swaps

53 Comments

    • Who We Should Blame for This Crisis [view article]
      This is dead on. Everyone shares in the blame.
      But am I missing something. What about the foreign countries - both governments and foreign banks and foreign investors = who loaded up on mortgages that were going to go to 13 percent and make them richer. They were not the lenders but the ones who bought up the originators' toxic waste.
      Oct 11 05:01 PM
    • Ireland's Ailing Banking Sector [view article]
      I have a few shares of AIB bought earlier this year after it tanked. Several different analysts in different media said it was good buy and was not involved in subprime. Of course, it tanked even more in recent months. It is barely breaking even. So I should do more due diligence than rely on several apparently unrelated experts who agree. And not be sentimental about ancestral Ireland, which now has a half million African and Mideast foreigners there as resident workers. But then the globalists hate individuality.

      I bought a few shares of IRL around two years ago, and then added some more earlier this year. So this is further proof that international diversity has to be more carefully thought out and executed.

      I will continue to hold both and will add to both in the future to cost average. But no more money goes in right away.

      One thing I found interesting in New Ireland's annual report was that it did not list major shareholders. It simply said all shares were held by Cede, the clearing house trust that holds all shares presumably, which is a scary thought. We really do not seem to own our shares. We have a claim on them. Sometimes I wonder what if our benificent government would resolve some future economic calamity by turning everyone's shares held in CEDE to some foreign creditor with claims on the nation and its inhabitants. But that is off topic.       Oct 04 02:42 PM
    • Did Crony Capitalism Lead to Wachovia's $54B Bailout? [view article]
      Wachovia, WAMU were like large beached whales caught in the outgoing tide.

      So bigger whales farther out in the deeper water are taking over their fallen brothers (or sisters, Diane).

      But what is the point of creating ever bigger whales, any one of which has the expanded capacity to do even greater harm than the smaller ones they absorbed?

      Let's change metaphors now and call these bigger whales in the deeper water ships. How long can these ships continue to take on water before they sink too?

      As I have said before, one of the major trends causing the financial calamity - other than fraud and unbridaled greed- is that the investment-bank led destruction of jobs through foreign outsourcing, combined with deliberately open borders to bring in cheap foreign labor, has caused wage stagflation.

      But the usury system requires ever inflating wages so that borrowers can keep up with usury payments. Otherwise, the lenders would eventually soak up all the money. That is the role of the "inflation fighting Fed": to continually inflate money supply. It has done so admirably, driving the value of a dollar down to a nickle since 1913. (Don't argue that government causes inflation because it could not do so unless the privately-owned Fed accomodates guvmint and prints the money that the government then borrows, agreeing to pay back interest. Ralistically, the government turned over the money printing operation to the central bank.).

      The banking system needs inflation to keep the system running.
      But the current wage stagflation has hit that need head on and it was the banks that are caving in, due to the resulting deflation.

      The Fed can inflate all it wants and pump that into the lenders - but it does no good. The borrowers wallets have to be inflated and they aren't. so banking appears to be doomed ala 1929 - 1933.

      Bank A is not loaning to Bank B because Bank A knows that when Bank B gives the money to Company C to build inventory, Company C's customers can't get money from Bank D to buy the product because of tighter lending standards, so Company C won't be able to pay back to Bank B who will not be able to pay back Bank A.

      The situation is so simple to figure out. And impossible to solve without the entire economy shrinking its balance sheets, with all the accompanying pain.

