MichaelSchmichael's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/183717/comments http://seekingalpha.com/article/174870-philip-morris-pays-up-something-s-not-right?source=feed#comment-788585 788585

On Nov 28 08:05 PM User 23832 wrote:

> Obviously, the law rightly "discriminates" against wrongdoers and
> in favor of law abiding citizens; however, the author's point (which
> you failed to grasp) was that in determining whether a person is
> a wrongdoer and, therefore, should be discriminated against by the
> law (i.e., fined, punished or subject to other liability), the law
> should be impartial rather than presupposing culpability on grounds
> such as financial wherewithal etc. This is a basic principle of
> the US justice system.
>
> Capisce?]]> Thu, 03 Dec 2009 11:44:25 -0500

On Nov 28 08:05 PM User 23832 wrote:

> Obviously, the law rightly "discriminates" against wrongdoers and
> in favor of law abiding citizens; however, the author's point (which
> you failed to grasp) was that in determining whether a person is
> a wrongdoer and, therefore, should be discriminated against by the
> law (i.e., fined, punished or subject to other liability), the law
> should be impartial rather than presupposing culpability on grounds
> such as financial wherewithal etc. This is a basic principle of
> the US justice system.
>
> Capisce?]]> http://seekingalpha.com/article/174870-philip-morris-pays-up-something-s-not-right?source=feed#comment-775567 775567 Tue, 24 Nov 2009 14:18:03 -0500 http://seekingalpha.com/article/128472-seven-uncomfortable-predictions-for-the-economy?source=feed#comment-447225 447225 www.jenniferbawden.com...). But I have to admit that the author clearly excels at self-promotion and marketing, giving the public exactly what it wants (gloom and doom) to drive interest in her firm.

Jstratt -- Claim reserves and reinsurance are irrelevant to the insurer problems the author references (liquidity crunch created when csv demands on life policies exceed current cash, requiring the sale of illiquid assets at so-called fire sale prices).

]]> Tue, 31 Mar 2009 19:47:32 -0400 www.jenniferbawden.com...). But I have to admit that the author clearly excels at self-promotion and marketing, giving the public exactly what it wants (gloom and doom) to drive interest in her firm.

Jstratt -- Claim reserves and reinsurance are irrelevant to the insurer problems the author references (liquidity crunch created when csv demands on life policies exceed current cash, requiring the sale of illiquid assets at so-called fire sale prices).

]]> http://seekingalpha.com/article/127405-geithner-a-fool-with-a-plan-and-is-that-a-bad-thing?source=feed#comment-437475 437475
]]> Mon, 23 Mar 2009 21:01:01 -0400
]]> http://seekingalpha.com/article/127389-how-treasury-s-bank-bailout-could-make-things-worse?source=feed#comment-437462 437462
And I thought the cronyism under Bush was bad . . . .

"I don't see this as a problem at all. In fact I see the opposite problem:

Let's say I'm a bank with a $100 face value "Legacy" pool that I have dilligently and painfully written down to $50, even though the best tire-kicker bids I have received are at $30. I haven't accepted because I don't want to take another $20 haircut.

The FDIC decides I can get 6:1 debt:equity on this stuff. So I set up a PPIF and fund it with $5.00. Treasury throws in $5 and the PPIF issues $50 non-recourse debt guaranteed by the FDIC. The PPIF then buys my pool for $60 and presto! I have turned $30 worth of crap into $10 cash ($5 net) and $50 of FDIC guaranteed paper- I don't really care what happens to the PPIF. In the fullness of time it may or may not make money. If it does, I'll get 1/2 of the profits. But it probably won't, so the taxpayer will pick up the tab.

So what's to stop me from putting, say, $8 into the PPIF and bidding $96 for the pool? Treasury is in for $8 and the taxpayer is on the hook for $80 courtesy the FDIC. My bank ends up with $16 in cash ($8 net) and $80 worth of FDIC guaranteed paper and the PPIF can go get stuffed for all I care.

I'm laughing all the way to the bank. Wait, I AM the bank."]]> Mon, 23 Mar 2009 20:45:46 -0400
And I thought the cronyism under Bush was bad . . . .

