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Bill Zielinski

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  • Don't Blame Mark-to-Market for This Crisis [View article]
    If you value assets based on market values, at least you have a value that makes sense economically today; it's valued at what a buyer would pay. The problem is that asset values can change significantly,(based on supply and demand, etc) without implying that the held to maturity value is impaired. This is why insurance companies holding high rated long term assets do not do mark to market adjustments. Flowing to the income statement mark to market adjustments every quarter would significantly distort the real operational results without being based on an underlying economic reality. The MTM question gets very complex based on the type of asset, it's credit rating and years to maturity.
    In the case of banks that are holding huge amounts of assets on their books at cost, when the market value is pennies on the dollar and recovery is doubtful, creates major doubts about the real strength of the bank's capital levels. MTM reflects the economic substance of a permanently impaired asset and allows for an accurate balance sheet and income statement.
    To keep virtually worthless assets on the books and not mark them to market is just a shell game. The bank pretends to hold assets worth something and investors are supposed to pretend that the bank is sound?
    How does this solve anything?
    The writer makes good points and is well justified in roasting Forbes ridiculous article.
    Mar 12 08:58 AM | 9 Likes Like |Link to Comment
  • How We Can Avoid Another Tragic Ponzi Scheme [View article]
    Another classic article by Mr. Quinn. The analogy of the Ponzi schemes of the US Government and Madoff is right on the money.

    This country’s pattern of civil and fiscal decline echoes the warnings issued by David Walker, of the Peterson Foundation, an organization that has been trying to educate America about the fiscal emergency we face due to reckless borrowing.
    As noted in Barron's this week:

    Walker compares our nation’s fiscal morass to the one that helped topple the Roman Empire. In one speech he argued, “Rome fell for at least four reasons, and please listen carefully: A decline in moral values and political civility at home, an overconfident and overextended military, fiscal irresponsibility by the central government and inability to control one’s borders. Does that sound familiar?”

    Is this democracy at its worst with a betrayal by our elected leaders, or is it a failure equally shared by both the voters and its elected leaders?
    Dec 16 02:43 PM | 5 Likes Like |Link to Comment
  • Is America on a Downward Slope? [View article]
    An incredibly well written dissertation on the financial disaster that the Fed and our political leadership have brought down upon us.

    This country is incapable of accepting the fact that the cure to our financial fiasco involves pain and sacrifice rather than more borrowing. The illusion of prosperity, promoted by unsavory and deceitful political and business leaders is still accepted by an uninformed public.

    The monetary authorities will do whatever they need to do to keep the bubble from bursting but their success is subject to much doubt. If they are "successful" it only means that they have postponed the real day of reckoning to a later date and increased our debt levels beyond what can ever be managed or repaid.

    Maybe some day before it is too late, an uncommon leader will rise to the occasion and talk straight to the American public. Maybe someday this honest man will explain how we have spent our future and that the cure is not more borrowing but pain and sacrifice so that we can have some hope of a better future for our children.

    Time is running short.
    Dec 10 07:12 AM | 4 Likes Like |Link to Comment
  • U.S. Markets: Keep on Rockin' in the Free World [View article]
    Thanks for another real good analysis.
    It's obvious that the powers to be don't seem to comprehend the serious situation that we are in. The only "solution" they have is to borrow and spend more, as has been the case for decades now.
    Only when it becomes blatantly obvious to everyone that we are at the edge of the abyss, will the impetus for the right kind of change happen. By that time, of course, it may be too late.
    Apr 27 08:34 PM | 3 Likes Like |Link to Comment
  • E*Trade: A Bet Worth Making [View article]
    Nice analysis.
    Probably worth picking up a few shares under the "lottery ticket" theory.
    Mar 16 05:42 AM | 3 Likes Like |Link to Comment
  • Optimists On Housing Recovery May Have To Wait Another Decade - Humpty Dumpty Vs.The Fed [View article]
    A recent survey by Harrison Group and AXP Publishing found that the highest income groups have reduced investments in stocks and financial investments from 76% in 2007 to around 46% today.

    So where are the "one-percenters" putting their money?
    According to the survey, the investments of choice are real estate, collectibles and hard assets.

