SeriousBull

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    • Wed Jan 23rd 22:40 PM | Rating: 0 0
      Commented on:
      4 Prior Market Crashes
      Good perspective to see the charts Barry. The point many investors are missing is that financial system fundamentals are highly leveraged so that defaults create domino effects as expected payments create problems where there is little margin for error. Take MBIA and Ambac who together guarantee $2.4 trillion of debt securities and whose combined market caps are less than $2 Billion. The reality is both that defaults can not be paid and that no insurance is really in place. Toss in another $5 billion. Aren't we all comfortable then?
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    • Tue Jan 15th 16:09 PM | Rating: 0 0
      Commented on:
      The CDS Losses Arms Race Continues
      Interesting article and more interesting speculation on the net loss from derivative defaults. The fact is that their are some 20 times the global net worth of the world in issued derivative contracts outstanding. In the scenario above Cicone forgot that balance sheets deflate when offset occur as do capital reserves. Oops!
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    • Fri Jan 11th 13:11 PM | Rating: 0 0
      Commented on:
      The Stock Market: An Excellent Predictor of U.S. Recessions
      As to the question of where are the markets headed, I have to say I prefer using the Average PE of the market indicator. We closed 2007 with the S&P500 at a PE of 18.8. To get back to the average from the the 1465 recent high we would expect a 18.6% decline. We are down 9.5% from this high so we have another 9.1% to go. We're halfway to a S&P 1193. Yet support is around 1230. That's my bet.
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    • Fri Jan 11th 12:04 PM | Rating: 0 0
      Commented on:
      Staunch Government Intervention Needed to Avoid Full-Blown Depression
      Hey don't shoot the messenger. Fed Chairman Bernanke just chronicalled how the credit crisis has unfolded disclosing exotica lending practices and how securitization of inflated mortgages into derivative security packages guaranteed by banks and sold around the world has made the US financial system and economy "fragile." What teh Fed has not yet tallied is the total risk exposure to the financial system largely because it is probablly unknowable. We do know that typical loan to value ratios are 20:1 and we know that bets were made on both sides of various economic events (somebody loses). Therefore we know that "Events" will trigger (or not) guarantees over time and losses will be realized (or not). Banks will certainly have to continue to inventory homes that have considerably less value than the loans made against them and therefore have write-offs, many of them. It is the uncertainty and consequential loss of faith in the financial system as disclosure is gradually made (as triggers occur) that feeds on itself and exacerbates financial problems. There is an estimated 10-20 percent further decline in home values likely to yet be realized. The negative multiplier effect impacting capital reserves at financial institutions combined with the added requirement to set aside loan loss reserves for coming legal liabilites are likely to push a US recession into a US depression if mishandled as it seems to be. Since consumer spending accounts for some two-thirds of US GDP, I believe it would be more preferable to once again stimulate consumer spending by capping credit card interest rates to accomplish this. It would come at a cost to Credit Card issuers (banks, AMEX & MC) but would great a positive, offsetting multiplier effect stimulating our economy. It might also preclude some foreclosures by providing more discretionary income to pay a mortgage rather than default on a home. Moreover, the US is attractive to Asia because of our consumer spending and sharply curtailing that factor might trigger any number of additional adverse consequences. Seems to me extending consumer spending and opening up our markets to let them buy our troubled banks and inflated real esate is a good solution. What's really 'nutso' is thinking nothings really all that serious and cutting interest rates will solve this problem.
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    • Mon Jan 7th 21:14 PM | Rating: 0 0
      Commented on:
      Can a Fed Move Stop the Debt Supercycle?
      Reinko, David Walker US Comptroller General has put together a power point detailing current on-balance sheet debt. You are correct with your $46 trillion dollar number. Iraq war spending, unfunded state & local pension liabilities are not in it, the coming tab for the housing debacle that will hit GNMA and Freddie Mac are not in it, nor is social security as the government now has cleverly cancelled all those IOU bonds by recasting SS as a 'pay as you go' system. Get Walker's powerpoint at: www.gao.gov/cghome/d06...
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    • Thu Jan 3rd 10:18 AM | Rating: 0 0
      Commented on:
      2008 Economic Outlook: Dominoes All in a Row
      Another possible scenario is an increase in foreign investment in the US due to the favorable foreign currency exchange and comparatively low US asset values of real estate and financial institutions. In this scenario, which I shall call "America on Sale," the US muddles through offsetting weak consumer growth with M&A transactions that repatriate foreign (China) trade surpluses and Oil dollars. Indeed, this scenario is already underway with buyers from Dubai and Netherlands accounting for $106 billion of $230 billion in 4th quarter 2007 deals and Europe accounting for the rest.(data from Bloomberg). The only thing that could derail this scenario from unfolding is prejudicial politics coming out of Washington. However against the backdrop of the Dubai Port fiasco, experience has been gained and "suitable" purchasers will partner to make it all happen (think ABM Ambro, USB, Carlyle Group, Blackstone and Goldman Sachs). The result then is a 'palatable' rescue of US financial institutions in 2008 by foreign investors bidding up US assets. The US Government will bless these deals because its really the only acceptable solution.
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    • Tue Jan 1st 22:45 PM | Rating: 0 0
      Commented on:
      Why Isn't the Government Capping Credit Card Interest Rates?
      Kurt Walter
      I agree with you that the government should not set credit card interest rates as they shouldn't seek to set any interest rates in a free market. The fact of the matter, and the point of my commentary, was that the Fed is purportedly lowering rates to help homeowner keep their home. Indeed, if they intend to have an effect they should rather get the multiplier effect of a cut in credit card rates and actually have an impact. Like it or not the data say America by and large is a fiscal fool.
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