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  • Chesapeake - When Analysts Get It Wrong  [View article]
    Author, I apreciate your analysis and think you have some good points. However, I think you are overlooking a huge counterpoint to why BK could still be highly probable.

    If we all agree that CHK has some highly desirable assets, wouldn't it make sense for a competitor, or even a T Boone Pickens type, to buy the short term debt at pennies on the dollar to deliberately force a BK, only to then be able to have first rights at purchasing CHK prized assets at distressed prices?

    This seems like the most obvious future to me. If I had the capital and the connections to execute this strategy, it is certainly the one I would. Thoughts?
    Dec 30, 2015. 12:16 PM | 2 Likes Like |Link to Comment
  • Cliffs - Time For A Board Pay Cut And Cancellation Of Share Repurchase Plan  [View article]
    Just because the bonds they issued at $100 w 7.5% interest have dropped to $50 in the open market doesn't impact the companies payment schedule. They are still paying $7500/yr. But that $7500 is effectively a 15% yield for whoever buys the bond on the secondary market for $50 instead of $100.

    These figures are just for demonstrative purposes. Not sure what the exact numbers are.
    Sep 24, 2015. 03:06 PM | 4 Likes Like |Link to Comment
  • Cliffs - Time For A Board Pay Cut And Cancellation Of Share Repurchase Plan  [View article]
    Pat--you do understand that the effective yield CLF bonds trade for in the secondary market have absolutely no relevance to CLFs interest payments right?
    Sep 24, 2015. 03:02 PM | 5 Likes Like |Link to Comment
  • Rep. Paul Ryan releases a new deficit reduction proposal that claims to cut $5.8T in spending over the next decade and includes major changes to Medicare and Medicaid. These problems won't get fixed because (choose one): A. they're unworkable; or B. politicians and voters don't have the stomach for such deep cuts.   [View news story]
    I would contend that the editor just knows his readership quite well, and selects those topics (i.e. Krugman) which generate the most responses.

    He may, or may not be Democratic but any editor's main goal is to generate buzz, eyeballs, comments, etc.
    Apr 5, 2011. 07:21 PM | 6 Likes Like |Link to Comment
  • Jobless Recoveries and the Cancer of Debt  [View article]
    I respectfully, but heartily, disagree with this comment.

    Contrary to popular belief, Reagan planted the seeds of our current economic infertility and told us they were Magic Beans. It took 30 years for the situation to finally implode, but continuously handing an increasing amount of people credit cards with larger and larger limits is NOT what I call "a global era of increasing use of capitalism."

    Basehitz hits the nail on the head about most humans being cognitively incapable of connecting the dots. He said:
    "• Less see today’s “solution” of endless borrowing and printing as tomorrow’s problem.
    • Very few recognize the danger to the nation from compounded policy errors over decades."

    Our current mess can be tracked back to Reagan's full-scale embrace of borrow-and-spend policy. In hindsight, people mistakenly call the 80's a period of prosperity when in reality it was just a nation being introduced to the joys of living beyond their means. Now, 30 years later, we are going to finally get the hangover.

    Giving millions upon millions of people credit cards with a zero balance and $50,000 limit and having them go on a shopping spree is not "prosperity."

    Please don't suggest the massive economic dislocation we are presently in the midst of as a failure of this, or the previous, administration. It is a long line of compounded failures from our "leaders" that has continued and escalated it to a scope beyond all of our combined imaginations.

    Disclaimer: I am politically independent so please don't take this post as a Liberal/Democratic Reagan-bashing. As long as we keep playing the Republican vs. Democrat game we are all losers.
    Apr 4, 2011. 05:05 PM | Likes Like |Link to Comment
  • Mortgage Defaults as a Stealth Stimulus  [View article]
    Truly amazing...
    Mar 30, 2011. 12:13 AM | Likes Like |Link to Comment
  • Housing Market: Here's an Amazing Statistic  [View article]
    I couldn't agree more with your logic. My family and I are actually executing this very strategy. If I typed my comment in a way that suggested otherwise, I apologize.

    That said, we are focusing on more urban areas than suburbs.
    Mar 27, 2011. 01:10 PM | Likes Like |Link to Comment
  • Kansas City Fed's Thomas Hoenig - the lone voice against monetary easing and zero interest rates for a long string of FOMC votes - is retiring Oct. 1 after 20 years as president. The bank's board has formed a search committee to find a successor.   [View news story]

    Another illuminating example of how bureaucracy is virtually unbeatable. It is the cancer of civilization. All bureaucracy, not just the Fed specifically. Those that oppose it are too small a minority, and eventually give up fighting.

    Whether it be fatigue, complacency, retreat, or conversion...the virtuous and rational individual usually loses to the mob.
    Mar 25, 2011. 12:27 PM | 2 Likes Like |Link to Comment
  • Chicago Fed chief (and FOMC policy voter) Charles Evans doesn't see as many needs for a third round of quantitative easing, and now thinks the jobless rate will fall not just to 8% by 2012's end, but to 7.5%. But he still wants an accommodative stance and disagrees "completely" that Fed policies are "dangerous."   [View news story]
    From the article:
    "I disagree completely with any characterization that these policies are dangerous," he said. "I think they are sound monetary policy decisions."

