Seeking Alpha

Macro and Cheese

 
View as an RSS Feed
View Macro and Cheese's Comments BY TICKER:
Latest  |  Highest rated
  • Why Greece Won't Exit The European Union [View article]
    What if they can't? They're beyond bankrupt, they can't pay, especially in euros.
    May 20, 2012. 12:57 PM | Likes Like |Link to Comment
  • Why Greece Won't Exit The European Union [View article]
    Apber,

    Totally agree on GS sentiment. And as you know it goes far beyond the two you mentioned.

    I do disagree though that the Euro would fail if Greece were to leave. First, Greece needs a weak currency to re-equilibriate its economy. The expensive euro is killing it, and that is one very big reason why Germany is going the extra mile--they want what for them is a weak euro to keep their exports going.

    Second, Greece has already defaulted, now it's a matter of clean-up.

    Third, let them leave (and technically it's Greece's decision alone), and when they're ready maybe some day they can come back.

    The idea of having a common currency without a genuine pan-Eurozone federal government is pie in the sky anyway. As is, most likely, a Eurozone federal government. Let's face it, the euro stinks. It needs to split in two, one for weaker currency countries, and one for the stronger ones. That would fix the euro(s).
    May 20, 2012. 12:21 PM | 1 Like Like |Link to Comment
  • Why A Greek Exit From The Euro Would Mean The End Of The Eurozone [View article]
    One important correction: Greece would not be "allowed" to leave the Eurozone. Only Greece can decide to leave, or to stay. The other countries have no say in the matter.
    May 15, 2012. 10:43 PM | 2 Likes Like |Link to Comment
  • JPMorgan's Hedging Losses Invite A Political Response [View article]
    That's the biggest mystery of all to me, why in world call it "egregious." He could have spun it as a hedge. Some are speculating that he was told to do it to reinvigorate the Volcker Rule.
    May 15, 2012. 03:22 PM | 2 Likes Like |Link to Comment
  • JPMorgan's Hedging Losses Invite A Political Response [View article]
    Tao Jamie was probably long gone when he spoke on Thursday. Here's something to consider:

    http://bit.ly/JeBm9Q
    May 15, 2012. 02:13 PM | 1 Like Like |Link to Comment
  • Bonds The Biggest Bubble: The Barbell Strategy [View article]
    I have been wondering, how big would Bernanke allow the Fed's QE balance sheet to get. It's a bit under 30% of GDP now, I can't see how they can let it get much bigger without totally distorting the treasury market, which they've already been doing. There's no signals to be had from the yield curve, and I think a lot of indicators have gone askew as a result. I no longer look at it.
    May 15, 2012. 09:04 AM | Likes Like |Link to Comment
  • Is 9% A Realistic Long-Term Rate Of Return For U.S. Equities? [View article]
    Getting to GDP also brings up one of the main reasons I remain bearish: Debt overhang. Japan has had GDP growth over the last 15 years of about 0.5%. They have 200% debt to GDP (it's actually more like 220%).

    I look at the macro as a big exercise in physics: Government intervention does not create wealth, but it can certainly move it around, delay it, etc. We have 80ish% debt to GDP--some say 100%, but I have not seem a true breakdown. But whatever, it's high enough. The Fed has another high 20s% to GDP balance sheet.

    All this staved off a depression, no doubt, but now we have to pay it back. And that means a reduction in GDP. The real problem begins next year, when the tax increases (or reversion if you like) arrive.
    May 14, 2012. 12:04 PM | 1 Like Like |Link to Comment
  • Is 9% A Realistic Long-Term Rate Of Return For U.S. Equities? [View article]
    Thanks Tom, interesting thesis and historical data.

    For my two cents markets are doing a pretty good job of discounting the world. They're cheap at 7% w/ zero short interest rates and 3% opportunity costs (bonds) but it's a dangerous world, hence the cheapness.

    I'm a bit of a bear now but it's no lay-up. It's also an expensive point of view, at 7% running costs.
    May 14, 2012. 09:53 AM | Likes Like |Link to Comment
  • JPMorgan's Hedging Losses Invite A Political Response [View article]
    Who said banks don't know their positions? I said WE don't know their positions.

    What difference does it make as to who wins? If you buy Apple and it goes from $600 to $550 do you worry about who made $50? He may have covered an hour after the transaction, or he may have been hedging an options position, or he may have been adjusting his portfolio.