    Article can be found at:
    May 17 01:59 PM | 2 Likes Like |Link to Comment
  • What Bernanke Said: On Stock Market Rises and Commodity Price Inflation [View article]
    Still LOL. Very nice summary.
    I suppose if mortgage rates had gone down (as they were supposed to), Bernanke would have taken credit for that as well.
    Feb 5 02:29 AM | 2 Likes Like |Link to Comment
  • More Option ARM Falsehoods: Interest Rates Are Not the Issue [View article]
    Great article. From the perspective of a first hand observer of the option arm financing fiasco, I can tell you that your assertions are exactly right. Virtually all of the option arm borrowers took this product based on the artificially low payment, virtually all of the borrowers paid only the minimum payment and virtually all of the borrowers have already or will default.
    Jun 22 03:38 PM | 2 Likes Like |Link to Comment
  • Today's Yellow Shoot: The MBA Mortgage Report [View article]
    Awesome article; you put together a lot of data points to show what the real situation is.
    Jun 4 05:36 PM | 2 Likes Like |Link to Comment
  • Deflation Death Spiral in Europe? Not Quite [View article]
    Nice piece with well crafted thoughts. Always instructive to read an intelligently articulated counterpoint to an accepted point of view.
    Apr 22 03:38 AM | 2 Likes Like |Link to Comment
  • Gold Marks Two Important Milestones [View article]
    The advantage of owning gold has also increased recently due to the fact that most "safe" financial assets now yield zero interest.

    So what is better to own? "Safe" treasury bills that yield zero interest while dollars fly off the printing press by the trillions or gold? An easy choice in my book.

    Also, gold is a relatively small asset class compared to the value of holdings in stocks, real estate, money funds, etc. Even a small reallocation of funds from paper assets to gold would have a huge impact. At some point i would not be surprised to see the value of gold quickly double in a short period of time.
    Dec 19 03:36 PM | 2 Likes Like |Link to Comment
  • Analysts Are Bullish on Gold: Should You Be Worried? [View article]
    Great article and although I am a long term gold stock and bullion investor, I get nervous when everyone is shouting to buy gold and predicting big price increases. Nonetheless, I don't believe the timing is important here; the smart move is to increase your positions on sell offs. The central banks of the world will engage in "quantitative easing" to whatever extent necessary in an attempt to provide more credit to an already over leveraged world, ultimately debasing the value of most currencies.
    Gold investors have been laughed at for years and there have been long periods of declines and/or under performance in price versus other asset classes. Gold, however, is the only monetary asset where the ultimate value of your investment is not subject to someone’s else’s promise or ability to pay. I view gold as the ultimate insurance hedge against a government’s propensity to spend itself into insolvency and, accordingly, I believe that gold should constitute 10 to 20% of one’s core investment assets. Historically, governments have regularly and repeatedly defaulted on their sovereign debts. In every such case of default, the citizens of those nations would have been far better off holding gold rather than government paper.
    Dec 3 01:36 PM | 2 Likes Like |Link to Comment
  • HYG: Peeking Inside This High-Yield ETF [View article]
    Excellent in depth summary of HYG. A potential investor in HYG would be well advised to read this article before making an investment decision.
    Jan 10 10:48 PM | 1 Like Like |Link to Comment
  • PIMCO Dumps U.S. Bonds: Should We Be Alarmed? [View article]
    Very nice article. The debt trap you mention is inescapable. The Fed moving to ZIRP has left them with only one bad option which is to continue to print money. I expect QE will become the global policy tool of choice by all central banks.
    How does one profit in this environment?
    Mar 10 02:54 PM | 1 Like Like |Link to Comment
  • Foreclosure Situation to Worsen in 2011; How We Got Here [View article]
    Of the total OREO of $53.2 billion at September 30, 2010, only $17.7 billion represented foreclosed 1-4 family and multifamily residences, a trivial amount compared to total banking assets.

    The number that should be of more concern is the percentage of mortgage loans past due. In the 1-4 family residential category, 12.53% of bank held mortgages are 30 days or more past due, with 9.68% past due by 90 days or more.
    In the multifamily residential real estate category, 5.72% of loans are past due by 30 days or more.

    The total amount of 1-4 family residential mortgages held by all FDIC insured institutions totals $1.9 trillion as of the end of the third quarter 2010, representing 27% of total net loans and leases.
    Jan 17 05:03 AM | 1 Like Like |Link to Comment