jswede

Bank Earnings: Why I Don't Trust Analyst Reports

Casflow.... what's a good ROA? 2%? Maybe they'll hit 3% with all this cheap funding?

Capital.... what are losses on assets? ~30%+ ? Possibly much more?

cashflow is a drop in the ocean compared to losses on assets.

Can Citigroup Be Restructured Without an FDIC Resolution?

Chris - to what degree do you quantify derivative exposure in your stress tests? your score for JPM seems incredibly low considering its deriv exposure. thank you.

GE, Goldman Bond Spreads: Unrealistic and Unsustainable

concur with igor -- in cash market, buyer is long risk; in CDS, buyer is short risk.

Fisking Ben Stein on Goldman's 'Wrongdoing'

1. no one at Goldman put a gun to an investor's head and said "buy these CMOs".

2. Goldman's short position in mortgages was at another part of the bank. It was NOT the part that was giving the investor's exactly what they wanted (ie CMO securitization/selling... - it was a decision that came down from the CFO in looking at the bank's entire balance sheet. It's smart management and the decision itself to short carried..... wait for it:

3. RISK. The shorts were positions they could have easily lost on were they wrong. Of course, now today, in hindsight, according to Ben Stein and Mr Retail Investor, the shorts were riskless because Goldman "knew" the market was going to crash and when. Riiight. Further, had they a feeling it MAY happen, the timing and magnitude were still very much wildcards and involved, again, risk.

Ridiculous comments. The only party at fault here were the rating agencies failure to communicate inherent risks, but even then, much blame lies with the investor who did not care to look past the ratings and actually understand the product.

Ben Stein on Goldman's Hatzius: Chinese Walls and Wall Street

What you describe as "crud" and "toxic" would be - at a different (lower) price - be called "speculative" and to many a "good value". The market sets the price, GS is one player on one side of the market - it can't have any real effect on the price the market is willing to pay for securities that had rating agencys' independent opinions on its quality.

So a part of Goldman thinks the market was mispricing the securities -- and it acted upon that thought by shorting. The part that was securitizing and selling CMOs was only giving the market what it wanted - the best performing mortgage funds of the last 5 years were full of this stuff, and no one was complaining then.

The only thing GS did "wrong" was to be right on its shorts -- that was a propriatary trade and also involved risk - who is GS, or anyone else for that matter, to tell investors who supposedly know what they are doing that they (the investors willing to pay the price they did for securities), AND the rating agencies, are wrong?

What if GS was wrong on its shorts? What would Ben Stein's column say then? (I can bet who'd he be accusing.)