Bruce Krasting's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/190260/comments http://seekingalpha.com/article/181424/comments?source=feed#comment-837931 837931
The future on this is not clear at all. I am concerned about what the "fixes" may do to the real economy. The better the fix, the bigger the drag on the economy. So we face hard choices.

Roger is correct in his advise. If you are 55 or under I would not count on SS as we now know it. ]]> Thu, 07 Jan 2010 11:11:01 -0500
The future on this is not clear at all. I am concerned about what the "fixes" may do to the real economy. The better the fix, the bigger the drag on the economy. So we face hard choices.

Roger is correct in his advise. If you are 55 or under I would not count on SS as we now know it. ]]> http://seekingalpha.com/article/181136/comments?source=feed#comment-836354 836354
I will keep you updated.]]> Wed, 06 Jan 2010 15:27:19 -0500
I will keep you updated.]]> http://seekingalpha.com/article/181136/comments?source=feed#comment-836352 836352
With a number like that it's hard to avoid the elephant.]]> Wed, 06 Jan 2010 15:25:51 -0500
With a number like that it's hard to avoid the elephant.]]> http://seekingalpha.com/article/181136/comments?source=feed#comment-836330 836330
You want Payroll Taxes to go up by 2%?? To pay for Bill Gates's SS check??. That is a bad plan.

This is not mean. It is fair.
the 'Meanie']]> Wed, 06 Jan 2010 15:15:12 -0500
You want Payroll Taxes to go up by 2%?? To pay for Bill Gates's SS check??. That is a bad plan.

This is not mean. It is fair.
the 'Meanie']]> http://seekingalpha.com/article/181136/comments?source=feed#comment-836317 836317
But Woodsey do you (after retirement) make more than $100k a year? If not then don't worry. This approach protects you. If you will be making more than $100k (again after you lay back) then you shouldn't complain. You are doing great. You don't need the extra 1,000 a month do you?

Just asking.]]> Wed, 06 Jan 2010 15:09:59 -0500
But Woodsey do you (after retirement) make more than $100k a year? If not then don't worry. This approach protects you. If you will be making more than $100k (again after you lay back) then you shouldn't complain. You are doing great. You don't need the extra 1,000 a month do you?

Just asking.]]> http://seekingalpha.com/article/180994/comments?source=feed#comment-835531 835531
How can you look at this and make a conclusion? You are relying on the past. But there is something very new today which negates the past. The Fed is manipulating this. We have never had a situation like this before. When have we had "0" rates??

The past is a good place to look for clues to the future. But only when the Present mirrors the past. There is nothing typical about the current interest rates.

I much more reasonable level for the funds rate today would be 3%. The economy is growing at about that rate, so if anything that funds rate is low by historical standards. The yield curve would be much flatter now if the Fed were not manipulating things to the extent of $2 trillion.

Do you wake up everyday and search for something positive to say? Come over to the dark side. There is not much good news out there. The status of the yield curve is not a green shoot.]]> Wed, 06 Jan 2010 09:32:47 -0500
How can you look at this and make a conclusion? You are relying on the past. But there is something very new today which negates the past. The Fed is manipulating this. We have never had a situation like this before. When have we had "0" rates??

The past is a good place to look for clues to the future. But only when the Present mirrors the past. There is nothing typical about the current interest rates.

I much more reasonable level for the funds rate today would be 3%. The economy is growing at about that rate, so if anything that funds rate is low by historical standards. The yield curve would be much flatter now if the Fed were not manipulating things to the extent of $2 trillion.

Do you wake up everyday and search for something positive to say? Come over to the dark side. There is not much good news out there. The status of the yield curve is not a green shoot.]]> http://seekingalpha.com/article/180613/comments?source=feed#comment-835428 835428
I will work on that aspect. But I don't see that being an issue in the NOLA suit I refer to. ]]> Wed, 06 Jan 2010 08:49:20 -0500
I will work on that aspect. But I don't see that being an issue in the NOLA suit I refer to. ]]> http://seekingalpha.com/article/180571/comments?source=feed#comment-829992 829992
A real return on my investment.


On Jan 02 05:58 PM optionsgirl wrote:

> www.slate.com/id/2236836]]> Sat, 02 Jan 2010 20:51:18 -0500
A real return on my investment.


On Jan 02 05:58 PM optionsgirl wrote:

> www.slate.com/id/2236836]]> http://seekingalpha.com/article/180571/comments?source=feed#comment-829834 829834

On Jan 02 01:23 PM optionsgirl wrote:

> spot on article. what do you plan to do defensively?]]> Sat, 02 Jan 2010 16:51:08 -0500

On Jan 02 01:23 PM optionsgirl wrote:

> spot on article. what do you plan to do defensively?]]> http://seekingalpha.com/article/179505/comments?source=feed#comment-818501 818501
Why? Because all of our big programs, SS Medicare, the deficit and debt ratio all assume we grow steady and big. A 3% growth rate implies that economic activity is expanding by about $400b per year. We need that to pay for all the intervention we are doing today.

I think we are trying to grow faster than the laws of economics will allow. We are not such a young country anymore. We have an aging population and a mature economy. We can't grow anymore at 3%. But we sure are trying to get there. I do not think we will succeed. I think a growth rate of 1% is more realistic for the next decade.

If you think that is a reasonable assumption then you can just write off the US for a while. The growing liabilities will take us to Argentina in about 4 years from now.

