Pent up demand

Chrysler's Future

"they just want to get the maximum return on selling the bonds they picked up for pennies on the dollar."

Very sloppy thinking. What does the discount at which a bond was purchased matter? The administration would love to sacrifice the rule of law on the altar of expediency, but that doesn't mean we should do it. I'd rather have rule of law and every single Chrysler employee thrown out on the street than the reverse.

Contrary to some of the comments: some of the bondholders in question were secured and were right to refuse to forfeit their claim so Obama could send a Valentine to the UAW.

TARP Funds to Common Stock: More Accounting Games

"Converting this capital to common equity actually takes the capital OFF the liability side and yet leaves the assets intact."

And not only that, it helps cash flow. The TARP preferred paid 8% I believe.

Let's Hurt the American Financial Services Industry

Shrinking the financial sector is good. The problem is that the only growth sector that seems to be stepping into that gap is the public sector. That is not a recipe for prosperity either.

Definition of CMO Trading: Look for People Dumber than You and Take Advantage of Them

Oh please. So it was the responsibility of a techie at some investment house to foresee all the trouble that could be caused in the future by securitization and say "Not in my Name"? Gimme a break.

What's a Dollar Worth? More than Citi

They will not be delisted. The rules don't apply anymore. Maybe a market historian could tell us if there has ever been a company with the vaunted single letter ticker symbol trading in the pinks?

Geithner's Vagueness Explained

Ah, yes, you see the original super secret plan that had been prepared just wouldn't work out. Right.

Why didn't he just say that the dog ate his homework?

Geithner's Vague Plan

Why is everyone surprised? We were awash in vague platitudes during Obama's campaign; did people expect something different after he took office?

Executive Pay Restrictions Will Deplete Wall Street's 'Elevator Assets'

>Tickerphilia says:
> ...

The government needs to work on the spending side of the ledger. There is a private and public component to our country's current account deficit. Consumers are swiftly adjusting their behavior to reign in their consumption and government should do the same. It makes little sense to me to raise taxes on the financial industry when government is already forced to provide life support.

A better reform would be to drastically curtail OTC derivatives and bring them onto an exchange. This would increase transparency of counterparty risks and allow enforcement of limits on the size of positions. It has the additional benefit for Wall St. haters that it would bring spreads on these products down, meaning less earning for brokers.

And I agree with your point that we should not allow "too big to fail" institutions to exist. They are a systemic risk that clearly is too dangerous.

Executive Pay Restrictions Will Deplete Wall Street's 'Elevator Assets'

Bite me, I made a typo on a blog comment. All I'm trying to point out is that people are throwing the baby out with the bath water.

Those of us in the trenches in Wall Street deal with a lot of pressure and responsibility and live with some of the highest living costs in the country. Take away the incentive compensation for most of us and we will struggle to have even a middle class standard of living in the New York metro area. I am in this industry in the first place because US companies offer neither money nor respect for those in my chosen field (engineering). I saw the writing on the wall as a young engineer. Experienced engineers above me getting paid little more than new hires, if they weren't let go by the time they were reaching 20 years.

But don't let me interrupt those lapping up the populist rhetoric put out by Washington.

Down vote away.


On Feb 05 10:43 AM bricki wrote:

> It isn't a floor, it's a ceiling. I would NOT want anyone managing
> my money who couldn't figure that out.
>
> On Feb 05 09:13 AM Pent up demand wrote:

Executive Pay Restrictions Will Deplete Wall Street's 'Elevator Assets'

I realize that bashing Wall Street is all the rage, but why can't anyone see that $500,000 is too low a floor. Imagine you are a portfolio manager overseeing several billion in investments. Catching or failing to catch a single mistake in rebalancing the funds can easily mean hundreds of thousands in loss/gain for the fund. Do you think doing a competent job for fundholders might be worth more than $500k in total compensation?

Is GM's Worker Buyout Offer Insulting?

I was not "gloating" about the treatment of auto workers. Only pointing out yet more evidence of their detachment from reality of other industries. The vast majority of workers who will be let go in this recession will get a few weeks or months of severance pay depending on their length of service. There will be no buyout payments offered. In light of the fact that GM continues to hemorrhage cash, I am actually surprised that they feel they can do another round of buyouts.



On Feb 04 09:23 AM Tomas04 wrote:

> It's pretty sad times when people get excited over others mistreatment.
> We are all in for a very rocky ride and yes the union workers for
> the auto plants will get hurt in the end here but is that something
> to gloat about?

Is GM's Worker Buyout Offer Insulting?

The insulted worker should have taken the earlier buyout I guess. They made a mistake by betting that jobs bank, etc. would be around. If the insulted worker waits around another year or so, maybe he'll be let go with nothing.

The Broken Hedge Fund Model

I don't see that hurdle rate or participation by the manager do much to deal with the incentive problems when a fund is deep underwater. When funds go underwater they are heavily incented to go for the Hail Mary because they typically cannot retain their talent on management fees alone.

That said, hedge funds will exist as long a people believe that there are certain golden boys who "know how to make money." Some investors will always be willing to take that bet regardless of the high fee structure, lockups, etc. ad nauseum.

Where's the Nationalization Debate?

Just wait for the next leg down for financials and the nationalization talk will be back on the table. There is another wave of mortgage defaults ready to break and consumer credit is deteriorating rapidly. The government types will lose patience with maintaining a veneer of private enterprise. I bet the only thing holding them back now is their fear of screwing up.

Thinking the Impossible: Could Bank of America Go to Zero?

"The simple fact is the government currently won't let any big bank go belly up no matter how bad it is. If the policy was different Citibank would not be around any more. "

Irrelevant to shareholders. The author clearly states that there is a massive risk of dilution for shareholders. No, Bank of America will not go out of business. But for common shareholders I think there is a good chance they will be wiped out. I agree with him, which is why I have already unloaded my remaining BAC after the most recent disclosures about TARP funds.

If you are a US citizen, you already have much more exposure to financials than you want through the government. Why buy more in your personal portfolio?