58robbo

Rolling Stone's Taibbi on Naked Short Sales: Close but No Cigar

if you have lied and told parties to the deal that you own the brooklyn bridge, that is fraud. if all the parties are aware that you don't own it and they're willing to take that risk that is their problem.

i really don't see any difference between naked shorting and spread betting for instance. it's all gambling in my opinion, everyone knows it and if you're willing to step up to the table and accept massive gains you have to be able to accept the potential losses. you also have to understand counterparty risk.

caveat emptor


On Oct 22 11:04 PM Dialectical Materialist wrote:

> I can't agree. I can't sell you the Brooklyn Bridge, even if you're
> willing to accept the risk that you can find another sucker to buy
> it from you. It is simply fraud to sell something you don't own regardless
> of whether the buyer is willing to play along or not. Why? Well for
> one thing, ownership is partially defined by who can and can not
> sell an asset. So when a company is having shares of its stock sold
> when they don't even exist (aka naked short selling), it is having
> something it has a right to stolen from it. And stealing is one of
> the few things even libertarians agree has to be a no-no. Without
> laws against stealing, the concept of private property doesn't work.
> This kind of counterfeiting and fraud is simply stealing.
>
> On Oct 22 02:42 PM 58robbo wrote:

Rolling Stone's Taibbi on Naked Short Sales: Close but No Cigar

i still don't believe this should be regulated or outlawed. we're supposed to be living in a free country. if all parties are happy with the risk that their partners are selling naked shorts then so be it. they just shouldn't come running for bailout money.

in gambling terms, if someone walks into a casino and wants to place bets with money they don't have it's up to the casino to decide whether they're happy to take those bets. as an investor in said casino, i understand what the casino's credit policy is and if i'm not happy with that risk i shouldn't invest. likewise if i'm a punter i should question the casino's ability to pay out. if i'm not happy with that risk i shouldn't gamble there.

the big problem with our system is that we seem to outsource some of our most important life decisions without fully researching the risk. we then sit back and pray that bureaucrats have done their jobs.

Commercial Real Estate: The Gathering Storm

there will be no storm! if the residential market is anything to go by, banks will just repo commercial re, board it up and that will be that! the property taxes and maintenance are minor expenses yet the value of this worthless real estate will appear on their balance sheets at 2006 prices. where is the storm now? it's almost as if you still believe that the insolvency rules which apply to you and me, apply to the banks!

Housing Industry Players Entreat Government for Tax Credit Extension

i really don't know why they bothered writing the letter!? it is quite obvious that given the opportunity the administration will extend the tax credit into the next millenium. i'll even predict that they'll make the tax credit available to all homebuyers and possibly increase its size.

U.S. Housing Market Has Likely Bottomed

i think it's a given that the govt is commited to an inflationary solution to our current economic crisis rather than allowing the mass liquidation of credit. i don't see how anyone could argue otherwise.

the big problem they have is how to make all this credit available to joe public. bush/greenspan used fannie/freddie, the cra and loosening of credit standards. obama is trying to do this but at the same time he is trying to curb the subprimes/alt-a's etc. this cannot work. you can't encourage banks to lend while at the same time tightening lending standards. that's like having a fist fight against.......... yourself!

a big part in all this is how does the administration bring down the supply of real estate while at the same time drive demand? for a start, a good portion of homes will be destroyed. they're already doing this in parts of michigan instead of trying to understand why the jobs and people left. many democrats i speak to think this is a wonderful idea. the thought of knocking down houses so that people can be employed to re build them makes sense to many people, i'm just not one of them.

another way is to get money into the hands of all those unemployed people so they may afford to buy. i think they'll extend the homebuyer tax credit, open it up to all buyers not just first timers and they'll double or triple its size. they have tried stimulus checks to the people but this was too small an amount and it was also a big 'up yours' in the face of anyone with exposure to the greenback namely china. i still however believe that it is possible we'll get another round only next time it might have another zero or two attached to it.

the big way they'll get cash into the hands of the people is through monumental government spending. this is where healthcare reform comes into play. i do love this song and dance they're making about it, but it's as good as passed! i believe that the jobs they create through this will also be very well paid (printed money of course)

another way to make money available is to give the financial innovators a say. last time we got 'no money down' this time we'll get 50 year mortgages. although this time around you can be rest assured that the bankruptcy laws will be tightened heavily. there won't be any of this 'strategic defaulting'!

when all else fails, they'll take us to war.

the answer to your question: the banks can/will hold on for as long as it takes. they are so heavily intermingled with the fed and the treasury there is no way they'll be allowed to fall!