"I don't see this as a problem at all. In fact I see the opposite problem:

Let's say I'm a bank with a $100 face value "Legacy" pool that I have dilligently and painfully written down to $50, even though the best tire-kicker bids I have received are at $30. I haven't accepted because I don't want to take another $20 haircut.

The FDIC decides I can get 6:1 debt:equity on this stuff. So I set up a PPIF and fund it with $5.00. Treasury throws in $5 and the PPIF issues $50 non-recourse debt guaranteed by the FDIC. The PPIF then buys my pool for $60 and presto! I have turned $30 worth of crap into $10 cash ($5 net) and $50 of FDIC guaranteed paper- I don't really care what happens to the PPIF. In the fullness of time it may or may not make money. If it does, I'll get 1/2 of the profits. But it probably won't, so the taxpayer will pick up the tab.

So what's to stop me from putting, say, $8 into the PPIF and bidding $96 for the pool? Treasury is in for $8 and the taxpayer is on the hook for $80 courtesy the FDIC. My bank ends up with $16 in cash ($8 net) and $80 worth of FDIC guaranteed paper and the PPIF can go get stuffed for all I care.

I'm laughing all the way to the bank. Wait, I AM the bank."]]> http://seekingalpha.com/article/125840-choice-hotels-outperforming-its-peers?source=feed#comment-424852 424852
]]> Fri, 13 Mar 2009 14:25:30 -0400
]]> http://seekingalpha.com/article/111807-19-bathwater-babies-for-this-week?source=feed#comment-374832 374832 Tue, 03 Feb 2009 16:51:16 -0500 http://seekingalpha.com/article/117401-revisiting-insurable-interest?source=feed#comment-371215 371215
Also, couching the debate in terms of "insurable interest" is a little misleading, at least to the extent that the author is equating "insurable interest" with "owning the referenced bond or underlying instrument." Insurable interest is a fairly loose concept, and presumably would be satisfied in the CDS context by having sold protection on the referenced instrument, owning equity in the referenced company (if the CDS is on a company), being short puts/long calls on the equity, etc. Permitting someone to buy protection on a company because they were also short equity puts seems to be the sort of speculation the author suggests is bad. Further, it would be very difficult to develop sensible buyer-side regulations that took into account the various ways in which a protection buyer could have an "insurable interest" in the referenced instrument and even more difficult (and expensive) to enforce.

I agree that regulation of CDS is important and needed, but I think the regulation should be focused on protection sellers not protection buyers. ]]> Fri, 30 Jan 2009 12:40:31 -0500
Also, couching the debate in terms of "insurable interest" is a little misleading, at least to the extent that the author is equating "insurable interest" with "owning the referenced bond or underlying instrument." Insurable interest is a fairly loose concept, and presumably would be satisfied in the CDS context by having sold protection on the referenced instrument, owning equity in the referenced company (if the CDS is on a company), being short puts/long calls on the equity, etc. Permitting someone to buy protection on a company because they were also short equity puts seems to be the sort of speculation the author suggests is bad. Further, it would be very difficult to develop sensible buyer-side regulations that took into account the various ways in which a protection buyer could have an "insurable interest" in the referenced instrument and even more difficult (and expensive) to enforce.

I agree that regulation of CDS is important and needed, but I think the regulation should be focused on protection sellers not protection buyers. ]]> http://seekingalpha.com/article/114369-when-bank-of-hawaii-falls-below-52-week-low-it-s-time-to-buy?source=feed#comment-355568 355568
In the end, Hawaii's economy reflects what is happening in the US and Asia, and the signals from both of those markets point strongly down. Those counting on Hawaii's economy being immune from this are akin to those who believed ______________ (fill in market where people in the past have claimed immunity, e.g., Manhattan's real estate market) was immune. It is coming to Hawaii, too, and when it does this stock will be flirting with the lowest of the three Dow downside targets cited by the author.

Long puts. ]]> Wed, 14 Jan 2009 11:41:09 -0500
In the end, Hawaii's economy reflects what is happening in the US and Asia, and the signals from both of those markets point strongly down. Those counting on Hawaii's economy being immune from this are akin to those who believed ______________ (fill in market where people in the past have claimed immunity, e.g., Manhattan's real estate market) was immune. It is coming to Hawaii, too, and when it does this stock will be flirting with the lowest of the three Dow downside targets cited by the author.

