Philip Gvinter

Who Should Have Skin in the Game?

Yup totally agree. This is why I said that the rating agency should be paid with a piece of the security rated rather than cash. This would quickly re-align their interest and encourage them to do due diligence on the securities they rate.


On Jun 22 09:57 PM Kid Dynamite wrote:

> philip - in my opinion, if we're going to fault anyone, it's the
> ratings agencies, who were guilty of gross negligence - not the "middle
> men" - the securitizers who brought together lenders and borrowers
> who were each driven by greed.
>
> i was comparing the realtor to the wall street firm selling the securitized
> product...
>
> i think we are basically agreeing with each other

Who Should Have Skin in the Game?

Well I think that there is a big difference between a realtor and the rating agencies. The rating agencies are more akin to an appraiser. The appraiser provides a document showing the current value in the area and area trends. He has a duty to perform the work honestly and to do due diligence on his sources. In the case of the appraiser that just means to cite where he got his data. In the case of the rating agencies there was no due diligence. Blaming the realtor is like blaming the trading desk. I don't believe in that but I do believe in holding the rating agencies to a slightly higher set of standards. They should have been required to review the underwriting standards for the pools of loans. They in fact did do this they admitted that they had erred in their ratings after the portfolios began to deteriorate.


On Jun 22 02:00 PM Kid Dynamite wrote:

> blaming the middle man would be like blaming your realtor when you
> buy a house that goes down in value... i just don't think like that.
>
>
> the problem is that the people buying all these toxic assets let
> their own greed cloud their due diligence... buyers (of assets,
> MBS, etc) need to be responsible for their decisions!
>
> more on this here:
>
> fridayinvegas.blogspot...

Who Should Have Skin in the Game?

I have to agree with Ned and Biomedlives. The very concept of a middle man with no skin in the game is a part of the problem here. This would not apply to banks and lenders who got caught holding the bag on several months of inventory of in some off balance sheet SIVs but would totally apply to GS, MS and originators like AHM and New Century. When one feels that he is in a position of limitless profit and zero risk than one is encouraged to do unethical things. We cannot allow this to continue. The very existence of such middle men is what breaks markets. Furthermore the difference between underwriting an IPO and selling MBS is that the underwriting of the IPO carries certain representations and levels of due diligence which are outsourced to the rating agencies or simply not performed in the MBS creation process.

The best idea I saw here was to compensate the rating agencies by paying their fees with par value sections of the debt securities that they rate rather than with cash. I get the feeling that a much higher level of due diligence on the part of the rating agencies would immediately become the norm.

Is the Microsoft Empire Cracking?

The point about ERP and other enterprise systems linking into Office apps is a very good one. I did not say that the next shoe to drop would be the enterprise market, but rather that it would be the small to mid size market which tends to not use these kinds of large and oftentimes legacy apps for back office operations. While losing small business market share will in no way crush MS it will be the beginning of a secular downtrend. Also the counterpoint to this is as next generation enterprise software continues to evolve towards a web-based SaS model many of these links will disappear. That ofcourse is something which is much further down the line and is in no way a guarantee, but is still where I believe IT infrastructure is headed over the next 10 to 15 years. IT infrastructure tends to swing like a pendulum between localized desktop systems to distributed client-server systems. It appears to me that we are swinging more and more towards the distributed system where the role of the desktop computer is closer to that of a dumb terminal which simply allows the user to access their applications and data which are stored remotely. Cloud computing seems to me to just be the latest incarnation of this trend and due to its ongoing success and evolutions seems to be far from its peak.



On Dec 10 12:48 PM User 316869 wrote:

>
> Sorry, but there are sooo many links into excel and word from other
> programs, i.e. ERP systems, detailed macro's, etc. The lack of such
> plug ins and the cost / effort to rewrite the macro's will hold back
> enterprise adoption of a competing product.
>
> Also, why not upgrade Office verisons, you are foreced to pay a yearly
> tax (licensing fee), so you may as well use the latest product.<br/>
>

Is the Microsoft Empire Cracking?

I agree completely with the author. MS is finally beginning to lose some market share to other operating systems, but more importantly as Alex points out the value proposition for upgrading the OS is no longer there. I am still amazed that corporate clients upgrade the office suite. Can anyone here honestly tell me that they have seen any functional upgrades that regularly get used between office 2003 and any later edition of the software? Open office is not really getting adapted yet but I feel that once cloud computing becomes more reliable and acceptable it can steal away a good bit of microsoft's small business customers who do not have the resources for a dedicated IT department. The gaming division is essentially a very large low yielding investment as it has failed to produce any meaningful revenue after having tons of money thrown into starting it. The online is even less successful than that. Office sales will begin to slow down some time soon as the upgrade cycle lengthens just as it has already lengthened for the OS. MSFT had better think up some new revenue streams quick if it does not want to begin shrinking soon.