Frank Lind

Global Payments Inc.: Moving Money to Make Money

Paul,
A risk with GPN [as argued by Morningstar] is their use of independent sales organizations {ISOs] means over the long term margins might be squeezed.
Any comment in that regard?

Thanks in advance

Will Someone Remove Geithner from the Poker Table, Please?

You, and several of the other scare quote progressives here, would be a lot more convincing to me on this topic--and most others--if so much of what you propose wasn't so in-my-face obviously based upon emotion and, in particular, rage and a deep emotional need for retribution. Rightly or wrongly, it really does seem to me, as a reader, that you get so furious at the mere thought that anyone in the world of finance might make money out of a plan for recovery that it causes you to instantly reject the possibility that such a plan could work.

God knows I've got my own anger control demons to deal with on a daily basis, so, in justice, I have little room to criticize. Indeed, I have been known to type the occaisional harsh comment myself. (Like, say, this one.) I'm just noting that it rather seriously undermines the reader's ability to put a lot of stock in your judgment in an argument that is, in the end, about judgment.

And make no mistake, that's what this argument is about: judgment and only judgment. A lot of people--Krugman and economists in general most particularly--talk like the consequences of implementing policy A vs. policy B can be fortold like Hari Seldon mathematically deriving the future in the Foundation novels. In fact, no one knows. All one can do is assess risk--a judgment call because the risks cannot be meaningfully quantified--and take action based on one's evaluation of those risks, another judgment call.

You may be right. The Administration's policy may lead to disaster and the one you favor, whatever that is, might lead to some glorious utopia. But it is also at least possible that you, and all those denizens of Akadame whom you cite are the ones who are disasterously wrong--because ivory tower experts may, in fact, have been wrong about something at some time past--and the plan proposed by the administration might somehow, by some miricle, stumble bassackwards into success.

It's the failure of many engaging in the discussion of economic policy here to acknowledge, at least implicitly through tone, the possibility that they might be wrong that disturbs me. That, and the increasingly common attacks on the good faith, motices, and intelligence, the apparant believe that one's own viewpoint is so self-evidently true and good and right that anyone opposing it must be evil.

If I wanted iron certitude that increased in inverse proportion to its relevance to the speaker's area of expertise, I'd have gotten a teaching job somewhere so I could attend faculty meetings.

The Geithner Plan FAQ

You, and several of the other scare quote progressives here, would be a lot more convincing to me on this topic--and most others--if so much of what you propose wasn't so in-my-face obviously based upon emotion and, in particular, rage and a deep emotional need for retribution. Rightly or wrongly, it really does seem to me, as a reader, that you get so furious at the mere thought that anyone in the world of finance might make money out of a plan for recovery that it causes you to instantly reject the possibility that such a plan could work.

God knows I've got my own anger control demons to deal with on a daily basis, so, in justice, I have little room to criticize. Indeed, I have been known to type the occaisional harsh comment myself. (Like, say, this one.) I'm just noting that it rather seriously undermines the reader's ability to put a lot of stock in your judgment in an argument that is, in the end, about judgment.

And make no mistake, that's what this argument is about: judgment and only judgment. A lot of people--Krugman and economists in general most particularly--talk like the consequences of implementing policy A vs. policy B can be fortold like Hari Seldon mathematically deriving the future in the Foundation novels. In fact, no one knows. All one can do is assess risk--a judgment call because the risks cannot be meaningfully quantified--and take action based on one's evaluation of those risks, another judgment call.

You may be right. The Administration's policy may lead to disaster and the one you favor, whatever that is, might lead to some glorious utopia. But it is also at least possible that you, and all those denizens of Akadame whom you cite are the ones who are disasterously wrong--because ivory tower experts may, in fact, have been wrong about something at some time past--and the plan proposed by the administration might somehow, by some miricle, stumble bassackwards into success.

