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Bruce Vanderveen

 
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  • Thinking the Impossible: Could Bank of America Go to Zero? [View article]
    Thanks to everyone who commented. I was hoping to stimulate a discussion of the bank balance sheets and wanted to get all view points.

    I think a lot of us would like to understand the derivative factor better. Do the huge derivative contract positions on the balance sheets just zero out. Or, do they hold the potential to bring these banks down? I'm afraid the later is the answer, but would be happy to see evidence otherwise.
    Jan 29, 2009. 02:15 PM | 1 Like Like |Link to Comment
  • Schwarzman's Bailout Wishlist [View article]
    Funny!
    Jan 28, 2009. 04:31 PM | Likes Like |Link to Comment
  • What Makes a Bank Too Big to Fail? [View article]
    So, what would the likely options be? Nationalization, Reinflation? We handled the South American Debt problems, when most banks were technically insolvent, a few years back. Could this crisis be handled the same way using a "bad bank"?

    Would derivative contracts be totally neutral, even if they are 10 to 20 times a banks total assets? Reason I'm asking is I get different stories on derivatives.

    Thanks
    Jan 28, 2009. 04:15 PM | Likes Like |Link to Comment
  • Evidence That Big Inflation Is Coming [View article]
    Maybe we get too wound up in semantics. Housing, commodity and other price declines will cause people NOT to spend, increasing unemployment, protectionist sentiment, increasing savings, deleveraging,. This decreases the velocity (turnover) of money. Add to this the destruction of the shadow banking system with a resultant credit availability losses.

    You can print all the money in the world but if it just sits in a vault somewhere nothing changes. For now anyway, the world is in a wealth/income destruction mode and governments so far has not been able to stop it. TARP2 will be followed by TARP3 and then TARP4. I like the term "negative wealth spiral" better than deflation. When the helicopters start flying things may change.


    Jan 25, 2009. 08:45 AM | 26 Likes Like |Link to Comment
  • Annals of CDS Demonization, Michael Lewis Edition [View article]
    I too would like to know how credit default swaps (CDSs) have contributed to the mess we are in. It is my understanding that they brought down largest insurance company in the world -- AIG -- in a matter of weeks?

    How did CDSs become a multi-trillion dollar market so quickly? Is that good or is it a major contributor to the problem? On the other hand, I can see how they provide "current market perception" of debt default probabilities. Maybe someone could help clarify?
    Jan 24, 2009. 09:43 AM | Likes Like |Link to Comment
  • Owning Oil in Royalty Trusts [View article]
    I knew someone would point this out. I had SCO for a few weeks, sold late yesterday. I was spending way to much time watching it (not sleeping well). Now, I will now sleep better that it is cashed out.

    Well, I did not say don't trade SCO., just that there are less volatile ways of shorting crude. It could be a good hedge against long oil positiions though.

    Bruce


    On Jan 15 08:02 AM kommando wrote:

    > So.....based on your disclosure you are ultra short crude (long SCO
    > is short crude) but you also implied you like to sleep at night,
    > so you are also long crude by owning BPT, and you explicitly suggest
    > that individuals should not be trading crude price changes by owning
    > the likes of SCO and the others you mention in your article.
    >
    > Please clarify - are you hedging your "long crude" position in BPT
    > against lower crude prices with your trade in SCO, or is shorting
    > crude with the SCO position your primary trade and your position
    > in BPT is a dividend play?
    Jan 15, 2009. 04:48 PM | 2 Likes Like |Link to Comment
  • Crude Reality: How Long Can Oil Stay Down? [View article]
    Oil demand may increase (Adam Smith's invisible hand) as gasoline prices drop. I know I am driving more. Also, truck demand is rising while hybrid demand is shrinking. Don't forget the cold winter. I am in Grand Rapids, Michigan, right now. Temperature this morning was 5 degrees F. Everyone -- employed or not -- will turn the heat up at these temperatures.

    Something to consider.
    Jan 14, 2009. 11:50 AM | 3 Likes Like |Link to Comment
  • Where are the Risk Auditors? [View article]
    Would it be possible to hire someone to "audit the audit" so to speak? They would be paid on what they find is wrong with the original audit rather than just the books.

    Knowing their audit will be independently checked might keep the original auditors more honest also.

    If the primary auditors just "talk a great game" they should be hired by public relations department in the first place.
    Jan 14, 2009. 10:17 AM | Likes Like |Link to Comment
  • How Did Madoff Fool the SEC? [View article]
    Well, yes this is exactly right. Verifiable statements are first thing to look at.

    Reminds me of my father who put $50,000 into an Arizona real estate company in the early 90's. He never saw a balance sheet or statements but wasn't concerned because they "looked, acted and communicated "like professionals He was right. They were professionals, professional crooks! Interest payments soon stopped and he never saw the money again.

    The basics have to be followed. Otherwise you might as well as not even have the SEC.
    Jan 6, 2009. 09:15 AM | Likes Like |Link to Comment
  • From Crunch to Catatonia [View article]
    Deflation is here. Can the government do anything about it? I doubt Obama's plan can stop it.

    I guess they can print money, but who gives the authorization. Congress probably will not authorize it unless things get much worse. Government is slow but this crisis is swift. So, expect deflation to strike hard for now. Afterward, who knows?

    Jan 5, 2009. 10:07 PM | 1 Like Like |Link to Comment
  • Don't Miss the Coming Gold Bull [View article]
    Yes, the government could potentially print money and send gold sky high. We, however, have a legislative system which would strongly frown on such a move. Things would have to get materially worse before popular pressure might allow it. This is why I feel that hyper-inflation, although a possibility in the distant future, will not occur soon. It probably would be a real miracle if we would transition from the current deflationary environment to a nice 1-2% inflation scenario.
    Jan 2, 2009. 11:56 AM | Likes Like |Link to Comment
  • Can Deflation Be Avoided? [View article]
    We seem to be in a period of relative stability with markets calming down, even rising. Does the market anticipate things getting better? Are government bailouts working or just delaying the inevitable. I don't see the current low price of gasoline triggering a rush to buy SUVs, but It has to increase sales somewhat plus make other commerce more affordable. Time will tell. I'm cautiously optimistic.
    Jan 2, 2009. 11:42 AM | Likes Like |Link to Comment
  • Chart of the Week: Gold [View article]
    The current deflationary environment will tend to drive gold down. However, both the India-Pakistan and Israeli-Palistinian conflict are wild cards with the potential to spike gold prices.
    Dec 28, 2008. 09:16 AM | 5 Likes Like |Link to Comment
  • I like the one about Bush and the Lehman brothers best! Just what was Bush's grade in his economic courses (if he took any).
    Dec 27, 2008. 10:18 AM | Likes Like |Link to Comment
COMMENTS STATS
267 Comments
560 Likes