Ira Artman

A New Proposal: Bank Annual Optional Warrant Acquisition Operation

Note:
The SeekingAlpha "Instablog" version of this same article contains a slightly more evocative title, as well as a compelling opening graphic.

It may be found at the following link:
seekingalpha.com/insta...

John Taylor Clears the Way for an Informed View of the Financial Crisis

Thank you all for kind words.

With respect to what the new Administration needs so it will not continue or repeat prior policy mistakes, I believe that the answer is simply - wisdom and the courage of their convictions.

If they are lacking in either or both, then I'm not sure why we bothered to hold last fall's election.

Bait and Switch: TARP, the RTC and Supervisory Goodwill

AxelRod, JohnL, and Marvin

Thank you for kind comments about what is of much more than theoretical concern to me.

First things first.

THING 1
-----------
I am (possibly unjustifiably optimistically) hopeful that the repercussions of continued mismanagement of bailout are such that there might be a refocusing on things that could work, can be measured, and can be targeted at specific areas.

The idea of a bailout effort that is - by design - unmeasurable as to effectiveness or compliance by recipients describes current TARP, in my humbled opinion.

I would think that it would also be unacceptable to Congress, even if (or because) they approved TARP in its current configuration.

So, Congress might go two ways, and perhaps a little of both.

#1: They might (for want of a better word) "demonize" the TARP recipients, and use the resulting antipathy for the "scoundrels" to limit public outrage when they reshape the industry to their own design.

This was approach used during S&L crisis (see example of Ben Franklin, there are many others).

Advantage of this is that it deflects scrutiny from Congressional responsibility for situation. [Note: I have written article entitled "One at a Time" that discusses Nobel laureate's view that this problem is primarily of Congressional origin.

Link here:

mortgagenewsclips.com/.../

Also, recall that the reason we had a mortgage securitization business was that in aftermath of S&L crisis, balance sheet lending was deemed to be "too risky and costly." So what makes you think that the rediscovery of balance sheet lending as a panacea now is such a great idea, other than it is not (yet) clearly broken?

#2: They might actually come up with targeted and specific programs, that could be deployed.

My guess will be 80% demonization and 20% useful stuff, but that's simply a wild guess. What industry looks like after that - I don't know how anyone can say.


THING 2
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Now, a comment explaining the "much more than theoretical concern" comment at beginning.

I am presently unemployed, and you can see my SeekingAlpha bio or my
LinkedIn profile for background.

LinkedIn Profile here:

www.linkedin.com/in/ir...


I am able to relocate myself anywhere and am looking for work, perhaps in (what's left of) mortgage finance business, or in some other finance-related business.

If any of you folks above, or readers "out there" can assist me in my search, I would be most thankful.

But thanks for reading, kind words, and comments. As I've noted elsewhere on web, in my prior life I built financial models of mortgage transactions, delinquencies, and home prices.

The fact that I can also write sometimes confuses folks, in that they say "Oh, you are looking for a writing job." Not so. I was simply blessed with excellent high school history teachers in public school that forced us how to think and write.

My writing is simply way to unashamedly promote myself and simulate the type of challenges I used to have when I worked for money.

Thanks again for reading and comments. - Ira

Bait and Switch: TARP, the RTC and Supervisory Goodwill

Thanks rkruse53 for comment.

As to "startling", read the linked reference to Benjamin Franklin Savings that appears in my article [I've repeated it below].

It is just an example of what happened before, in - I think - distressingly similar circumstances. There are many examples.

Thanks for reading.

en.wikipedia.org/wiki/...

Bait and Switch: TARP, the RTC and Supervisory Goodwill

Note: For those that DIDN'T see the movie, when Oliver/Mark Lester holds out his empty bowl, he asks:

"Please sir, I want some more. "

as noted below:

Oliver Twist: Please sir, I want some more.
Mr. Bumble: [thinking he must not have heard right] What?
Oliver Twist: Please sir, I want some...
[pauses hesitatingly]
Oliver Twist: more?
Mr. Bumble: [surprised beyond belief] More?

www.imdb.com/title/tt0...