Long puts. ]]> http://seekingalpha.com/article/111807-19-bathwater-babies-for-this-week?source=feed#comment-347731 347731 FGP). The company is highly leveraged, with a simple interest coverage ratio of .39 ($9M in operating income and $17M in interest expense), quick ratio of .38 and debt to capital ratio of 101%. In fairness, these figures can be misleading -- but even when you add back in depreciation of $21M, the company still is not generating sufficient cash to cover both interest payments ($17M) and dividends ($32M). The company's dividend doesn't look sustainable -- it appears to have been relying on debt to fund the dividend in recent quarters. I also don't like the heavy reliance on receivable financing via securitizations, which likely is very expensive right now and could spell trouble when customers stop paying their bills. My bet is on a dividend cut within 2 quarters, which is why I am short FGP.
]]> Tue, 06 Jan 2009 14:35:24 -0500 FGP). The company is highly leveraged, with a simple interest coverage ratio of .39 ($9M in operating income and $17M in interest expense), quick ratio of .38 and debt to capital ratio of 101%. In fairness, these figures can be misleading -- but even when you add back in depreciation of $21M, the company still is not generating sufficient cash to cover both interest payments ($17M) and dividends ($32M). The company's dividend doesn't look sustainable -- it appears to have been relying on debt to fund the dividend in recent quarters. I also don't like the heavy reliance on receivable financing via securitizations, which likely is very expensive right now and could spell trouble when customers stop paying their bills. My bet is on a dividend cut within 2 quarters, which is why I am short FGP.
]]> http://seekingalpha.com/article/111103-altria-has-been-great-time-to-exit?source=feed#comment-332050 332050
This makes little sense. The Altria decision was a narrow decision addressing whether a federal law specific to the tobacco industry preempted state deceptive act statutes. First, the decision has no impact on non-tobacco businesses. Second, it does little to change the overall legal environment for tobacco companies as they are already in litigation in all 50 states, facing common law claims that will almost always be in state as opposed to federal courts (assuming compliance with CAFA). Rather than the chicken little assessment offered here, I see it as more of a "heads we win, tails it takes us longer to win" decision, where tails came up. ]]> Wed, 17 Dec 2008 11:10:20 -0500
This makes little sense. The Altria decision was a narrow decision addressing whether a federal law specific to the tobacco industry preempted state deceptive act statutes. First, the decision has no impact on non-tobacco businesses. Second, it does little to change the overall legal environment for tobacco companies as they are already in litigation in all 50 states, facing common law claims that will almost always be in state as opposed to federal courts (assuming compliance with CAFA). Rather than the chicken little assessment offered here, I see it as more of a "heads we win, tails it takes us longer to win" decision, where tails came up. ]]> http://seekingalpha.com/article/108987-brazil-one-of-the-best-opportunities-in-emerging-markets?source=feed#comment-319901 319901 Wed, 03 Dec 2008 11:37:37 -0500 http://seekingalpha.com/article/108727-a-little-known-fact-and-good-news-about-this-crisis?source=feed#comment-319048 319048
First, that the author regards the mortgage income tax deduction as "a little known fact" seems odd -- every real estate agent hypes this benefit.

Second, as noted above, the math is wrong -- the total interest paid on a $1M loan would be about $1.15M, not $1.8M as referenced by the author.

Third, the author disregards the economic distortion of the much larger tax subsidy provided by the up to $500,000 exemption on gains from the sale of a qualifying residence (yes, I realize that $500,000 is nominally lower than $1.15M and the applicable rate would be LTCG, not ordinary income, but the tax benefit is available in the current year, not stretched out over 30 years, and has a much larger emotional component (i.e., "I just got $500,000 tax free!!!!")).

Fourth, although it is often suggested that the tax tail always wags the economic dog, but -- as many of the comments above suggest -- tax implications are but one (often small) factor in determining whether a particular deal makes sense (the prevalence of the rent versus buy calculators available on the internet suggest that people are actually doing the math) -- factors such as equivalent rent and expectations of future asset appreciation or depreciation or rent increases or decreases are far more important.