    To say that about an enormous, unprecedented monetary intervention, to the tune of multiple trillions of dollars, is beyond arrogance.

    It's like the first doctor to ever attempt an open-heart surgery telling his patient "I disagree completely with any characterization that this procedure is dangerous. I think it is sound medical policy."
    Mar 25, 2011. 12:13 PM | 5 Likes Like |Link to Comment
  • Housing Market: Here's an Amazing Statistic  [View article]

    I think the main takeaway for people should be that housing, like any other investment, is relative.

    Similar to 1999, when people realized there is no inherent value to paper shares of a company with no revenue, people are now realizing there is no inherent value to a 3,000 sqft ubiquitous house in a ubiquitous suburb. That is the main reason for the severe decline, both in median price and especially in new units sold. With the supply available today, why anyone would be building or buying new houses in suburbia is beyond me.

    There is absolutely no point in spending several hundred thousand dollars on a house that looks like every other house in a suburb that could be built the exact same way a mile to the left or a mile to the right. Even if you build a totally unique, high end house with the best materials possible there is still no value added beyond the value of the land itself. And as I mentioned earlier, ubiquity is the defining characteristic of suburbia.

    It is also why prices in areas you mentioned like DC, San Fran, NYC, etc. have not dropped as much. Prices will always drop in a recession/depression such as we are currently experiencing, however that is due more to individuals' insecurity about their job and income as opposed to a bubble popping, IMO.

    I live in St. Louis. All prices are down, but the difference is that if you own a property in one of the desirable central neighborhoods your rental rates are increasing. People are discovering there IS inherent value to these properties due to location, location, location. The combination of plummeting suburban home values coupled with rising gas prices will lead, I think, to a national re-urbanization.

    Just my $.02, keep up the great posting!
    Mar 24, 2011. 11:02 AM | 21 Likes Like |Link to Comment
  • Why We're Headed for a Collapse  [View article]
    I agree, but the upside is that humans are, by nature, quite adaptable. The transition period to austerity will be a little rough, but once the New Age of Austerity is upon us, we will go about our business as we always have. Frugality will be the new "style" just like excess was for the last twenty.

    People either forget or don't realize that there were plenty of people who had money during the Depression. They just did everything they could to pretend they didn't, because wealth was so frowned upon. Part of the whole mystique about how bad it was back then was just that-- mystique. It was a different set of values and we could return to that much quicker than people think.

    Imagine a theoretical situation where SS, Medicare, and Medicaid were ALL ABSOLVED overnight. People would be irate, and there would be some riots (mostly just because a-holes like to destroy stuff and any excuse to do so will work). But this would be short lived. Does anyone know someone that would riot for more than a week? I know I wouldn't. I would be pissed at how much of my prior work had been flushed down the drain, and then...I would move on.

    This post has become longer-winded (sic) than I expected, but my main point is that an Austere America is not that hard to imagine, and not that far away once the dominos start falling. We are imaginative, we are adaptable, and we persevere. Look how many people voluntarily live in Minnesota. It didn't take them very long to figure out you need heavy coats and lots of layers. Same holds true for society at large. Entitlements stop means I have to work. Bummer, but life continues.
    Dec 10, 2010. 11:36 AM | 19 Likes Like |Link to Comment
  • Queasing Over Quantitative Easing, Part IV  [View article]
    Destructive creativity--- great phrase that I will be spreading around. Thanks David.
    Sep 1, 2010. 11:14 AM | Likes Like |Link to Comment
  • Who Rents Out Houses?  [View article]
    But we could be getting back to that America. With millions unable to sell their homes at a price that would allow them out of the mortgage, it seems mobility is going to be ratcheted down quite a bit.
    Aug 20, 2010. 10:30 AM | 2 Likes Like |Link to Comment
  • Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) should be "abolished" rather than reformed, Rep. Barney Frank says. "No more hybrid private-public," referring to the outlook for the government-sponsored enterprises. "If we want to subsidize housing, then we could do it upfront and let the budget be clear about that."   [View news story]
    Are his constituents really stupid enough to fall for this?

    He may as well just send a letter out to them saying "Hi, my name is Barney Frank. I think you're an idiot, and I expect your vote next election."
    Aug 18, 2010. 10:37 AM | Likes Like |Link to Comment
  • My Afternoon at the Treasury  [View article]
    I have to agree with this line of thought. If they were truly interested in open debate, they would have brought the ZeroHedge crew.

    ZeroHedge is the most read, but most critical blog out there. All the guests that WERE invited regularly reference it.

    As another reader suggested, they brought in only those bloggers they thought were winnable. I read/follow most on the list and only hope this doesn't change their tune.

    To quote a previous post, you've been stroked....I hope you don't purr.
    Aug 18, 2010. 09:59 AM | 5 Likes Like |Link to Comment