I think that the Congressional reaction will be similar to that of Mr. Bumble, and Congress could put a halt to the use of TARP as it was used in '08.

If it does, then TARP recipients could be expected to do as well as S&L's with goodwill, when the goodwill was disallowed by Congress in 1989's FIRREA legislation. [They failed.]

But we shall see.

Ginnie Mae Extension Risk - Well, Assume Me!

Yes, yes, and yes! When folks ask:

Who will pay for the mortgage crisis and the bailout?

the "easy" answer is "taxpayers" or "all of us."

Once you realize that we are probably [!] about to replay the S&L crisis of the 1980's:

1. balance sheet lending,
2. low rate mortgage assets,
3. funded by deposits that become too expensive once
rates move up as inflation reasserts itself,
4. due to ill-conceived programs that are funded with
loose money/printing press

It should be clear that

1. Before taxpayers are called again to pay for losses of balance sheet lenders (and are there any lenders these days, OTHER than balance sheet lenders - I think not)

2. the equity investors in balance sheet lenders may be wiped out as their low fixed rate mortgage asset heavy balance sheet can not be funded by shorter term deposits as the deposit rates reset upward.

But who remembers the 1980's?

Thanks for reading. - Ira

Jumpstart Spending With a National Housing Lottery

Thanks for comments. Sadly, the article IS serious. Here is why.

1. The unfairly criticized (of late) for Chairman Greenspan has demonstrated the power of (for want of better word) "greed" when he mobilized borrowers' self interest to create a spending machine that drove the US economy, even though household incomes were stuck.

2. If people are among those that can afford to buy lottery tickets, then it is NOT irresponsible to afford them that pleasure.

3. While greed may be gone, fear is everywhere.

4. Money - if spread around widely[!] among the fearful in an unaccountable way (i.e., TARP) will not work. So it would seem.

5. This proposal is for a targeted and modest plan (relative to the $750B TARP) to harness what has worked in the past (gain-seeking "greed"), rather than administer more of what hasn't.

6. In that context, what is so fantastic or ridiculous about the above.

7. What is ridiculous is the following:

"Hello. I'm from the government, and I will be spending $700 B of your money. Once it is distributed, I will have - by design - no way to tell what the money is being used for, or even if it has been used at all. If it is simply hoarded, there will be no way for me to monitor or to hold the hoarders accountable."

That's ridiculous. Or to put it another way.

8. When there is a gas shortage or a hurricane, states have the ability to impose anti-gouging laws against vendors who charge "too much."

It would seem[!] that we now have a capital shortage. Yet the folks who won't even gouge, because they are hording their (formerly our, i.e., the taxpayers') scarce resources face no penalty for their inaction.

That's ridiculous.

PS: Thanks for reading. - Ira

Monetary Mechanisms: Then and Now

Flow5 - Thank you for time and comments. You've given me much to think about. - Ira

Learning Curves: Identifying a Recession

While you may be able to "feel recession in your bones", were you feeling the recession in your bones as of October of 2006?

Interesting thing is not the "NAI", which is, I guess, a more-or-less coincident indicator, but Estrella et. al.'s work on Yield Curve Predictor.

It gives you a warning one year ahead of time.

Monetary Mechanisms: Then and Now

Replies for ebreen, flow5, and derryl

#1: ebreen: You are correct. In balance between content & length I confined inflation comments to first piece in series ("The Demographic and Economic Record Prior to the Housing Meltdown"), but not here, and perhaps should have.

#2: flow5+derryl: Understand point that you are making. But how, then, to interpret the claims that occurred during the 70's - 80's that "dintermediation" was occuring in banking system? If deposits can't leave, then "where did they go?", or would you say that - by definition - there is NO such thing as dintermediation?

An Endowment Portfolio From Publicly-Traded Vehicles

Consider ANGLX - Analytic Global Long SHort - as alternative?