Comments on Credit Trader's articles RSS Syndication from SeekingAlpha.com http://seekingalpha.com/author/credit-trader/articles http://seekingalpha.com/article/137339/comments?source=feed#comment-763895 763895 Tue, 17 Nov 2009 12:23:01 -0500
Cheers]]> http://seekingalpha.com/article/137339/comments?source=feed#comment-503137 503137 Thu, 14 May 2009 01:37:20 -0400
Where is Tyler? anybody know? ]]> http://seekingalpha.com/article/137339/comments?source=feed#comment-502492 502492 Wed, 13 May 2009 15:02:12 -0400
Tom]]> http://seekingalpha.com/article/137339/comments?source=feed#comment-502298 502298 Wed, 13 May 2009 13:15:09 -0400
--rq]]> http://seekingalpha.com/article/137339/comments?source=feed#comment-502135 502135 Wed, 13 May 2009 11:38:35 -0400 http://seekingalpha.com/article/135193/comments?source=feed#comment-494881 494881 Questions: Are you saying the municipalities themselves didn't understand > what they were getting into? Also, are you talking about the kinds > of bond issues people vote for in special elections? Thank you.]]> Thu, 07 May 2009 22:35:36 -0400

On May 05 01:33 PM masf wrote:

> Questions: Are you saying the municipalities themselves didn't understand
> what they were getting into? Also, are you talking about the kinds
> of bond issues people vote for in special elections? Thank you.]]> http://seekingalpha.com/article/135193/comments?source=feed#comment-494031 494031 Thu, 07 May 2009 12:37:55 -0400
The question then becomes "What does the debtor public sector entity do vis-a-vis curing the default"? The contemporary options are to either raise taxes(good luck) or look to Uncle Sam to help(even better luck), or take a scalpel to labor costs, including pension and health care benefits(best luck---meet the public sector unions).

The above wells are pretty dry in our 21st Century environment, and our political willl is both weak and limited in a practical sense.

You ask, "Well, how about my bond insurance?". You know the answer to that one. Just forcast a relatively sharp increase in defaults and then take a look at the balance sheets of the major insurers. Also, keep in mind that the insurers got into the CMB business in a big way and are wallowing in claims.

Last point. Look at the swell yields on on muni debt right now. The market is telling us to take a pass.

I'm sure happy my wife, another friend, or neighbor isn't a muni salesperson. If they were, like the kids say......OUCH!]]> http://seekingalpha.com/article/127904/comments?source=feed#comment-491405 491405 Wed, 06 May 2009 03:20:39 -0400
Mark to Market accounting created a bigger problem than was there. If I insure an individual I don't pay unless he dies. If he gets sick I don't raise his premiums until he gets well again. Mark to Market accounting essentially killed Bear and Lehman.]]> http://seekingalpha.com/article/135193/comments?source=feed#comment-491291 491291 Tue, 05 May 2009 23:02:44 -0400
Apparently a lot of investors don't think the muni's will default. I'm not saying they know what is true but wow, the money going into them now is amazing. I think a lot of people are looking to lock in the 6-7% tax free yield (most think taxes will be going up..uh..uh) and that is for the Insured Funds. (I know some people think the insurance co's can't actually pay....but that's another issue).
I currently have IMT, NZF, and FHIGX but I guess I can sell if things get too bad. On the other hand, if the gov'ts efforts at reviving our economy work, we'll have these yields locked in (imho).
Thanks, Willydo (by the way, how do I trigger notification to read other responses to this article or do I just have to keep "chekin' back"??]]> http://seekingalpha.com/article/135193/comments?source=feed#comment-491275 491275 Tue, 05 May 2009 22:35:55 -0400
i personally would not mind to buy munis, watch them default and demand the golden gate bridge as in kind payment. i'd be rich from the toll collection.]]> http://seekingalpha.com/article/135193/comments?source=feed#comment-490887 490887 Tue, 05 May 2009 16:24:41 -0400
And so, I believe, the story will unfold all across this land: the next BIG SHOE TO DROP will be at the local level, with people refusing or unable to pay the huge tax bills that are going to be foisted upon them. And cities will default on their munis.]]> http://seekingalpha.com/article/135193/comments?source=feed#comment-490668 490668 Tue, 05 May 2009 14:28:04 -0400
I have. No one has yet to have seen a report, though quite a few have asked and not been satisfied.