On Oct 16 03:24 AM Michael Clark wrote:

> Lawrence Yun disregarded; I understand your logic.
>
> Will the banks not have to add supply (foreclosures) to the market
> at some point? I realize the administration and Congress have said
> it's ok to lie and evade (the mark-to-market inconvenience) but what
> do they get out of letting house rot for ever, rather than selling
> them. I understand they want to limit supply to try to arrest further
> price depreciation -- when does this logic evaporate in the face
> of further economic weakness?
>
> I'm on record as saying we have deflation until 2019. Can the banks
> wait that long?

U.S. Housing Market Has Likely Bottomed

any relation to lawrence yun?

anyway, you cannot be serious. reservation demand? you must be kidding. the grand daddy of this flawed argument is demographics favoring the upside! this is blind optimism on heroin!

the reality is that baby boomers are retiring and therefore downsizing and unemployment is getting worse. there are also millions of people who are upside down. as it becomes more socially acceptable to walk, millions more will! i do however agree with you that housing has bottomed. in nominal terms at least, but not for any of the reasons you state. i stated as much in my instablog. housing has bottomed because of monumental withdrawal of supply. this in the form of banks delaying foreclosure proceedings and witholding foreclosed homes from the market!

Bank of New York and Bank of America vs. AIG: No Winner in Sight

this is a joke! obviously UG shouldn't pay if Countrywide were missrepresenting underwriting standards. that is a no brainer! where it gets tricky however is if UG insured those mortgages knowing full well that the underwriting was dodgy! if i was to hazzard a guess, i'd say that UG knew that to be the case.

having UG pay however would transfer ALL of the blame for this mass fraud into the hands of UG and i don't think that is fair. countrywide along with their brokers and their clients who falsified documents should be criminally charged. the simple solution to the financial mess left behind would be not to bail any of them out.

OTC Derivatives Reform: The Parade of Mendacity Continues

ie, no bailouts when it all goes wrong!

OTC Derivatives Reform: The Parade of Mendacity Continues

Karl, i have to disagree with you on the whole issue of regulation. in my opinion regulations encourage investor apathy, they're prone to catching the mice while the elephants go free and they're always regulating against yesterday's con!

having said that, the govt should not be called in when it all goes bad! caveat emptor!

Global Oil Supply: Learning from Lagos

great article Gregor. i totally agree with you that there is zero spare capacity and that is what sent the price up last year (contrary to the witch hunt for speculators!) producers around the world had their spigots wide open and there simply wasn't enough!

ok, so we've had a huge pullback in demand which has created the illusion of spare oil, but it's only a matter of time until that slack gets pulled out. to be fair, that could take a long time because i don't see demand recovering any time soon.

Global Oil Supply: Learning from Lagos

why is it that everytime someone feels threatened by something the solution they propose is to tax it to high heaven! i have a different point of view to this. how about not subsidizing energy production, refining, security and most importantly energy exploration! like everything it is high time we start paying the full cost for whatever it is that we are using and not dumping the cost on the taxpayer.
what do i mean? we currently pay much less for oil than it costs to pull out of the ground, refine and protect. we also subsidize the risk that oil explorers take when they start to drill. if none of these processes were subsidized, explorers would think twice before drilling and that would send the price of oil up. so oil prices go up and the taxpayer gets a tax break so there is a zero sum game. the key difference is that the consumer is now empowered to choose. he can use the tax break money to fill up his truck or he can purchase a smaller vehicle and take what's left of his cash and put it to better use!


On Oct 02 08:27 AM Yarak wrote:

> From here in Brazil your point about oil nationalism is clearly evident.
> Also how some "get it," others don`t. Many years ago in a graduate
> class (in the US) I dared to make a point about the possible wisdom
> of increasing taxes on gasoline as a means of strategic energy policy,
> simply on the basis that oil imports enriched America's worst ideology
> rivals. Added to possible volatilities in supply, the deficit-blowing
> impact of oil on dollar weakness, theories of declining world production,
> etc., and America's oil-guzzling ways seemed downright suicidal.
>
> Meanwhile other countries, like Brazil, were executing smart, hedged
> strategies like their dual-fuel policy, as is China.
>
> In my mind these days (and months) is how easy an empire can fall,
> how inevitable it seems that history just repeats itself.
>
> Step back for a moment, and so much of our current trouble is fundamentally
> caused or deeply affected by energy policy. For example, now minus
> all the bulls*t about WMDs, wouldn't about 1 to 1.5T come of the
> cost of the Iraq war come in handy now? Or how about the fact that
> financing the war kept rates low longer than they should ? Or Administration
> attention focused on the War and not on domestic issues where it
> needed to be? I always lamented how narrow the view of "national
> security" was to my colleagues and friends...