Fifth, the economic value of the mortgage deduction tax benefit decreases every year as the annual interest paid decreases and inflation increases the spread between the fixed tax benefit and inflation adjusted taxable income (e.g., in 2038, the final year of the hypothetical 30 year mortgage, the borrower would pay only $2000 in interest but presumably (hopefully) would have income far greater than $200,000 -- the deduction would only be worth $800 that year assuming a 40% marginal bracket).

There are many good reasons to buy a house, but anyone who does so based solely on the mortgage interest deduction (to the exclusion of other, more important, factors) is in my view misguided.

Also, in reference to a comment above, mortgage interest isn't a preference item for purposes of the AMT. ]]> Tue, 02 Dec 2008 13:14:59 -0500
First, that the author regards the mortgage income tax deduction as "a little known fact" seems odd -- every real estate agent hypes this benefit.

Second, as noted above, the math is wrong -- the total interest paid on a $1M loan would be about $1.15M, not $1.8M as referenced by the author.

Third, the author disregards the economic distortion of the much larger tax subsidy provided by the up to $500,000 exemption on gains from the sale of a qualifying residence (yes, I realize that $500,000 is nominally lower than $1.15M and the applicable rate would be LTCG, not ordinary income, but the tax benefit is available in the current year, not stretched out over 30 years, and has a much larger emotional component (i.e., "I just got $500,000 tax free!!!!")).

Fourth, although it is often suggested that the tax tail always wags the economic dog, but -- as many of the comments above suggest -- tax implications are but one (often small) factor in determining whether a particular deal makes sense (the prevalence of the rent versus buy calculators available on the internet suggest that people are actually doing the math) -- factors such as equivalent rent and expectations of future asset appreciation or depreciation or rent increases or decreases are far more important.

Fifth, the economic value of the mortgage deduction tax benefit decreases every year as the annual interest paid decreases and inflation increases the spread between the fixed tax benefit and inflation adjusted taxable income (e.g., in 2038, the final year of the hypothetical 30 year mortgage, the borrower would pay only $2000 in interest but presumably (hopefully) would have income far greater than $200,000 -- the deduction would only be worth $800 that year assuming a 40% marginal bracket).

There are many good reasons to buy a house, but anyone who does so based solely on the mortgage interest deduction (to the exclusion of other, more important, factors) is in my view misguided.

Also, in reference to a comment above, mortgage interest isn't a preference item for purposes of the AMT. ]]> http://seekingalpha.com/article/108113-what-obama-needs-to-know-about-tim-geithner-the-aig-fiasco-and-citigroup?source=feed#comment-315696 315696
I think the point of the article goes more to the implications of the policy decisions being made and the potential motivations behind those decisions, not whether the specific numbers cited end up being correct or even reasonable. It would be short sighted to dismiss the article out of hand based on an unfortunate and presumably very embarassing arithmetical error. ]]> Wed, 26 Nov 2008 13:44:49 -0500
I think the point of the article goes more to the implications of the policy decisions being made and the potential motivations behind those decisions, not whether the specific numbers cited end up being correct or even reasonable. It would be short sighted to dismiss the article out of hand based on an unfortunate and presumably very embarassing arithmetical error. ]]> http://seekingalpha.com/article/99967-how-will-arbitron-fare-in-this-market?source=feed#comment-314805 314805
In its 10-Q filed November 5, 2008, the company listed $162M in total assets and $171M in total liabilities as of September 2008. The company is therefore technically insolvent by its own admission. Backing out $38M in goodwill and $1M in intangibles, the company's total liabilities exceed by almost $50M its tangible assets. This apparently has not impacted the company's ability to tap its credit lines, as Arbitron issued $125M in new LTD while paying off only $67M in existing LTD (net increase of $58M in LTD for Q3). The company is still paying its dividend, but it is not clear how much longer its lenders will keep feeding the pig.

In addition to what appears to me to be considerable balance sheet issues, Arbitron also recently lost contracts with Cumulus and Clear Channel to Neilsen. The revenue loss for this is estimated by the company as $7M in 2009 and $10M annualized. Not that big of a deal by itself, but could be indicative that the company faces individualized revenue generating headwinds on top of general market malaise.