It's the failure of many engaging in the discussion of economic policy here to acknowledge, at least implicitly through tone, the possibility that they might be wrong that disturbs me. That, and the increasingly common attacks on the good faith, motices, and intelligence, the apparant believe that one's own viewpoint is so self-evidently true and good and right that anyone opposing it must be evil.

If I wanted iron certitude that increased in inverse proportion to its relevance to the speaker's area of expertise, I'd have gotten a teaching job somewhere so I could attend faculty meetings.

The Geithner Plan FAQ

Here's what I don't get about the argument Krugman's been hammering for weeks now. He says the banks that own a lot of CDO's are "zombie banks" that must be killed, purified and then, uh, reanimated, which makes the zombie metaphor kind of a dead end. But I digress.

In Krugman's argument, the CDO's are next to worthless, because a thing is only worth what someone will pay for it and no one will pay much of anything for CDO's of any kind right now. In a real sense, that is true, but it's true because it is a definional tautology. "What someone will pay" is a definition for "worth," therefore a think no one will pay much for is next to worthless.

The unstated assumption in that definitonal tautology however, is that the information upon which the market's valuation of the asset is based is both rational and factually correct.

And that's where I have a problem with Krugman's argument. By insisting that these assets are intrinsically and irrecoverably worthless such that Citibank must be burned, razed and sown with salt, he's implicitly stating that the market's valuation of Citi's CDO's is rational and that' market's information is correct. The problem is that this means he is pinning his entire arugment upon a current valuation made by the very same market thatcaused this problem by overvalued these same assets based upon what everyone now acknowledges was irrationality and information that was more delusion than data.

So upon what basis does Krugman now contend that that market now has more and better data and a better emotional control than it did when it was bidding these things up into the stratosphere? He doesn't say--and indeed conspicuiously ignores this whole issue.`Instead, we get sneering about "misunderstood assets."

Some of these assets have to have still be producing income. Indeed, given some of them have to be producing 100% of the income they were expected to produce. That's the way their structured. An issue of bonds gets paid from the stream of revenue from a particular pool of mortgages. The class A bonds get first dibs on that income, the Class B bonds get paid from what's left over after the A's are paid and the C bonds get whatever's left after the B's are paid, and so on. Unless the foreclosure rate in the pool of mortages backing the debt is 100%, the A's have to be getting paid in full. Given the rate's I'm seeing in the paper, the B's are almost certainly paying back at 100%. And, indeed, the "C" must be getting something, though less than 100%.

Appraisors, accountants and lawyers routinely use measurements of value other than mere market value. In particular, appraisors, accountants and lawyers often value assets for which there is no ready market using the income approach. The CDO's--even the really, super crappy sub-prime backed CDOs--are generating income. Again, I know this because the mortgage default rate is not close to 100%. So they have value. The problem, as I understand it, is that no one is buying even the decent respectable Class A and B CDO's backed by 30 year, high down payment mortgages because they do not do not know how bad the foreclosure is going to get and thus cannot figure out how much to pay for them.

And that leads me to the other thing I don't get about Krugman's--and, especially the scare quote progressives nationalize/recieversh... argument.

What do they propose do do with these assets after they nationalize the banks? Sell them for whatever anyone will pay right now? Now that's a prescription for rewarding the evildoers--they'll buy them up for a song and profit handsomely when the economy turns around, default rates bottom and market values can again be determined. Transfer them to the government for value? Why would you do that? Aren't they "toxic" and "worthless?" Transfer them to the government for nothing? Doh! Stupid Fifth Amendment!

Top Turkeys of 2008

A group of idiots who have not been mentioned are the American people for not saving anything and going into so much debt to finance their excessive consumption, riding the housing boom themselves and not planning for a rainy day.

Wal-Mart's Expands $4 Drug List, Puts Pressure on Drug Store Chains

Disagree.
The moat of pharmacies are their convenience. In actual fact WMT has taken very little market share from WAG and CVS.