Carl Dincesen's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.com/user/158409/comments http://seekingalpha.com/article/671381/comments?source=feed#comment-6728221 6728221 Sat, 23 Jun 2012 16:03:20 -0400 http://seekingalpha.com/article/671381/comments?source=feed#comment-6712751 6712751 Thanks for the thoughtful comment.
You ask “the” question, what if a nation just walked away from its obligations to the finance authority. Stated another way, will investors’ readily accept that risk.
The consequences of walking from a “supra” finance union obligation would be more severe than if a nation simply abrogated its debts. Severe and justified would include this piranha nation being shut out of European banking and trade system. With other countries joining in as well because that kind of action threatens the stability of the world’s largest economy, the EU.
You are not just stiffing investors, but also the referee and league or union. All other members of the league will punish that team. They have agreed to not play with the offending team until it meets all of its obligations to the finance authority for debt issued on its behalf. Could an EU state turn into a North Korea? Yes, but what are the odds.
Just as important is the fact that all member nations and investors come out ahead in the short and long term.
A proposal like this in my opinion would have a positive impact on the value of the Euro and price of Greek, Spanish and Italian government bonds.
No doubt, the rating agencies would slather the union’s finance authority bonds with triple-A ratings, in this rare case deserved.
Probability is the measure of risk over time. Here is a link to a direct three-way comparison to Moody’s and S&P long-term credit rating definitions. I think another solution for a different but related problem is obvious here:
http://bit.ly/MD9jNY]]> Fri, 22 Jun 2012 21:39:45 -0400 Thanks for the thoughtful comment.
You ask “the” question, what if a nation just walked away from its obligations to the finance authority. Stated another way, will investors’ readily accept that risk.
The consequences of walking from a “supra” finance union obligation would be more severe than if a nation simply abrogated its debts. Severe and justified would include this piranha nation being shut out of European banking and trade system. With other countries joining in as well because that kind of action threatens the stability of the world’s largest economy, the EU.
You are not just stiffing investors, but also the referee and league or union. All other members of the league will punish that team. They have agreed to not play with the offending team until it meets all of its obligations to the finance authority for debt issued on its behalf. Could an EU state turn into a North Korea? Yes, but what are the odds.
Just as important is the fact that all member nations and investors come out ahead in the short and long term.
A proposal like this in my opinion would have a positive impact on the value of the Euro and price of Greek, Spanish and Italian government bonds.
No doubt, the rating agencies would slather the union’s finance authority bonds with triple-A ratings, in this rare case deserved.
Probability is the measure of risk over time. Here is a link to a direct three-way comparison to Moody’s and S&P long-term credit rating definitions. I think another solution for a different but related problem is obvious here:
http://bit.ly/MD9jNY]]> http://seekingalpha.com/article/285646/comments?source=feed#comment-1829580 1829580 Fri, 12 Aug 2011 16:02:28 -0400 http://seekingalpha.com/article/275188/comments?source=feed#comment-1743044 1743044 Intending to hold to maturity and that actually happening are two different things, but most are called or economically called prior to maturity.

Before investing a large sum in a particular municipal bond issuer, I would still want to know the price offered was fair value for the risk assumed. Essentially, how far away or how unlikely is default in the foresee able future. You do not get that from public rating agency ratings or reading their rating reports.

Thank you for bringing up the question. It’s an important point.

Carl]]> Mon, 04 Jul 2011 23:57:29 -0400 Intending to hold to maturity and that actually happening are two different things, but most are called or economically called prior to maturity.

Before investing a large sum in a particular municipal bond issuer, I would still want to know the price offered was fair value for the risk assumed. Essentially, how far away or how unlikely is default in the foresee able future. You do not get that from public rating agency ratings or reading their rating reports.

Thank you for bringing up the question. It’s an important point.

Carl]]> http://seekingalpha.com/article/275188/comments?source=feed#comment-1715717 1715717
Bondsonline providing access to rating agency reports is a significant development. I believe Fitch was the first to do it via press release. But I am not sure you get all of the information all of the time and because the bond issuers pay for the rating, they are not truly independent.

When I mentioned “independent expert credit advice,” I was referring to our company’s goal of bringing independent expert opinion to retail municipal bond investors. We are not there in terms of pricing yet, but are working on retail distribution through a brokerage firm.

I agree 100%; borrower funded credit rating agencies are here to stay. Thanks for sharing your thoughts,
Carl]]> Sat, 18 Jun 2011 23:22:42 -0400
Bondsonline providing access to rating agency reports is a significant development. I believe Fitch was the first to do it via press release. But I am not sure you get all of the information all of the time and because the bond issuers pay for the rating, they are not truly independent.

When I mentioned “independent expert credit advice,” I was referring to our company’s goal of bringing independent expert opinion to retail municipal bond investors. We are not there in terms of pricing yet, but are working on retail distribution through a brokerage firm.