And yet public sector budget goals have not been met, the equity and real estate markets which embrace their pension fund investments are down sharply, and costs(mostly salaries and pension obligations) are escalating.

One of our next shoes to drop?]]> http://seekingalpha.com/article/135193/comments?source=feed#comment-490643 490643 Tue, 05 May 2009 14:13:33 -0400
When you discuss the "know your client" analysis of the banks, I think you are being kind. You seem to suggest the banks should have done their homework and realized the munis are not sophisticated. I would love to see the presentations the banks showed. I very much doubt they had a section saying, this is a floating bond and this is a swap to put the rate back to fixed. I would imagine the products shown to munis were only highly complex but presented in a way to suggest that this was what everyone was doing.

Anyway, I digress, the solution is very simply. No embedded optionality of any sort, in bonds or swaps. No collateral agreements (therefore the banks have to be prepared to take the full risk).

The purpose of derivatives are for liability management and they must be risk reducing - it does not take a genius to work out what is risk reducing, you simply compare revenue streams to interest costs. The swaps may give the banks a credit exposure but if it reduces the overall risk to the issuer, then this is ok, but forget about monoliners, this simply creates the illusion of protection. What is clear is banks pushed the riskiest of products, but I don't understand the motive of the financial teams at the munis who thought it was a good idea, but they should ask themselves if they think they are so smart, why aren't they working on Wall Street - or maybe they thought doing something funky might help them get a job on Wall Street?

Seems to me that banks need to be taught a lesson and if they are not prepared to actually help the munis they need to be legally prevented from doing business with them.

It needs to be stated very clearly, between the banks and the munis, they are gambling with the tax payers money.]]> http://seekingalpha.com/article/135193/comments?source=feed#comment-490575 490575 Tue, 05 May 2009 13:33:33 -0400 http://seekingalpha.com/article/129605/comments?source=feed#comment-453861 453861 Mon, 06 Apr 2009 15:37:42 -0400 http://seekingalpha.com/article/129605/comments?source=feed#comment-453772 453772 Mon, 06 Apr 2009 14:44:27 -0400
Check it out: www.sfgate.com/cgi-bin...]]> http://seekingalpha.com/article/129605/comments?source=feed#comment-453133 453133 Mon, 06 Apr 2009 09:00:22 -0400 http://seekingalpha.com/article/128598/comments?source=feed#comment-449473 449473 Thu, 02 Apr 2009 12:40:25 -0400 http://seekingalpha.com/article/128272/comments?source=feed#comment-444605 444605 Sun, 29 Mar 2009 21:31:39 -0400
Except AIG intentionally called them "swaps" rather than insurance, specifically so that the 50 collective INSURANCE commissioners of the individual states would not have jurisdiction to look under the covers of these instruments and ask silly un-free-market-capitalist questions like: "Where is the insurable interest?" or "Where is the collateral on these instruments?" or "How much exposure do you have in these instruments should a jumbo institution fail, and how will you be able to pay your counterparties" or "Just WHO ARE your counterparties in the top ten or twenty largest exposures you have written?"

Thank GOD the insurance commissioners didn't have a chance to impede the flow of free market capital by asking such silly assinine socialist questions!!!!]]> http://seekingalpha.com/article/128272/comments?source=feed#comment-444526 444526 Sun, 29 Mar 2009 19:40:54 -0400 http://seekingalpha.com/article/128272/comments?source=feed#comment-443978 443978 Sun, 29 Mar 2009 10:51:04 -0400
I mean really, if you are not on one side or the other of a debt trade on say Lehman these should be "taken out and shot." I can see no economic reason to have CDS short of a hedge if you are in a position. Then fine. But short of that it is just pure gambling. In 1929 they had this type of thing for equities and they called them "bucket shops."