      Oct 03 10:40 AM
    • Entering the Endgame for Monetary Policy [view article]
      Yeah, this is hopeless. The $700 billion bailout is a tiny pinky finger stuck into a dike that already has a hole the size of a basketball.
      In Friday's Denver Post Jeff Wilson of Wilson Advisory alleges the total value of all derivatives is $600 trillion. Excluding those, he says the total U S wealth is $57 trillion. If only 10 percent of the derivatives go bad, you can do the math.       Sep 27 12:22 PM
    • The End of Supervised Entities - Now What About Swaps? [view article]
      The debacle we are experiencing also proves that regulators don't even regulate what they are supposed to.
      In Friday's Denver Post Jeff Wilson alleges the total value of all derivatives is $600 trillion. Excluding those, the estimated total wealth of the U. S. is $57 trillion. If 10 percent of the derivatives go bad, you do the math.       Sep 27 12:19 PM
    • The Calm Before the Storm? [view article]
      The bailout is like trying to put a finger into a dike that has a hole the size of a basketball.
      Jeff Wilson of Wilson Advisory alleges in the Friday Denver Post that there isn't enough money to solve the toxic debt mess. He says the total value of all derivatives is $600 trillion. If only 10 percent go bad, that still exceeds the total U. S. wealth - excluding derivatives - of $57 trillion. The greedy brainiacs have killed the golden goose.       Sep 27 12:15 PM
    • An Alternative Bailout Proposal [view article]
      Heres the alternate plan I posted at the NY Times (if they accepted it) and the Denver Post.
      Swaps

      Congress should not gallop ahead at full speed to fix in 48 hours a problem that has been building for years.
      Paulson and the government until now have favored funneling the money into the top, instead of starting at the bottom.
      Amounts from $300 to $1,200 were given away as a tax refund. The government giveth.
      But I calculate the $700 billion bailout Paulsen requests for Wall Street comes out to $9,333 - before interest - for each of the roughly 75 million tax paying households in the U. S. Of course, the cost for the previous takeovers and bailouts swell the per household tax bill even higher.
      Why not have Congress give the $9,333 instead to each house hold, with the restriction it could be used to only pay down debt or save in a financial institution or one of the identified financial services stocks. People in debt would repay lenders, which would help both. And people not in debt would invest savings or stock in the financial system, helping to build liquidity. The savings or investment would be restricted from withdrawal for at least five years, for stability. Financial systems that can't be helped by this plan because they are too far gone would be allowed to go bankrupt under the cleansing mechanism of Darwinian free market forces.
      Congress has to realize the current $700 billion mess is just the latest in a series of crises still to come. That is how it has been playing out all year.       Sep 24 04:37 PM
    • What Should a Banking Crisis Bill Really Look Like? [view article]
      Here's the plan I posted at the NY Times and Denver Post
      Swaps
      Congress should not gallop ahead at full speed to fix in 48 hours a problem that has been building for years.
      Paulson and the government until now have favored funneling the money into the top, instead of starting at the bottom.
      Amounts from $300 to $1,200 were given away as a tax refund. The government giveth.
      But I calculate the $700 billion bailout Paulsen requests for Wall Street comes out to $9,333 - before interest - for each of the roughly 75 million tax paying households in the U. S. Of course, the cost for the previous takeovers and bailouts swell the per household tax bill even higher.
      Why not have Congress give the $9,333 instead to each house hold, with the restriction it could be used to only pay down debt or save in a financial institution or one of the identified financial services stocks. People in debt would repay lenders, which would help both. And people not in debt would invest savings or stock in the financial system, helping to build liquidity. The savings or investments would be restricted from cashing in for at least five years, to keep liquidity in the system. Financial systems that can't be helped by this plan because they are too far gone would be allowed to go bankrupt under the cleansing mechanism of Darwinian free market forces.
      Congress has to realize the current $700 billion mess is just the latest in a series of crises still to come. That is how it has been playing out all year.       Sep 24 04:35 PM
    • We've Crossed the Line from Capitalism to Socialism [view article]
      If all financial companies become "agents of the government" that would be more closer to communism than socialism. The alleged ownership by the governmentment and not proxy capitalists is communism, as opposed to national socialism, under which owners are told by the government how to use their business.

      I would agree that the intervention is so massive that the bias is toward inflation, except that the deflation of asset classes is so massive I wonder if there is a chance for equilibrium overall. The deflation of assets is really starting to kick in. The free falling market was paralleling the free falling real estate, no question.

