oldlures1

Moral Hazard: A Danger to Our Financial System

Very well done!

Who's Buying Financials?

Time and time again your articles are gloom-n-doom, everybody is wrong and I am right, blah, blah, blah. Personally, I think you've fallen under the spell of the magical flute of various pied pipers; Ackman being one of the most prominent.
I'm sorry, but going forward, I think I'll just skip over your blogs. They're just not worth the read.

A 'Buy the Loser' Rally

Perhaps the more appropriate title would be "A 'Buy the OVERSOLD' Rally"? But then, I guess anything slightly optimistic just wouldn't fit in here on SA, would it? *sigh*

Selling the Short Sellers Short: Another Sign of Trouble

I too agree w/ the comments of .
I understand the other has a right to his opinion, but it's complete bunk! And the fact that such skewed nonsense is posted on SA is not only reflective (in part) of what's wrong with the sytem, but makes me wonder why I keep coming back to reading SA -- I guess it's because the folks of E*Trade haven't provided a better, less-biased, source.

*sigh* Moving on now...

The Current Market Atmosphere: Easy Money Hard to Come by

I'm with Sophisse. Can't speak for everyone, but I think it'd do me a world of good to disconnect for a while; seperate from the "noise", and clear my head. Too much info - my circuits are about to short.

The Stock Market: Searching for Signs of Intelligent Life

Personally, I don't know that I'd crib Ackman, but if so, then I'd offer that an informed decision can only be gained by looking at both sides of the coin. As such, read (Third Avenue Value Fund) Marty Whitman's FY07 year-end and 1st qtr 2008 shareholder letters - there's a lot of discussion their large play on MBIA.

The Stock Market: Searching for Signs of Intelligent Life

I forgot to add to my comment...

And while the mkt is distracted by the chaos, the AA-downgrade effectively shuts the monolines doors, thus allowing BK's newly opened bond insurer nearly unfettered access sans competition from those pesky #1 and #2 players, MBI and ABK.

The rating agencies downgraded both ABK and MBI without conducting a review. That's a fact, and one you won't see pointed out in the headlines. [note: Moody's has initiated a review, to be concluded in the weeks ahead]. In either case, it's odd, wouldn't you say? Downgrading MBI and ABK impacts over $1 trillion in securities; quite a bold move in the absence of a thorough review.

Furthermore, the rating agencies substantiate (albeit weakly) their actions now by questioning "franchise value"; the ability to generate new business. This too is odd, because if you look at the numbers, not the headlines, you'd see that MBI was the 3rd largest originator of bond insurance this year. Obviously, there IS franchise value...today...that would likely increase with time. But that door has been effectively shut by the downgrade, thus ensuring whatever franchise value they had is now gone! Again, doesn't this strike you as odd? It should.

The Stock Market: Searching for Signs of Intelligent Life

wobatus - I agree. Lot's of emotion floating around on this one, and little substantive evidence to back up claims. I started to offer my opinion, but frankly didn't know where to start; too many holes to plug. Nevertheless, I suppose you inspired me.

I will offer this; generally speaking, I think there are a lot of bright minds in the investment community. They study the numbers, understand the fundamentals, and they don't fall victim to propagandist headlines and market manipulators (i.e. Buffet, the rating agencies, etc.).

I don’t agree with the author’s overall message and underlying sentiment, but I do share his sense of wonder and confusion over recent events. After all, the market is behaving without rhyme or reason, flying in the face of conventional wisdom.

I also agree with his lack of respect for S&P, but I’ll expand my disappointment to all three agencies, and offer in support of my mentality their downgrade of MBI and ABK (this is where I also disagree with the author). If you read the headlines as a harbinger of truth, then the agencies’ actions seem appropriate, but you’d also be terribly misguided. The financial fundamentals of both companies can pay policyholders, survive the crisis and continue as going concerns. But you won’t hear that, let alone see any evidence that supports it (that is, unless you read the financials, the 10-ks, are tear yourself away from the headlines). What you get as supporting rationale is irrelevant industry observations and vague innuendo about what might be happening in the insured portfolios. So why downgrade them? It doesn’t make sense, unless, of course, they have an underlying agenda and/or have succumbed to market perception.

All told, I can explain the circus we’re observing (and unfortunately enduring) with two words: election year

FNMA is going to be insolvent by year-end, huh? And I've heard elsewhere that ABK and MBI will be insolvent by year-end as well. Apparently a lot is happening by “year-end”. Want to know what else is near year-end? The election. Coincidence? I think not. Here’s the schtick: Create an environment of disruption and chaos, and don't allow it to settle. Fuel a sense of dejection and unrest. Lead "the people" to believe in the notion of impending doom; financial or otherwise, and the need for "change". Folks will look for an opportunity to create such change and....well...whatd'ya know, there's an election; just before "year-end"! How convenient! It's purely coincidental, I'm sure.

At the risk of sounding like a complete whacko conspiracy theorist, I’ll leave you with something to chew on: Moody’s is 20%-owned by Berkshire Hathaway; a obvious conflict-of-interest (but you don’t see that in the headlines, do you?). Let’s make it juicy: BK just opened its own bond insurance shop, which stands to gain from by stifled competition (i.e. ABK and MBI). Now, let’s take it a step further, to a macro-level: Buffet is a well-known lefty, and has made his displeasure with the current administration quite obvious (and admittedly, as a righty, I share some of that frustration). By virtue of BK, Buffet (when not otherwise distracted by soap opera gigs) controls the purse-strings of many companies, all of whom pay annual fees to the rating agencies. Are you connected the dots? So, here it goes, downgrade one company, and the effect is contained in those four walls. But downgrade the two largest bond insurers, and you’ve effectively downgraded every security they insure, thereby fueling panic, turmoil and unrest in the markets, not to mention beat down consumer sentiment, thus helping to ensure an economic landscape more accommodating for a change in administration.