Long puts. ]]> Tue, 25 Nov 2008 13:44:49 -0500
In its 10-Q filed November 5, 2008, the company listed $162M in total assets and $171M in total liabilities as of September 2008. The company is therefore technically insolvent by its own admission. Backing out $38M in goodwill and $1M in intangibles, the company's total liabilities exceed by almost $50M its tangible assets. This apparently has not impacted the company's ability to tap its credit lines, as Arbitron issued $125M in new LTD while paying off only $67M in existing LTD (net increase of $58M in LTD for Q3). The company is still paying its dividend, but it is not clear how much longer its lenders will keep feeding the pig.

In addition to what appears to me to be considerable balance sheet issues, Arbitron also recently lost contracts with Cumulus and Clear Channel to Neilsen. The revenue loss for this is estimated by the company as $7M in 2009 and $10M annualized. Not that big of a deal by itself, but could be indicative that the company faces individualized revenue generating headwinds on top of general market malaise.

Long puts. ]]> http://seekingalpha.com/article/101145-argentina-sinking?source=feed#comment-288757 288757 Thu, 23 Oct 2008 11:30:42 -0400 http://seekingalpha.com/article/97359-how-good-are-riskmetrics-tools?source=feed#comment-286441 286441
Actuarial analysis works reasonably well with life insurance, property loss, auto and a few other lines in which you have large, diverse pools of insureds and excellent long-term data. It is less than reliable when it comes to complex types of financial risk (D&O, E&O, surety), especially when the degree to which the individual insured risks will correlate is unknown. That said, and in the perspective of actual insurance (not CDS, which aren't technically "insurance"), $1.5M in premium for up to $1.3B in risk looks very low compared to how other types of complex risk is priced. ]]> Mon, 20 Oct 2008 12:53:01 -0400
Actuarial analysis works reasonably well with life insurance, property loss, auto and a few other lines in which you have large, diverse pools of insureds and excellent long-term data. It is less than reliable when it comes to complex types of financial risk (D&O, E&O, surety), especially when the degree to which the individual insured risks will correlate is unknown. That said, and in the perspective of actual insurance (not CDS, which aren't technically "insurance"), $1.5M in premium for up to $1.3B in risk looks very low compared to how other types of complex risk is priced. ]]> http://seekingalpha.com/article/99967-how-will-arbitron-fare-in-this-market?source=feed#comment-283185 283185
Long puts in ARB and WXS.]]> Wed, 15 Oct 2008 15:59:08 -0400
Long puts in ARB and WXS.]]> http://seekingalpha.com/article/99125-california-canary-in-the-economic-coal-mine?source=feed#comment-278159 278159 www.taxfoundation.org/...); nor do I hear you complaining about California when you are using or benefiting from all of the technology developed in California (biotech, telecomm, networking, defense, etc.); nor do I hear you complain about California when you are eating all of the food grown here. California has its problems (Proposition 13 being one), but I'd rather sink with California when it falls into the sea then be holed up in the 'hollers of West Virgina with the likes of the posters above. ]]> Thu, 09 Oct 2008 17:18:40 -0400 www.taxfoundation.org/...); nor do I hear you complaining about California when you are using or benefiting from all of the technology developed in California (biotech, telecomm, networking, defense, etc.); nor do I hear you complain about California when you are eating all of the food grown here. California has its problems (Proposition 13 being one), but I'd rather sink with California when it falls into the sea then be holed up in the 'hollers of West Virgina with the likes of the posters above. ]]> http://seekingalpha.com/article/98565-the-next-bull-market-could-be-rentals?source=feed#comment-274964 274964 Mon, 06 Oct 2008 15:04:12 -0400 http://seekingalpha.com/article/96819-las-vegas-real-estate-cash-is-king?source=feed#comment-262438 262438 Tue, 23 Sep 2008 10:31:26 -0400 http://seekingalpha.com/article/92370-lax-underwriting-foreclosures-and-credit-crunch-stimulate-misery-industries?source=feed#comment-238768 238768
That prior exchange follows.

I first commented:

The article and comments re modified terms disregard the impact loan recasts and teaser rates are going to have on losses in the Alt-A portfolios. The "payment shock" and related defaults associated with these factors will operate independently of interest rates. Further, because many of the borrowers could not afford the payments on their principal balances if subject to fully amortized payments at market interest rates, loan modification is simply not an option without a principal haircut (which banks don't appear willing to take on a preemptive basis).

