply expansion will kill deflation. Regardless of what happens to the economy afterwards, TBT and PST will pay off.
]]>