eternitus

13 Comments

    • AIG: Hardly a 'Bailout', Absolutely Necessary [view article]
      Reasonable? If not for a Bear Raid, there would have been no downgrades and no capital needs. The company has $80 billion in equity and generates $8 billion a quarter in cash flow. It would have to have an $8 billion loss 10 more times to get to the same position of insolvency that FNM and FRE had. The government is expropriating long-term value from the shareholders and solidifying a hatchet-job by shorts.

      Lender of last resort? Try Mobster of last resort. This is a Tony Soprano deal... the government will make $100 billion on this.       Sep 17 09:15 AM
    • Crunching Numbers: Why I'd Buy AIG [view article]
      I've done the math and I agree with the calcs. Liquidity is not an issue for this Company.... It's an insurance company with an enormous portfolio of liquid assets, plus several strong business units it can liquify .

      I think it would be irresponsible for rating agencies to downgrade based on a massive short surge (where there was no news on AIG), which would cause it to destroy a bit of long-term value by posting additional collateral.

      Ton of money to be made long AIG if you don't soil your pants... look for a huge short-covering rally soon.       Sep 14 10:22 AM
    • Rent vs. Buy Datapoint of the Day [view article]
      Housing affordability was at an all time low in 1983 (prices didn't correct down in nominal terms (I think) and mortgage rates were between 12 and 15%). The NAR's presentation of the data is disingenuous at best. Follow the link below.

      mortgage-x.com/trends....

      If you look at the chart, mortgage rates are anomalous between 1979 and 1986 (only time they were >10%) and data from that period should be disregarded, especially if your aim is to create some type of affordability benchmark.

      Do you pay attention to what a used car salesman says? Then why would you listen to a bunch of used house salesmen?


       Sep 05 11:29 AM
    • AIG and the Lunacy of GAAP Reporting [view article]
      AIG is being punished too much and the stock price is ridiculously low. I wouldn't be surprised if their cash losses amount to less than $5 billion, looking at the actual securities.

      The thing that's holding me back from buying more shares is uncertainty over how much capital the mentally impaired rating agencies will force them to raise based on these GAAP numbers market to an inefficient, illiquid and frightened market. They've already had to dilute the heck out of investors by raising $20 billion at a low stock price.       Aug 27 11:11 AM
    • Let's Not Emulate the Hoover Administration [view article]
      Over the long-term, don't lower housing prices positively affect our economy? This frees up income for households to consume or to invest and put their money to more productive use. Aug 25 01:28 PM
    • Credit Crisis Review: ARMed for Failure [view article]
      Is anyone blaming the real estate cheerleaders who were telling people to buy homes whatever the cost and to get into the property market any way they could (and happily took their commission checks and ran)? You know, the folks at the NAR who published a book showing a helpless family on the cover with a home helplessly out of reach above their heads titled "Are you missing the real estate boom?" Our entire society was pushing families into houses that they couldn't afford without a second thought, until it was too late, and the real estate industry was behind it all. Aug 05 08:57 AM
    • It's All a Matter of Incentives [view article]
      Good article... we need to create a scheme that properly aligns incentives. Jul 27 09:59 AM
    • Just How Terrible Is Housing as an Asset Class? Roubini Weighs In [view article]
      Friend,
      You seem nice but are nonetheless largely wrong. Shelter is a must for any family, not homeownership (Did you know that more Germans rent their houses than purchase?).

      Housing is a dreadful investment under normal conditions, barely keeping pace with inflation over the very long run, despite draining an enormous amount of money from the "owner" in the form of property taxes, maintenance and generally interest expense.

      In the current climate, with such substantial differences in the dollar cost of renting and owning, it is much easier to build equity saving and investing the difference (in my case 100% of my rent payment) than it is owning a home, which is more likely to depreciate or stagnate in value than anything else, barring an unlikely rise in incomes in general.

      However, that is not the type of investment Dr. Roubini is talking about. He is speaking of capital investment as referenced in economics. In such usage, economic participants make capital investments to improve the productivity of factor inputs (basically to improve the productivity of a worker), which makes us all richer. After shelter is provided for everyone in sufficient quantity, housing produces zero economic benefits for us. Generally, building McMansions does nothing to improve the economy, as Mr. Roubini says. That capital would have been put to better use in R&D or building infrastructure, which would benefit us today instead of sitting idly, as houses are currently doing.       Jul 17 03:31 PM
    • U.S. Stock Market: Muddling Through the Fundamentals [view article]
      PE is done on a post-tax basis, GNMA Yield is pre-tax. Adjust GNMA for taxes before making a comparison. Jun 19 02:16 PM
    • Exxon's 2007 Tax Bill: $30 Billion [view article]
      Um, net deferred tax liability increased by less than $200 million last year (meaning your points about deferred taxes are moot in relation to Dr. Perry's argument). If you believe XOM shareholders are making obscene profits (and will continue to make such profits), you really ought to buy XOM stock, which you can purchase for next to nothing in brokerage fees.

      A few points to remember:
      1. You are not entitled to anything... cheap gasoline included.
      2. The point of setting up a for-profit business is TO MAKE PROFITS.
      3. Exxon does not set the price of oil.
      4. Exxon's profit margins are 11%, not unreasonable when you compare it to Pfizer, which manages to make 17% on the backs of the sick and dying (who may not have an analogous option to number 4 below).
      4. If you are dissatisfied with the price of gasoline, you may, at any time, take a train, ride a bike, walk, or ride the bus. All of these options will reduce your energy costs.
       Feb 07 02:11 PM
    • Clinton and Obama: Hedge Fund Killers [view article]
      Just pandering for votes... On the personal taxes, these guys should pay the same rates as everyone else.

      Taxing the public operating companies is another thing altogether. It seems ridiculous to me that we would tax these partnerships at a higher rate when the "little guys" finally get a chance to own these things, but not at the private level where only wealthy guys have access.

      In addition, it seems like a monumental waste of time for congress to levy a tax a grand total of 3 companies (I think OZM is one), especially when it will be challenged in court by the companies on the basis of discrimination. Different corporate structures are taxed different ways (C-Corps, S-Corps, LPs, LLCs)... every company, public and private, has a right to chose whichever structure it wishes. What justification is there to single out a few successful companies and say that they aren't allowed to use a limited partnership structure, while some other public companies are?       Jan 12 11:49 AM
    • Blackstone: The Stock Buyback Which Isn't [view article]
      Full Disclosure: I've been buying since BX breached $20. Way undervalued because most don't understand the business. Jan 11 01:39 PM
    • Blackstone: The Stock Buyback Which Isn't [view article]
      Felix,
      I'm not sure the press release stated that Blackstone Management will be buying the units. Blackstone management controls Blackstone Group (the public company) as General Partner, and I believe they are directing the public company to repurchase the shares. If that is the case, then the shares will inure to the benefit of all shareholders.

      What I would like to know is what portion of these funds will go to buy back units of Blackstone Holdings (Schwarzman and his buddies) and at what price, especially when these units are supposedly equivalent to the publicly traded units.

      As you can see from above, the operation of the company is confusing, and because public shareholders can never control the company (the general partner always controls in a limited partnership)... the only thing keeping interests aligned is the huge holdings of the insiders.
       Jan 11 08:59 AM
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