    This trade became public last Thursday afternoon. Do you think JPM hadn't been unwinding it prior to the announcement?
    May 14, 2012. 09:40 AM | 3 Likes Like |Link to Comment
  • JPMorgan's Hedging Losses Invite A Political Response [View article]
    I'm not sure I agree on the zero sum aspect Tom, it's very hard to look at aggregate numbers and determine how much risk they have. It could be they have illiquid loans, or exposure to a subsidiary they're offsetting, or structured assets, etc.

    But at the end of the day the essential point you make is that in the event of catastrophe, we citizens are left holding the bag. That is the key. I am a fierce defender of the capital markets per se, but the corollary to that is that players absolutely must be allowed to fail, they must be able to fail. If not, their risk management is compromised.

    But we have done nothing to limit their size: We have a handful of banks with assets of over $2 trillion.

    It shouldn't be hard to fix: You make them pay for their own TBTF insurance. The bigger the bank, the more they pay, to the point where they can make their own decision as to how big to be. There are certain economies to scale to banking, and I don't think we should dissuade banks from taking advantage of that--up to the point when it becomes a real threat to society. We're well past that point, for sure.

    I favor a progressive fee, a charge in bp on assets, starting with institutions of a certain size, to my mind somewhere around $50 billion. The charge should rise as a function of the bank. That is, we would charge the $50 bio bank 10bp on assets above that, but the charge would go up to 15bp above $100 bio, etc. The bank could make a business decision as to where to draw the line.
    May 13, 2012. 03:34 PM | 3 Likes Like |Link to Comment
  • JPMorgan's Hedging Losses Invite A Political Response [View article]
    If banks don't make markets there is no one left to do it, and believe me, you don't want that. You can't stop banks from making markets until you establish a market-making network like we had before, when there were a dozen big investment banks. They're all gone, apart from GS and MS, and technically they're banks.

    I do hope you understand that marketmaking and all of the comments here are about an issue that had absolutely nothing to do with the financial crisis. The financial crisis was caused by CREDIT, not market making. The instruments that caused the crisis were backed by subprime and were far too illiquid for market making. They were also highly leveraged.

    This is not opinion, this is fact.

    And guess what, Dodd Frank and the Volcker Rule don't touch that area.
    May 13, 2012. 02:47 PM | 2 Likes Like |Link to Comment
  • JPMorgan's Hedging Losses Invite A Political Response [View article]
    It's too complicated to talk about winners and losers really. They were taking positions to enhance their portfolio. The other party to JPM's trades could have been enhancing their own portfolios. Even JPM's counterparties may not know if they were winners or losers, trading among banks is very active and fluid
    May 13, 2012. 02:39 PM | 2 Likes Like |Link to Comment
  • JPMorgan's Hedging Losses Invite A Political Response [View article]
    Let's keep it in context: JPM lost $800 mm on a $200 bio portfolio, that's a loss of less than 1%. JPM is making about $20 billion annually these days. They lost less than 5% of a year's income.
    May 12, 2012. 12:47 PM | 1 Like Like |Link to Comment
  • JPMorgan's Hedging Losses Invite A Political Response [View article]
    The problem is, banks have to take risks if they are going to make markets, which we all seem to want. There is no way to separate out risk from principal trading. The best solution for that is Glass Steagal...

    ...but again, that was NOT the cause of the financial crisis, which was caused by bad credit. And you can't stop banks from taking credit risk, that is what banks are for.

    The most important step is to work through TBTF.
    May 12, 2012. 12:43 PM | 2 Likes Like |Link to Comment
  • Paulson, Hendry, Taylor And Others Are Wrong - The Euro Is About To Become The New Yen [View article]
    Interesting thesis.

    3 flies in the ointment:

    1) I am sure you would agree that as far as currencies are concerned, deflation is a relative game. If for example the Eurozone deflates at 1% but the US deflates at 2%, that would favor the dollar. The E'zone may deflate, but the US is not likely to be far behind, certainly not to the extent that would lead the euro to soar.

    2) Germany has just finished a round of wage negotiations with their unions that gives them a 6% increase over two years. Wages are sticky--this is inflationary, pure and simple. It may not overcome the arguments you've cited, but it is likely to at the very least put them on hold for a while.

    3) Deflation would give Draghi all the cover he needs to unleast the Mother of all QEs.

    I do agree, however, that Greece leaving would take the euro up, so I am short, but only half of what I would be willing to do.
    May 12, 2012. 11:07 AM | 1 Like Like |Link to Comment
COMMENTS STATS
195 Comments
179 Likes