Mikebrah

21 Comments

    • ON: Mon Sep 29th 11:08 AM
      Commented on:
      The Great Bank Rush of 2008: What's the Money For?
      Considering the magnitude of this rule change, I am shocked more hasn't been made of it. This is the first I have heard anyone speak about it, and it is downright scary.

      This really is frightening, especially considering that (like a gambler) even if this bailout works, there is great likelihood that it will be followed by a series of high-risk maneuvers.

      This really feels like someone being down to their last few chips at a blackjack table and putting them all on the table. Even if it works, you still aren't anywhere near where you started and will likely repeat the move several times.
      View article »
    • ON: Fri Sep 26th 01:25 AM
      Commented on:
      Bailouts: Misunderstanding the Moral Hazard
      We shouldn't be offering anything for any securities.

      The proper course of action would have been to set aside this $700B as a Super Liquidity Fund which would ensure that all current debt needs are met, and that liquidity is ample.

      Then, leadership should have bombarded the taxpayer with this message:
      "America is safe. Your money is safe. FDIC insurance will be increased to $250,000. Any solvent company that needs liquidity will have it provided via this $700B fund. This fund will ensure that orderliness is swiftly restored to the credit markets and any viable, solvent company will have all the liquidity they need. There will be some turmoil in the short term as a lot of poorly managed companies, especially banks, cease to exist. Rest assured that this will pass, and that we will be the stronger for it. I say again, both America and your money are safe."

      Boom. Problem solved.

      PS - If the entire economy is about to collapse, why is it that I have yet to hear from any nonfinancial Fortune 500 CEO or CFO giving their unabashed support for this plan. I'm always skeptical when the only party advocating a solution is the sole benefactor. General Electric, Caterpillar, Wal Mart... these companies all have pretty smart guys as their CFO. If the demise of the economy were imminent, I would think these very CFOs would be just as active in advocating this bailout as the Wall Streeters. But the only people I hear crying wolf are the very people this package will benefit.

      These financial guys are coming across as aggressive used car salesman. "Once in a lifetime!", "Act Now!!! It Won't Last Long!!!", and just like used car salesman what they really mean is: "please take this crap off our hands for more than its worth!"
      View article »
    • ON: Thu Sep 25th 00:05 AM
      Commented on:
      AIG: Details of Its Punishing Bailout
      Wow... prison style.
      View article »
    • ON: Wed Sep 24th 01:47 AM
      Commented on:
      The Greatest Short Sale in History
      John Pseudoynm,

      Does LEH's BK pose any problems for that ETF? I don't know how that works.

      Thanks.
      View article »
    • ON: Wed Sep 24th 01:43 AM
      Commented on:
      The Greatest Short Sale in History
      bearfund,

      Yes, and lets have a big circle-jerk and sing songs of love, too.
      View article »
    • ON: Tue Sep 23rd 22:31 PM
      Commented on:
      The Greatest Short Sale in History
      Stone Fox, I agree with you about the AIG deal. That should in theory, make a quick and easy profit for the government.

      However, this RTC II or whatever its going to be called is EXTREMELY inflationary. From listening to the session with the House committee this afternoon, the plan is to put an artificial floor in housing by having the gov't (us) buy these asset-backed securities for more than they're worth. You know its stupid, because if it weren't then private capital would have already done it. For Hank and Ben to imply that the gov't is being shrewd here is blatantly dishonest.

      This plan is both stupid and immoral. The plan will allow huge numbers of financial companies to escape from their mistakes, and keep huge numbers of idiots that bought more house than they could afford from foreclosure.

      Neither of these is a good thing and will necessarily lead to much higher inflation.

      This "solution" is emblematic of our society writ large. It is the ultimate continuance of an absolute aversion to pain that we have developed. This policy is the equivalent to Little League's that don't keep score, or giving out trophies to kids that finish 6th place. Everyone "wins," there are no "losers" anymore.