You commented:

Uh, speaking as someone on the frontlines? The banks are taking the haircut and writing down the principal, either through short sales or loan mods. It was a good theory though.

I responded:

Uh, Jimmy Lathrop, you think First Fed is going to voluntarily take the 40%-plus haircut required to get the principal balance on this loan (from the WSJ) low enough for Mr. Truong to afford his payment?

"Dien Truong, a 35-year-old, water deliveryman, pulled out $156,000 in cash when FirstFed refinanced the $628,000 mortgage on his Richmond, Calif., home in 2005. Mr. Truong used the money as a down payment on another home and turned the FirstFed home into a rental property. But the $2,500 a month he collects in rent is no longer enough to cover his mortgage payments, which have climbed to roughly $5,100 from $1,618.

FirstFed offered to refinance him into a new loan with payments of roughly $4,250 for the first five years, but Mr. Truong says he can afford only to pay the $2,500 in rental income. Because he has been making the minimum payment, his loan balance has climbed to more than $690,000, which is more than the home is worth.

"I've been a good customer," says Mr. Truong, who hasn't made a loan payment since March. "This time my credit will be screwed up for good." His loan application shows that Mr. Truong and his wife earn $165,000 a year, more than double their actual income, says Katrina Vizinau, a housing counselor with Community Housing Development Corp. of North Richmond. Like Mr. Truong, she says, many borrowers say they didn't read the application until later."

You responded:

MichaelSchmichael - the answer is yes, because they are doing it now, or they are selling the loans to a GSE who will take the loss and let the American taxpayer bail them out until someone dissolves the GSE charters, which will not happen in the near future.

Thoughts?]]> Mon, 25 Aug 2008 16:17:53 -0400
That prior exchange follows.

I first commented:

The article and comments re modified terms disregard the impact loan recasts and teaser rates are going to have on losses in the Alt-A portfolios. The "payment shock" and related defaults associated with these factors will operate independently of interest rates. Further, because many of the borrowers could not afford the payments on their principal balances if subject to fully amortized payments at market interest rates, loan modification is simply not an option without a principal haircut (which banks don't appear willing to take on a preemptive basis).

You commented:

Uh, speaking as someone on the frontlines? The banks are taking the haircut and writing down the principal, either through short sales or loan mods. It was a good theory though.

I responded:

Uh, Jimmy Lathrop, you think First Fed is going to voluntarily take the 40%-plus haircut required to get the principal balance on this loan (from the WSJ) low enough for Mr. Truong to afford his payment?

"Dien Truong, a 35-year-old, water deliveryman, pulled out $156,000 in cash when FirstFed refinanced the $628,000 mortgage on his Richmond, Calif., home in 2005. Mr. Truong used the money as a down payment on another home and turned the FirstFed home into a rental property. But the $2,500 a month he collects in rent is no longer enough to cover his mortgage payments, which have climbed to roughly $5,100 from $1,618.

FirstFed offered to refinance him into a new loan with payments of roughly $4,250 for the first five years, but Mr. Truong says he can afford only to pay the $2,500 in rental income. Because he has been making the minimum payment, his loan balance has climbed to more than $690,000, which is more than the home is worth.

"I've been a good customer," says Mr. Truong, who hasn't made a loan payment since March. "This time my credit will be screwed up for good." His loan application shows that Mr. Truong and his wife earn $165,000 a year, more than double their actual income, says Katrina Vizinau, a housing counselor with Community Housing Development Corp. of North Richmond. Like Mr. Truong, she says, many borrowers say they didn't read the application until later."

You responded:

MichaelSchmichael - the answer is yes, because they are doing it now, or they are selling the loans to a GSE who will take the loss and let the American taxpayer bail them out until someone dissolves the GSE charters, which will not happen in the near future.

