Stewart Gordon

Allied Capital Corporation Q4 2007 Earnings Call Transcript

This needn't be published. I just wanted to thank you for the effort to get transcripts like this out in such a timely manner. almost 40 years ago I had to wait and hope such transcripts would be out within a month of their date (or longer) and I paid $2000 a year for that privilege (shouldn't tell you that!). Then it was a corporate need, now you make a modest private investor's work a lot easier. Thank you.

The Timeless Money Center/Government Dance

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The Timeless Money Center/Government Dance

WHY DOESN'T THE US GOV'T BUY 10 YEAR PREFERRED AT 7% ISSUED BY THE BANKS SPECIFICALLY FOR THIS PURPOSE, OFFERED TO ANY BANK WRITING DOWN THEIR CDO'S TO SAY, 15%,WITH SAID PREFERREDS NOT TO EXCEED 75-85% OF WRITE-DOWNS. THESE BANKS WOULD HAVE TO ALSO AGREE TO PHASE IN THEIR RESETS OVER 3 YEARS, AND PERHAPS CONVERT THE MORTGAGE OF THOSE HOPELESS CASES, FIRST TO A 30 YEAR STRAIGHT LINE MONTHLY AMORTIZATION OF LOAN PRINCIPAL, THEN IF THIS DOESN'T WORK THEY CAN FORECLOSE, IF IT DOES WORK,THIS WILL CONVERT TO RENTAL OVER SAY FIVE YEARS BEGINNING ONE YEAR AFTER THE ORIGINAL RE-SET DATE.
LET'S LOOK AT THE RESULT. BANK LIQUIDITY PROBLEMS REDUCED, STOCK MARKET AND OTHER INVESTOR RISK AND DISCOUNTING SUBSTANTIALLY REDUCED BY FORCING THE WRITEDOWN INSTEAD OF PLAYING THIS "HOW LONG CAN I FAKE OUT THE MARKET" NONSENSE GOING ON TODAY. THE US BALANCE OF PAYMENTS WOULD NOT BE AFFECTED, INTEREST ON THE PREFERREDS COULD GO TO THE TREASURE OR 50% TO A FOCUSSED ISSUE, THE IMPACT OF THE RESET PEAK WHICH I BELIEVE OCCURS IN 2009 WILL BE SPREAD, SINCE ANYONE NOT ABLE TO REFI OR TO PAY THE MORTGAGE AS WRITTEN WILL HAVE SOMETHING ON THEIR CREDIT RECORD THEY WILL NOT BE LEFT OFF SCOTT FREE. THE WORK-OUTS WILL BE LEFT IN THE HANDS OF THOSE WHO MIGHT WELL WANT TO GET RID OF THOSE PREFERREDS (MANY THEY SHOULD ESCALATE 1/2% A YEAR AS ADDED INCENTIVE), THE GOVERNMENT WOULD HAVE ITS MESSY INCOMPETENT INVOLVEMENT MINIMIZED. SOME TERMS WILL UNDOUBTEDLY REQUIRE RESTRICTIONS ON LAWSUITS; HOWEVER, THE US WOULD NOT BE IN THE POSITION OF RETROACTIVELY REWORDING FINANCIAL DOCUMENTS.

The numbers used are approximate, but I thought would be good enough for illustration. The definition of the scope and depth of the problem, the means of action available to mortgagors and mortgagees and a more generous time frame would remove further uncertainty, use of our US government money at a rate would be less damaging to the US$
and balance of payments, the markets
could then focus on the issues brought about by a weakening economy and consumer credit - I have no interest in destroying the real world, just taking the mumbo-jumbo out of the CDO and so-called sub-prime problem.

Wall Street Breakfast: Must-Know News

Florida regulators have to be kidding! They are already having to back-fill homeowners insurance with a state insurance that is going to kill tax-payers when another bad year comes along. Failing to allow increases was just part of their tactics to woo insurance companies. Now credit-worthy, longtime customers are being axed with non-renewal; are they now going to do the same to auto insurance? Seems to me that some of the things they were asking for were populist harassment not solid negotiating. What a joke they are.

Verizon Interest in LTE - Don't Be So Hasty

1. Verizon seems to be doing the big corporate always a bridesmaid, never a bride.
2. Why? Sprint seems to be in real trouble and a friendly, now "so-called open" Verizon is trying to look welcoming to the only other CDMA's around.

3. Verizon seems to have been put on the back foot by Google - and stayed there using words, not actions to appear otherwise. Their chairman said they are even going to GSM - what decade???
Verizon could have swallowed their ego and worked with Google and made a real strategic coup (tho I doubt they could have worked with an innovative customer oriented partner), but they didn't.
4.IMHO, it's all a dream waltz, or if you prefer, lots of sound signifying nothing!

Does a Decade Make Core Inflation "Transitory?"

There is no law that says highly variable components of inflation cannot be smoothed over a longer time period and added back. There is a "law" that says most people living day to day don't believe the basis of what the Fed says and is doing. I am a reasonably intelligent businessman; I am also a breadwinner, a shopper for daily needs, short term and long term personalty - and the Fed's choice of core inflation discredits its competence, groups its efforts with the "rest of the idiots" in Washington who are totally out of touch with reality (last phrase not mine but from a solid blue collar worker). WE HAVE HAD INFLATION THAT NO ONE CAN CALL TRANSITORY FOR AT LEAST 2 YEARS probably fed by the Fed's failure to tighten up while fueling a false economic "boom" in unpaid for housing. I believe the Fed may retain the last vestige or aura of competence that many trust a bit in Washington,DC. Loss of trust in that institution would be the greatest loss and that is happening today when we see inflation all around us for 2 or more years and someone says "it's under control."