I agree 100%; borrower funded credit rating agencies are here to stay. Thanks for sharing your thoughts,
Carl]]> http://seekingalpha.com/article/264645/comments?source=feed#comment-1611550 1611550 Mon, 25 Apr 2011 17:34:22 -0400 http://seekingalpha.com/article/218727/comments?source=feed#comment-1281908 1281908
Nearly all of the bonds carry insurance. I should have mentioned that. Some investors are being paid while some others are not depending on which insurer backed the bonds held.
Insurance was necessary to induce providers of liquidity to stand behind the auctions as buyers of last resort. That obligation terminated when the bond insurers where downgraded.]]> Fri, 29 Oct 2010 17:33:18 -0400
Nearly all of the bonds carry insurance. I should have mentioned that. Some investors are being paid while some others are not depending on which insurer backed the bonds held.
Insurance was necessary to induce providers of liquidity to stand behind the auctions as buyers of last resort. That obligation terminated when the bond insurers where downgraded.]]> http://seekingalpha.com/article/211315/comments?source=feed#comment-1081550 1081550
Narrow mined conservatives and liberals should look closely at the Japanese healthcare system. It's existence and success is a reality that proves both political points of view are based on false assumptions. As for elected officials, what's going on with them is, for the most part, ugly. ]]> Thu, 24 Jun 2010 21:29:18 -0400
Narrow mined conservatives and liberals should look closely at the Japanese healthcare system. It's existence and success is a reality that proves both political points of view are based on false assumptions. As for elected officials, what's going on with them is, for the most part, ugly. ]]> http://seekingalpha.com/article/202212/comments?source=feed#comment-1079759 1079759
You might need to put aside negative opinions about certain government actions to understand this. I have. Please read Part II and tell what you think about this.]]> Wed, 23 Jun 2010 19:09:49 -0400
You might need to put aside negative opinions about certain government actions to understand this. I have. Please read Part II and tell what you think about this.]]> http://seekingalpha.com/article/202212/comments?source=feed#comment-1079750 1079750
You might need to put aside negative opinions about certain government actions to understand this. I have. Please read Part II and tell what you think about this.]]> Wed, 23 Jun 2010 19:03:12 -0400
You might need to put aside negative opinions about certain government actions to understand this. I have. Please read Part II and tell what you think about this.]]> http://seekingalpha.com/article/202212/comments?source=feed#comment-1079713 1079713 Wed, 23 Jun 2010 18:25:15 -0400 http://seekingalpha.com/article/202212/comments?source=feed#comment-1011533 1011533
State regulators limit margins, not spending, to 4%, give, or take 100 basis points. Appling that margin to the sum of reimbursements paid plus operating expenditures equals annual earnings. ]]> Thu, 06 May 2010 20:38:57 -0400
State regulators limit margins, not spending, to 4%, give, or take 100 basis points. Appling that margin to the sum of reimbursements paid plus operating expenditures equals annual earnings. ]]> http://seekingalpha.com/article/191314/comments?source=feed#comment-920836 920836 Tue, 02 Mar 2010 19:24:39 -0500 http://seekingalpha.com/article/191314/comments?source=feed#comment-920769 920769 Tue, 02 Mar 2010 18:30:46 -0500 http://seekingalpha.com/article/191314/comments?source=feed#comment-918969 918969 Mon, 01 Mar 2010 17:39:26 -0500 http://seekingalpha.com/article/127953/comments?source=feed#comment-442613 442613 Appreciate the complement.]]> Fri, 27 Mar 2009 13:20:43 -0400 Appreciate the complement.]]> http://seekingalpha.com/article/78394/comments?source=feed#comment-172895 172895 Fri, 23 May 2008 16:53:56 -0400 http://seekingalpha.com/article/70241/comments?source=feed#comment-149963 149963 Sun, 13 Apr 2008 16:42:46 -0400 http://seekingalpha.com/article/70241/comments?source=feed#comment-136120 136120 Thu, 03 Apr 2008 14:46:27 -0400 http://seekingalpha.com/article/66485/comments?source=feed#comment-120374 120374
Credit ratings are simply an informed opinion as to the likelihood of getting paid in full on time in a very stressed environment with triple A's the most likely survivors. Read the rating agency credit rating definitions, and then read the raters' rating methodologies for financial guarantee insurers. Default assumptions for categories of risk can change but the fundamental approach has remained the same for more than 30 years.

The unprecedented speed and magnitude of home price declines in certain housing markets is a natural result of the unprecedented speed and magnitude of the immediately preceding price appreciation that was fueled in large part by the collapse of mortgage under writing standards beginning in 2004. Those depreciating markets are well on there way to reaching price levels consistent with current personal income levels which is and always has been the fundamental driver of residential real estate values. There will be blood but the patient will recover faster than many think unless we have a depression in which case I would rather be holding Ambac or MBIA insured debt than uninsured A rated debt. Is that not the fundamental reason why investors have been giving up a little yield in exchange for insurance protection during the last 34 years?
]]> Thu, 28 Feb 2008 15:50:33 -0500
Credit ratings are simply an informed opinion as to the likelihood of getting paid in full on time in a very stressed environment with triple A's the most likely survivors. Read the rating agency credit rating definitions, and then read the raters' rating methodologies for financial guarantee insurers. Default assumptions for categories of risk can change but the fundamental approach has remained the same for more than 30 years.

The unprecedented speed and magnitude of home price declines in certain housing markets is a natural result of the unprecedented speed and magnitude of the immediately preceding price appreciation that was fueled in large part by the collapse of mortgage under writing standards beginning in 2004. Those depreciating markets are well on there way to reaching price levels consistent with current personal income levels which is and always has been the fundamental driver of residential real estate values. There will be blood but the patient will recover faster than many think unless we have a depression in which case I would rather be holding Ambac or MBIA insured debt than uninsured A rated debt. Is that not the fundamental reason why investors have been giving up a little yield in exchange for insurance protection during the last 34 years?
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