Thoughts?]]> http://seekingalpha.com/article/88848-credit-crisis-review-armed-for-failure?source=feed#comment-223692 223692
"Dien Truong, a 35-year-old, water deliveryman, pulled out $156,000 in cash when FirstFed refinanced the $628,000 mortgage on his Richmond, Calif., home in 2005. Mr. Truong used the money as a down payment on another home and turned the FirstFed home into a rental property. But the $2,500 a month he collects in rent is no longer enough to cover his mortgage payments, which have climbed to roughly $5,100 from $1,618.

FirstFed offered to refinance him into a new loan with payments of roughly $4,250 for the first five years, but Mr. Truong says he can afford only to pay the $2,500 in rental income. Because he has been making the minimum payment, his loan balance has climbed to more than $690,000, which is more than the home is worth.

"I've been a good customer," says Mr. Truong, who hasn't made a loan payment since March. "This time my credit will be screwed up for good." His loan application shows that Mr. Truong and his wife earn $165,000 a year, more than double their actual income, says Katrina Vizinau, a housing counselor with Community Housing Development Corp. of North Richmond. Like Mr. Truong, she says, many borrowers say they didn't read the application until later."

]]> Wed, 06 Aug 2008 00:44:47 -0400
"Dien Truong, a 35-year-old, water deliveryman, pulled out $156,000 in cash when FirstFed refinanced the $628,000 mortgage on his Richmond, Calif., home in 2005. Mr. Truong used the money as a down payment on another home and turned the FirstFed home into a rental property. But the $2,500 a month he collects in rent is no longer enough to cover his mortgage payments, which have climbed to roughly $5,100 from $1,618.

FirstFed offered to refinance him into a new loan with payments of roughly $4,250 for the first five years, but Mr. Truong says he can afford only to pay the $2,500 in rental income. Because he has been making the minimum payment, his loan balance has climbed to more than $690,000, which is more than the home is worth.

"I've been a good customer," says Mr. Truong, who hasn't made a loan payment since March. "This time my credit will be screwed up for good." His loan application shows that Mr. Truong and his wife earn $165,000 a year, more than double their actual income, says Katrina Vizinau, a housing counselor with Community Housing Development Corp. of North Richmond. Like Mr. Truong, she says, many borrowers say they didn't read the application until later."

]]> http://seekingalpha.com/article/88848-credit-crisis-review-armed-for-failure?source=feed#comment-222495 222495 Mon, 04 Aug 2008 13:53:58 -0400 http://seekingalpha.com/article/85068-the-real-cost-of-the-agency-guarantee?source=feed#comment-206905 206905 Wed, 16 Jul 2008 11:29:13 -0400 http://seekingalpha.com/article/83886-abb-perfectly-positioned-to-benefit-from-global-infrastructure-boom?source=feed#comment-200158 200158
China, Russia and the Middle East certainly certainly have sufficient public funds for infrastructure investment, but LatAm is looking a little less promising (e.g., recent public finance issues, currency action and lower house passage of export tax in Argentina is likely to dampen investment activity). The US and Europe appear to have public finance constraints that will (or at least should) limit public spending. Where is the money going to come from -- PPP? Which banks have the capital to do these big deals? Even if the financing issues are resolved, large infrastructure investment would exacerbate the inflation problems through increased basic material demand and elevated employment. I would appreciate your thoughts on those issues.

Also, I am curious -- in your bio you reference your accurate prediction of a currency crisis in Argentina sometime in 1994 or 1995. I was aware of some limited contagion in Argentina in 1994 and 1995 from the Mexican crisis, but was unaware of a currency crisis in Argentina in that timeframe (certainly aware of the 2001 devaluation, though). To what 1994 or 1995 Argentine crisis are you referring?

Saludos. ]]> Mon, 07 Jul 2008 17:10:19 -0400
China, Russia and the Middle East certainly certainly have sufficient public funds for infrastructure investment, but LatAm is looking a little less promising (e.g., recent public finance issues, currency action and lower house passage of export tax in Argentina is likely to dampen investment activity). The US and Europe appear to have public finance constraints that will (or at least should) limit public spending. Where is the money going to come from -- PPP? Which banks have the capital to do these big deals? Even if the financing issues are resolved, large infrastructure investment would exacerbate the inflation problems through increased basic material demand and elevated employment. I would appreciate your thoughts on those issues.