      One of Obama's big supporters has been Soros, who is on record favoring communitarianism, his code for socialism. He thinks, now that he has made a pile, everyone else should be under socialism.

      And now that the investment banking crowd have made their pile the last few years, they are throwing the business to the communitarians too. There will be fewer people coming along to catch up with them.       Sep 22 10:00 AM
    • Ban on Short Selling Could Have Negative Consequences for Options Market [view article]
      Who cares? The situation is now so unbalanced and dangerous that marginal trading strategies derived from basic buy and sell are the least of our worries for maintaining.. An option is a form of a derivative. Obviously the financial elites do not understand derivatives very well. Sep 22 09:49 AM
    • If You Think the Dow Did Well Today, You're Wrong [view article]
      Interesting comparison. I guess the people who knocked the posting of this comparison should share their deepest thoughts with us instead of just putting up a shallow put down. Save the trash talk for your vaunted ping pong prowess. Sep 20 12:58 PM
    • L.A. Times Former Staffers: Zell's Takeover a 'Classic Grift' [view article]
      This is an interesting post and the plaintiffs make an interesting argument.
      But our court system is biased toward, shall we say, capital and not people when it comes to business.
      Sep 17 04:00 PM
    • Retrieving Flagrant Bonuses Could Address Moral Hazard Issue [view article]
      Huge bonuses are a huge carrot stick. The shareholders never complained about most of the profit going to the employees year after year. Stock rating agencies never complained about money going out the door instead of into reserves in an industry that periodically self destructs.

      Fraud and deception is just part of America's moral compass and we should fight wars to impose our moral compass on others.

      One way to combat this is to abolish the CPA profession and replace it with insurance. Insurance companies would insure a company from failure. Their tough look at the books would impose more discipline, until these bankruptcy insurance firms begin competing more and more for premiums, which would inevitably lead to fraud and corruption even there.

      Greed. It's really what's for dinner. Exhorbitant bonuses have always been part of the greed accept by America's moral compass.       Sep 16 10:20 AM
    • Recognizing an Abnormal Market [view article]
      Wish I had just stopped buyng on New Year's Day. And cashed in some positions, but now some holdings are way down - think BDN, which I thought was a wiped out safe buy at 19, and AIB (what was I thinking. Even European banks with supposedly little exposure have been taken out with the ebb tide. I boguht because several experts said it was a good buy. And they are still saying that now, but I am down and now a long term holderl. But I am beginning to wonder if the banking financial sector has truly suicided itself and it will be declared as dead as some bankrupt railroad bonds from the 1800s.).

      How can a usury system go on forever anyway? No tree grows to the sky, and no compounded debt instrument can suck up all the money without killing its host. But that is off topic.

      Steve Ballmer's lament for MSFT reflects how irrational it all is. In a non-IRA account last spring I was looking at buying into Disney, which I already owned, or MSFT, both around 31 at the time time. My rational mind said buy MSFT but my gut said Disney, which I bought. Disney went up to 33, 34 and is now 32 still in this horrible market, while Microsoft is down to 27.

      What a stock should be can far from what is can be in this panic environment.

      Sep 13 02:18 PM
    • The Death of Consumption? [view article]
      This from CNBC today. Guy says U. S. is headed for a depression.

      I wonder if this was engineered, or just happened.

      CNBC.com| 11 Sep 2008 | 09:11 AM ET
      The end result of the global economic slowdown may be the U.S. announcing national bankruptcy as the government cannot afford the bailouts that it promised and the market will not bail out the government, Martin Hennecke, senior manager of private clients at Tyche, told CNBC on Thursday.

      "We expect a depression in the United States. We expect a depression, very possibly, also in Europe," Hennecke said on "Worldwide Exchange."


      The estimated $300 billion cost of the Fannie/Freddie bailout will probably be considered as a loss that the government will have to take, therefore passing it on to taxpayers, he explained
      Sep 11 10:25 PM
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