      Wrong. There will always be winners and losers. Failing to acknowledge that makes all of us lose.
      View article »
    • ON: Tue Sep 23rd 13:15 PM
      Commented on:
      Can Hank Paulson Lead?
      This is just the beginning...
      View article »
    • ON: Sat Sep 20th 12:41 PM
      Commented on:
      The Artificial Inflation of Stock Prices, Due to the Short Selling Ban
      First sentence, 2nd paragraph is supposed to read "WITH" shorting banned not "without"

      thanks!
      View article »
    • ON: Sat Sep 20th 12:40 PM
      Commented on:
      The Artificial Inflation of Stock Prices, Due to the Short Selling Ban
      Shorting is completely valid.

      This is going to be a disastrous policy. Over the weekend, the big boys will realize that without shorting banned, there is no one to temper the flames and will be able to send all financials to the moon.

      I have been long ETFC for a year, but at the end of the day I loaded up on XLF and Dec calls. All it will take is a couple big buyers to launch every financial upward, which will eventually cause a panic among remaining shorts.

      I predict the ban will last longer than 10 days, and the gov't will use these skyrocketing prices as validation of their brilliant "policies."

      This seems like the trade of a lifetime, am I missing something?

      MM
      View article »
    • ON: Fri Sep 19th 15:15 PM
      Commented on:
      Another Oversold Watch: Is This One Different?
      With the SEC ban on shorting financials, isn't the good trade here to go long the XLF? With no one able to short, what's to stop the financials from being sent to the moon only to be clobbered back down once the ban is eventually lifted?

      Also, do you like any of the miners at these levels or stay strictly to the commodity itself?

      thanks!
      View article »
    • ON: Thu Sep 18th 02:31 AM
      Commented on:
      What About 'All That Cash on the Sidelines'?
      When bulls refer to this, its usually in percentage terms. Cash in money markets as a percent of total funds, not in absolute dollar terms, can have meaning.
      View article »
    • ON: Wed Sep 17th 23:57 PM
      Commented on:
      Is AIG a Buy Following the Government Bailout?
      As if Fannie and Freddie weren't bad enough, now we will have a GSE insurance company.
      View article »
    • ON: Wed Sep 17th 23:57 PM
      Commented on:
      Is AIG a Buy Following the Government Bailout?
      I just read the Fed press statement and it actually doesn't say anything about warrants. It simply states the Fed now has a 79.9% stake in AIG.

      "The interests of taxpayers are protected by key terms of the loan. The loan is collateralized by all the assets of AIG, and of its primary non-regulated subsidiaries. These assets include the stock of substantially all of the regulated subsidiaries. The loan is expected to be repaid from the proceeds of the sale of the firm’s assets. The U.S. government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders."

      At these levels, its probably still a buy. But its definitely not the opportunity of a lifetime as I previously thought.

      More importantly, what is Uncle Sam's motivation to ever let go of their 80% stake? They just sunk their teeth into the biggest insurance company out there for pennies on the dollar and will get paid to do so. It seems inevitable that this will transition into some form of nationalized insurance program.

      This is bad.

      View article »
    • ON: Wed Sep 17th 22:05 PM
      Commented on:
      Is AIG a Buy Following the Government Bailout?
      Joe,

      I just read the prospectus on AVF and AFF and it says that AIG can defer the dividend for up to 40 quarters without causing a default.

      I wouldn't be holding your breath on that 55% yield.
      View article »
    • ON: Wed Sep 17th 21:27 PM
      Commented on:
      Is AIG a Buy Following the Government Bailout?
      Also think about this...

      Why on God's green earth would AIG take an 11%+ loan for $85B if they didn't think the company was worth considerably more than that?

      Would you take a $500k loan with 11% interest to save your house thats only worth $100k?

      I would wager thats the real reason LEH went BK. They realized at that point it was the smarter decision. This is a steep price for AIG to pay, so they most feel very strongly it is well worth it.

      Think about it.
      View article »
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