Also, I am curious -- in your bio you reference your accurate prediction of a currency crisis in Argentina sometime in 1994 or 1995. I was aware of some limited contagion in Argentina in 1994 and 1995 from the Mexican crisis, but was unaware of a currency crisis in Argentina in that timeframe (certainly aware of the 2001 devaluation, though). To what 1994 or 1995 Argentine crisis are you referring?

Saludos. ]]> http://seekingalpha.com/article/77555-imperial-sugar-insurance-coverage-adequate-to-rebuild?source=feed#comment-169138 169138 Fri, 16 May 2008 20:07:43 -0400 http://seekingalpha.com/article/73552-the-impending-mortgage-crisis?source=feed#comment-156959 156959
"Who exactly would do that? Walk away when one can still make payments, because of perceived "negative equity" which in the case of most homeowners will be a temporary condition? No one I know. That is patently idiotic. To summarize, your primary "fear" is that people will ruin themselves financially for years to come, by turning in the keys to their homes - EVEN THOUGH THEY CAN STILL AFFORD THE PAYMENTS AND OTHERWISE HAD NO INTENTION OF SELLING - simply because this market's fewer sales, at depressed prices, intimates to them that they presently have no equity?"

Lots of people do that which you call "patently idiotic" -- it is being mentioned practically every day in the news. It is happening so frequently that there is a cute term for it: "jingle mail." Look here:

seekingalpha.com/artic...

Or you can google "jingle mail."

You should really get out more, even Fox news (of which you are no doubt a fan) covers the problem of "jingle mail."

Smart or not, it is happening. ]]> Fri, 25 Apr 2008 22:58:25 -0400
"Who exactly would do that? Walk away when one can still make payments, because of perceived "negative equity" which in the case of most homeowners will be a temporary condition? No one I know. That is patently idiotic. To summarize, your primary "fear" is that people will ruin themselves financially for years to come, by turning in the keys to their homes - EVEN THOUGH THEY CAN STILL AFFORD THE PAYMENTS AND OTHERWISE HAD NO INTENTION OF SELLING - simply because this market's fewer sales, at depressed prices, intimates to them that they presently have no equity?"

Lots of people do that which you call "patently idiotic" -- it is being mentioned practically every day in the news. It is happening so frequently that there is a cute term for it: "jingle mail." Look here:

seekingalpha.com/artic...

Or you can google "jingle mail."

You should really get out more, even Fox news (of which you are no doubt a fan) covers the problem of "jingle mail."

Smart or not, it is happening. ]]> http://seekingalpha.com/article/73552-the-impending-mortgage-crisis?source=feed#comment-156958 156958
"Who exactly would do that? Walk away when one can still make payments, because of perceived "negative equity" which in the case of most homeowners will be a temporary condition? No one I know. That is patently idiotic. To summarize, your primary "fear" is that people will ruin themselves financially for years to come, by turning in the keys to their homes - EVEN THOUGH THEY CAN STILL AFFORD THE PAYMENTS AND OTHERWISE HAD NO INTENTION OF SELLING - simply because this market's fewer sales, at depressed prices, intimates to them that they presently have no equity?"

Lots of people -- it is being mentioned practically every day in the news. It is happening so much that there is a cute term for it: "jingle mail." Look here:

seekingalpha.com/artic...

Or you can google "jingle mail."

You should really get out more, even Fox news (of which you are no doubt a fan) covers the problem of "jingle mail." ]]> Fri, 25 Apr 2008 22:56:08 -0400
"Who exactly would do that? Walk away when one can still make payments, because of perceived "negative equity" which in the case of most homeowners will be a temporary condition? No one I know. That is patently idiotic. To summarize, your primary "fear" is that people will ruin themselves financially for years to come, by turning in the keys to their homes - EVEN THOUGH THEY CAN STILL AFFORD THE PAYMENTS AND OTHERWISE HAD NO INTENTION OF SELLING - simply because this market's fewer sales, at depressed prices, intimates to them that they presently have no equity?"

Lots of people -- it is being mentioned practically every day in the news. It is happening so much that there is a cute term for it: "jingle mail." Look here:

seekingalpha.com/artic...

Or you can google "jingle mail."

You should really get out more, even Fox news (of which you are no doubt a fan) covers the problem of "jingle mail." ]]>