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    • Tue Sep 23rd 08:03 AM | Rating: 0 0
      Commented on:
      Say It Ain't So: Barclays to Allow Default of Lehman ETNs?
      The ETNs are clearly debt obligations of Lehman. I don't see why anyone would be surprised. Read the prospectus.
      View article »
    • Mon Sep 22nd 14:08 PM | Rating: 0 0
      Commented on:
      AIG: The CDS Market Bailout
      AIG has about $500 billion in notional value of Credit Default Swaps. I have read that the total notional value of Credit Default Swaps is over $60 trillion.
      Where is the other 99.2%?
      Now that is something to worry about.
      View article »
    • Fri Sep 19th 15:03 PM | Rating: 0 0
      Commented on:
      A Possible 10 to 1 Bet on AIG
      I bought this AIGprA on Wednesday and sold it today. I currently have no position in AIG.

      I am looking at the AIG listed notes, the American General Finance notes and International Lease Finance notes. The latter 2 are AIG subsidiaries.
      View article »
    • Fri Sep 19th 14:55 PM | Rating: 0 0
      Commented on:
      A Possible 10 to 1 Bet on AIG
      The AIGprA is different from the Fannie and Freddie preferreds. The AIG is a debenture, a debt instrument. Fannie and Freddie issued true preferreds. The Fannie and Freddie preferreds dividends are not cumumlative if not paid. The cash payments on the AIGprA accumulate if deferred.
      The annual cash distribution on the AIGprA is $6.375. If not paid, it is cumulative. Part of it will become additional shares and part of it will become additional debentures.
      The conversion rate for each AIGprA is approximately 1.97 shares. If the cash distributions are deferred, they compound at about 5.67%/yr.
      Check the prospectus. Lots of moving parts, but a very interesting opportunity.
      www.sec.gov/Archives/e...
      View article »
    • Wed Sep 17th 20:25 PM | Rating: 0 0
      Commented on:
      Merger Arbs Balking at Merrill/BofA Deal
      I don't think that 18% is enough spread. If BAC doesn't do this deal, Merrill is toast.
      Merrill wouldn't even be $5 now without this deal.
      View article »
    • Tue Sep 16th 08:51 AM | Rating: 0 0
      Commented on:
      The Financial Storm of the Century
      Corzine is correct about the US consumer in general and credit cards specifically. We have only seen the tip of the iceburg.
      AIG is "technically solvent" but their credit protection costs 12%/year.
      In the World Series of Poker, AIG would be referred to as the "short stack" and this is the "degree moment."
      AIG, like Lehman, has huge corporate hubris. Where on Earth will AIG come up with $100 billion?
      The Fed was right to let Lehman go and should do the same with AIG.
      Then, work on saving the banks, which will be the financial survivors, and the financial powers of the future.
      View article »
    • Mon Sep 15th 12:40 PM | Rating: 0 0
      Commented on:
      Why Lehman Wasn't Saved
      Felix Salmon is right. Lehman had to go bankrupt and take the preferred stock and part of the debt with it. Otherwise, how does this end?

      When the Bear Stearns bailout was done, the Treasury and Fed was faced with a sudden surprise and shock. In the case of Lehman, Merrill Lynch and AIG and Wamu there can be shock, but no surprise.

      The Fed told these institutions to do deals. Only Merrill did so, and Merrill was saved.

      What happened to free market capitalism? Lever up too much and you are taking a risk. You might fail. Lehman did and AIG might fail this week.

      Anyway, the employees made a lot of money. I hope they saved some of it.
      View article »
    • Mon Sep 15th 12:30 PM | Rating: 0 0
      Commented on:
      And Then There Were Two: Securities Firms Come Crashing Down
      Bank of America + Merrill Lynch, it looks more and more like Citigroup.
      Why did BAC pay so much? They could have had Merrill for $10/share later this week.
      View article »
    • Sun Sep 14th 19:26 PM | Rating: 0 0
      Commented on:
      Crunching Numbers: Why I'd Buy AIG
      AIG is a house of cards. We now will see Lehman liquidated and then we will be able to accurately mark to market the AIG assets, and better estimate the AIG liability for Credit Default Swaps.
      The result will probably be zero or negative.
      View article »
    • Sun Sep 14th 17:07 PM | Rating: 0 0
      Commented on:
      So, Do We Own Fannie and Freddie or Don't We?
      The US backstopped Fannie and Freddie with pledges to buy preferred stock. The debt securities of these two companies is not guaranteed like GNMA.
      There is still a spread between the Fannie and Freddie debt and US Treasury debt.
      I don't know why anyone thought that this debt would be added to the debt of the United States.
      View article »
    • Sat Sep 13th 09:17 AM | Rating: 0 0
      Commented on:
      Let Lehman Fail
      Lehman will be allowed to fail. The line will be drawn in the sand. FDIC will take over Wamu. AIG will be sliced up by insurance regulators.
      Merrill might make it or not.

      Then, finally, it will be over.
      View article »
    • Sat Sep 13th 09:12 AM | Rating: 0 0
      Commented on:
      Debating the Lehman Collapse
      If Lehman is greatly undervalued at the present time, someone with a big, strong balance sheet will do a deal this weekend. Some price like $5/share.
      The solid balance sheet of the new buyer will restore confidence in Lehman and the company will prosper. That buyer then can sit back and reap the rewards of his purchase of undervalued assets at an irrational discount created by short sellers.
      Or...
      View article »
    • Sat Sep 13th 09:02 AM | Rating: 0 0
      Commented on:
      Market Losing Patience with AIG
      "Triple pillar of the world transformed into a strumpet's fool." The quote from Shakespeare is a perfect summation of the situation at Lehman, AIG and Merrill Lynch.

      The "strumpet" was the allure of huge, easy profits from various fixed income "new paradigms."
      Sub prime and Alt-A mortgages. Collateralized Debt Obligations. Credit default swaps.

      The fool?
      View article »
    • Sat Sep 13th 08:55 AM | Rating: 0 0
      Commented on:
      The Lehman Situation: Brutally Logical, or Patently Illogical?
      With 30 to 1 leverage even a small mispricing of assets means the difference between survival or not. Does anyone think that the assets on Lehman's balance sheet are accurately priced? With time the company might be able to work out of its problems, but Lehman has very little time.

      As the week began there was talk of dividing Lehman into a good bank and a bad bank. Now, the whole company is the bad bank.

      Hubris, arrogance, greed. The end of a 150 year old company.
      View article »
    • Sat Sep 13th 08:43 AM | Rating: 0 0
      Commented on:
      AIG: The Mark-to-Lehman Market
      The real problem with AIG is the Credit Default Swaps. How much do they have outstanding on Lehman? Wamu? Merrill Lynch?
      General Motors, Ford, etc?
      Is AIG meeting the required marks to market?
      Can AIG survive a rating cut?
      Why does it cost 1200 basis points to insure AIG debt?
      View article »
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