In insurance you have to have an insurable interest. Which is to say you cannot buy insurance on a street person. The same concept should govern these. ]]> http://seekingalpha.com/article/128272/comments?source=feed#comment-443817 443817 Sun, 29 Mar 2009 04:10:54 -0400
Oh, sorry, with a few improvements and complications we can keep the Ponzi liquid.

(*=putting out the oil fire by blowing up the well)]]> http://seekingalpha.com/article/128272/comments?source=feed#comment-443740 443740 that flow being a 2% premium to the seller of protection (AIG). The bank lender may get its 10% on its loan (likely more like 5-6% prior to crisis), but that lender is actually forking over (lending) real dollars to take the credit risk of the borrower. AIG did not have the cash to back up the debt -- and I don't think they even had to post collateral like most counterparties would. AIG probably looked at the CDS as a logical extention of its core insurance business, because that's fundamentally what the CDS is -- insurance. ]]> Sat, 28 Mar 2009 22:56:48 -0400 that flow being a 2% premium to the seller of protection (AIG). The bank lender may get its 10% on its loan (likely more like 5-6% prior to crisis), but that lender is actually forking over (lending) real dollars to take the credit risk of the borrower. AIG did not have the cash to back up the debt -- and I don't think they even had to post collateral like most counterparties would. AIG probably looked at the CDS as a logical extention of its core insurance business, because that's fundamentally what the CDS is -- insurance. ]]> http://seekingalpha.com/article/128272/comments?source=feed#comment-443726 443726 Sat, 28 Mar 2009 22:12:13 -0400 http://seekingalpha.com/article/128272/comments?source=feed#comment-443685 443685 Sat, 28 Mar 2009 20:38:37 -0400 http://seekingalpha.com/article/127904/comments?source=feed#comment-441887 441887 "Perhaps I’m reading in too much into this sentence but to expect > AIG (http://seekingalpha.com/symbol/aig) to somehow have hedged or > offset its CDS trades is akin to an insurance company kidnapping > sick people who have bought life insurance and sticking them in incubators > to prolong their life." > > Insurance companies (responsible ones, anyway) have reserves and > investments that are intended to guarantee payment on the policies. > When they sell guarantees (in variable annuities, for example), they > do buy hedges and make offsetting investments. Also, half the policyholders > won't die in a nine-month period, which is what happened to AIG]]> Fri, 27 Mar 2009 02:11:25 -0400

On Mar 26 08:23 AM Blah, blah, blah, etc. wrote:

> "Perhaps I’m reading in too much into this sentence but to expect
> AIG (seekingalpha.com/symbo...) to somehow have hedged or
> offset its CDS trades is akin to an insurance company kidnapping
> sick people who have bought life insurance and sticking them in incubators
> to prolong their life."
>
> Insurance companies (responsible ones, anyway) have reserves and
> investments that are intended to guarantee payment on the policies.
> When they sell guarantees (in variable annuities, for example), they
> do buy hedges and make offsetting investments. Also, half the policyholders
> won't die in a nine-month period, which is what happened to AIG]]> http://seekingalpha.com/article/127904/comments?source=feed#comment-441068 441068 Thu, 26 Mar 2009 11:32:50 -0400 http://seekingalpha.com/article/127904/comments?source=feed#comment-440729 440729 Thu, 26 Mar 2009 08:54:54 -0400
Hurricane and earthquake insurance require regulation due to the time asymmetry in payment and risk realized combined with the difficulty in pricing acute tail events.]]> http://seekingalpha.com/article/127904/comments?source=feed#comment-440709 440709 Thu, 26 Mar 2009 08:42:32 -0400
He made a lot of money, granted. However, all of his ideas are not good ones.]]> http://seekingalpha.com/article/127904/comments?source=feed#comment-440681 440681 Thu, 26 Mar 2009 08:23:44 -0400
Insurance companies (responsible ones, anyway) have reserves and investments that are intended to guarantee payment on the policies. When they sell guarantees (in variable annuities, for example), they do buy hedges and make offsetting investments. Also, half the policyholders won't die in a nine-month period, which is what happened to AIG]]>