Is There Really a Global 'Cabal' Aiming to Dump the Dollar?

i just wonder to what extent they'll continue to finance our debt and at what point they'll pull the plug. it is very clear that we are living through a deflationary period which has seen a gargantuan credit contraction many times greater than the stimulus put forward to counter it. at the same time, we have a govt and fed who are idealogically commited to inflation. part of that commitment is the unwaivering support given to banks to stabilise a still heavily inflated real estate market.

the problem they face is how to increase the velocity of this printed cash to make its way into the hands of joe public? the bush/greenspan coalition paradoxically used cra type legislation along with fannie/freddie to get the banks to lower lending standards and flood the market with liquidity. i somehow doubt though, that the 'no money down', '105% mortgages' and 'liar loans' will make a wholesale comeback any time soon.

so what will we get? i don't underestimate any action on the part of the fed/govt. doubling, tripling of the tax credit? another huge round of stimulus? 1,2,.....10 times greater than the 2 already passed? cash for clunkers, appliances, golf clubs, plasma tv's? 40,50, 60 year mortgages? i wouldn't even put it past them to send out another round of stimulus checks only this time they might add another zero!

when this happens, and i'm pretty sure it will, it remains to be seen what china and the bric countries do with regard to reserve currencies

Get Ready for $35 Billion More in Handouts

there is no need for public housing. there are towns in this country where perfectly liveable homes are being destroyed without the first thought as to how these homes might be used to deal with the growing homeless problem. all this to prop up the price of real estate instead of allowing the banks to fail. there is absolutely no difference between this policy and roosevelt's policy of destroying livestock and plowing over crops while millions had little to eat!


On Oct 01 06:26 PM The Geoffster wrote:

> Living as I do in a major American city, I see first hand the need
> for public housing, food stamps, welfare and other transfer payments
> to the poor. In fact, the need seems to increase proportionately
> to the demand. I don't have any charts to prove this, nor am I working
> up an article, but my eyes do not deceive me. My bias has always
> been toward the liberal view that conditions would improve for these
> poor souls if we could just provide them with the educational tools
> to advance beyond the gutter. Sadly, many of our multi-generational
> poor do not appear to have the makeup to succeed in a post modern
> society. More sadly still, I'm coming around to the notion that if
> you see a man in the gutter, he probably belongs there.
> Disclosure: SH

It's Time to Call a Housing Bottom

i agree that it's time to call a bottom to real estate prices....... in nominal terms at least! is it a false bottom? i think it is because the banks are witholding mountains of inventory from the market and therefore skewing supply figures. they're doing this by not listing foreclosed real estate, stalling foreclosure on delinquent mortgages and setting prices for listed homes way above what the market will bear.

i understand that to a certain degree now is a 'good' time to buy. interest rates are low, the tax credit for 1st time buyers and if you're earning the same money you were 3 years ago, it might make sense as home prices are cheaper than they were. the question is who will take up the slack from the 9%-18% unemployment (depending which data you look at)? the interest rate could be 0% but that still begs the question, how will someone who is unemployed make their payments?

there is also the question of lending standards. to my understanding the loose lending standards which got us here have been tightened. how then is the consumer who didn't have a downpayment in the good times going to find the money to stump up the required deposit? the tooth fairy?

Why Banking Is Insolvent

i'll clarify what i meant: why would anyone strategically default if they weren't upside down? the answer is that they wouldn't. the strategic defaulters are doing so precisely because they price they'll fetch in the real world for their homes is less than what they owe. if they still had any real equity they'd sell instead of default!

On Sep 29 04:47 PM Karl Liesman wrote:

> Karl says, "Almost by definition, foreclosures only happen on upside-down
> properties."
>
> That is just not true. Read and learn.
>
> www.boston.com/realest...
>
>
> www.washingtonpost.com...