A lot of the securitization boom was driven by the desire to hold riskless "AAA" assets by large financial institutions (and to a lesser extent the "AA" piece). The way the capital regulations work, a bank could fund nearly limitless "AAA" tranches and earn 20-25 basis points risk free.
The problem was always selling the "A" and "BBB" and "BB" tranches which limited how much could be done... not to mention finding enough underlying assets. I would love to blame the banks, but it's a highly regulated and competitive business. Making half the money of the bank next door will get you fired. Ask Phil Purcell.
My Advice to Cisco: Double the Dividend and Cut the Conference Calls [View article]
The Company need to return it's cash to shareholders, but they will wait in order to try to get a tax amnesty or fundamental tax law change on foreign earnings.
Pre-crises the Fed was monetizing less than 0.5% of GDP per year, post-crises it is in excess of 3%. There is an argument that as long as inflation is below some threshold, say 2% that the Fed can replace treasury assets (bills, notes, bonds) with Federal reserve assets (deposits at the Fed) at whichever rate it chooses. I don't see the logic in this argument. It doesn't matter whether base line inflation is 1% or 3%, the purchase of treasury securities with Federal Reserve assets is a transfer of purchasing power from the private sector to the public sector with no promise to repay.
The authorities will continue to monetize because it is the most politically achievable way to effect a tax increase. And since the Government has nearly full control over the banking sector, it can create enough financial repression to tie up funds in excess reserves in order to control inflation. All the banking acts and regulations are purposeful acts to constrict credit creation to effect that end.
How a New Cisco CEO Could Move the Stock Price Up 40% [View article]
The US worldwide income tax policy will have to change eventually. It's a significant disadvantage. However, US firms have many competitive advantages to offset this, so it has been and remains only a minor drag. As the world competes better, the tax rules will have to change.
The Teflon Market: When Will It Correct? [View article]
Yes they can stop buying and not collapse the market because there is enough net global savings to fund treasury debt issuance and the US govt is still a credit worthy borrower. At the current rate of issuance that may not be the case is 2-5 years depending on how things evolve. The bigger problem for the treasury market in the short-term I think is that if private demand for capital picks up, then there will not be enough excess savings to fund the deficit at current levels.
10 High-Yielding REITs Offering Safety and Growth [View article]
At HCP, pro forma for the HCR ManorCare acquisition debt and debt-like liabilities are 40% of enterprise value and 53% of current cost accounted net invested capital.
I should take a look at HCN again, I can't recall what I didn't find attractive about it. I think it was their business mix.
Is Gold 50% Overpriced or 25% Underpriced? [View article]
The decline rate on a single well may be greater, but you can tie a well back to the gathering point more cheaply on average and the well itself is cheaper to drill due to all the process improvements enabled by the geology of shale compared to conventional plays. Encana believes it can still drive costs down significantly (>50 cents) from where they are now with infrastructure improvements in its fields.
I agree with your long-term thesis on natural gas, at the same time we haven't even begun to see long-term, infrastructure related switching toward natural gas due to its current availability and these things take a lot of time.
We probably agree over the long-term, but how long it takes to get there and what the path will be is up for debate.
10 High-Yielding REITs Offering Safety and Growth [View article]
When I looked at HCN I also looked at HCP and decided I liked the business more. Those interested in HC REITs should take a good look at that name as well. The dividend yield is not definitive for REITs because management has a lot of discretion in how much they pay out due to the dominance of depreciation in cash flow.
Is Gold 50% Overpriced or 25% Underpriced? [View article]
The structural price of natgas has changed. It's not so much the discovery of shale gas in terms of quantity, but rather that shale gas has manufacturing like economics because it can be extracted so efficiently and because a lot of shale gas has significant amounts of liquids byproducts which essentially subsidize the gas production.
I posted this awhile back and it complements your own research well. i compare to some different metrics than oil but note that the gold price is a good barometer of energy price inflation from a fundamental perspective.
I chose 1973 as an earliest start date for gold. In 1970, the price of gold was still partially set.
Valuation and U.S. Debt [View article]
The problem was always selling the "A" and "BBB" and "BB" tranches which limited how much could be done... not to mention finding enough underlying assets. I would love to blame the banks, but it's a highly regulated and competitive business. Making half the money of the bank next door will get you fired. Ask Phil Purcell.
My Advice to Cisco: Double the Dividend and Cut the Conference Calls [View article]
Valuation and U.S. Debt [View article]
The authorities will continue to monetize because it is the most politically achievable way to effect a tax increase. And since the Government has nearly full control over the banking sector, it can create enough financial repression to tie up funds in excess reserves in order to control inflation. All the banking acts and regulations are purposeful acts to constrict credit creation to effect that end.
How a New Cisco CEO Could Move the Stock Price Up 40% [View article]
Cisco's Flip Cam Failure and the Consumerization of IT [View article]
Diamond Offshore: Attractive Investment, And a Possible LBO Candidate [View article]
iPhone Technology: It's Like Buying 'B' Shares in Apple [View article]
these are "analog" devices is you look at for example texas instruments business lines.
returns of capital here are good, but in general they commoditized products.
The Teflon Market: When Will It Correct? [View article]
10 High-Yielding REITs Offering Safety and Growth [View article]
10 High-Yielding REITs Offering Safety and Growth [View article]
I should take a look at HCN again, I can't recall what I didn't find attractive about it. I think it was their business mix.
The Teflon Market: When Will It Correct? [View article]
Is Gold 50% Overpriced or 25% Underpriced? [View article]
I agree with your long-term thesis on natural gas, at the same time we haven't even begun to see long-term, infrastructure related switching toward natural gas due to its current availability and these things take a lot of time.
We probably agree over the long-term, but how long it takes to get there and what the path will be is up for debate.
10 High-Yielding REITs Offering Safety and Growth [View article]
Is Gold 50% Overpriced or 25% Underpriced? [View article]
Is Gold 50% Overpriced or 25% Underpriced? [View article]
I posted this awhile back and it complements your own research well. i compare to some different metrics than oil but note that the gold price is a good barometer of energy price inflation from a fundamental perspective.
I chose 1973 as an earliest start date for gold. In 1970, the price of gold was still partially set.