You can't make this thing run a marathon at speed any longer. But I think we might die trying.]]> Wed, 23 Dec 2009 08:33:21 -0500
Why? Because all of our big programs, SS Medicare, the deficit and debt ratio all assume we grow steady and big. A 3% growth rate implies that economic activity is expanding by about $400b per year. We need that to pay for all the intervention we are doing today.

I think we are trying to grow faster than the laws of economics will allow. We are not such a young country anymore. We have an aging population and a mature economy. We can't grow anymore at 3%. But we sure are trying to get there. I do not think we will succeed. I think a growth rate of 1% is more realistic for the next decade.

If you think that is a reasonable assumption then you can just write off the US for a while. The growing liabilities will take us to Argentina in about 4 years from now.

You can't make this thing run a marathon at speed any longer. But I think we might die trying.]]> http://seekingalpha.com/article/177897/comments?source=feed#comment-814194 814194
There is no adjustment mechanism in the Euro structure. There has to be one. The issues for Greece/Spain etal will not go a way if they have to stand up to the economic clout of Germany. That is not going to work.

There has to be a two tiered Euro. One weak one strong. One North one South. I recognize the complexity of this suggestion. I understand the implications to the debt side of the equation. I admit I do not have a ready solution for these issues. But just because it is costly and complicated does not mean it shouldn't be considered.

Mr. Harison suggests there are numerous alternatives that should be considered. Please name one that would work.

This train is coming whether you like it or not. It would be better to address it while there is a degree of stability. To do it in a crisis atmosphere will cost us all dearly.]]> Sun, 20 Dec 2009 08:45:36 -0500
There is no adjustment mechanism in the Euro structure. There has to be one. The issues for Greece/Spain etal will not go a way if they have to stand up to the economic clout of Germany. That is not going to work.

There has to be a two tiered Euro. One weak one strong. One North one South. I recognize the complexity of this suggestion. I understand the implications to the debt side of the equation. I admit I do not have a ready solution for these issues. But just because it is costly and complicated does not mean it shouldn't be considered.

Mr. Harison suggests there are numerous alternatives that should be considered. Please name one that would work.

This train is coming whether you like it or not. It would be better to address it while there is a degree of stability. To do it in a crisis atmosphere will cost us all dearly.]]> http://seekingalpha.com/article/179020/comments?source=feed#comment-814185 814185
This issue is a canard. The Agencies have NO limits on the size of their guarantee book. That is what is growing. The balance sheet limitations are meaningless.]]> Sun, 20 Dec 2009 08:27:19 -0500
This issue is a canard. The Agencies have NO limits on the size of their guarantee book. That is what is growing. The balance sheet limitations are meaningless.]]> http://seekingalpha.com/article/178823/comments?source=feed#comment-814178 814178
As of today there is about 10 billion in shares in Treasuries hands. They have promised that these shares will be sold in 2010. The break even price is about $3.25 per share. Pretty much where the market is today.

Jim, you have been doing this a long time now. You are making this kind of recommendation when you know there is a 10b share seller? And that seller has said they would sell in less than 12 months? Come on.

I think that C may be worth more than $3.15, but really, where is the upside? There are dozens of things for your listeners to invest in that actually have a real upside. You working for C or MS on this one?]]> Sun, 20 Dec 2009 08:21:29 -0500
As of today there is about 10 billion in shares in Treasuries hands. They have promised that these shares will be sold in 2010. The break even price is about $3.25 per share. Pretty much where the market is today.

Jim, you have been doing this a long time now. You are making this kind of recommendation when you know there is a 10b share seller? And that seller has said they would sell in less than 12 months? Come on.

I think that C may be worth more than $3.15, but really, where is the upside? There are dozens of things for your listeners to invest in that actually have a real upside. You working for C or MS on this one?]]> http://seekingalpha.com/article/178374/comments?source=feed#comment-808398 808398
I would not want to sell $25b of common in that environment. That could cause a panic in the wrong market. There is a very good chance that these deal does not happen in a way that the taxpayers get their money back. My definition for when C is out of TARP is when the taxpayers get paid back. In full. That is not the decision that Treasury has made. We should be angry that we are still at risk while the bonuses flow.


On Dec 16 05:58 AM Angry Banker wrote:

> Citi doesn't have to "pay back" the $25 billion. This $25 billion
> is basically common stock that the US Government owns and will be
> selling over the next 12 months. Assuming the government sells this
> common stock at more than $3.25 per share, it will in fact be making
> a profit on its investment (which it should have started doing when
> Citi was trading above $5 not long ago!).]]> Wed, 16 Dec 2009 11:02:50 -0500
I would not want to sell $25b of common in that environment. That could cause a panic in the wrong market. There is a very good chance that these deal does not happen in a way that the taxpayers get their money back. My definition for when C is out of TARP is when the taxpayers get paid back. In full. That is not the decision that Treasury has made. We should be angry that we are still at risk while the bonuses flow.


On Dec 16 05:58 AM Angry Banker wrote:

> Citi doesn't have to "pay back" the $25 billion. This $25 billion
> is basically common stock that the US Government owns and will be
> selling over the next 12 months. Assuming the government sells this
> common stock at more than $3.25 per share, it will in fact be making
> a profit on its investment (which it should have started doing when
> Citi was trading above $5 not long ago!).]]> http://seekingalpha.com/article/177790/comments?source=feed#comment-802855 802855
The cost of ownership for housing is very high. You get paid to own stocks. So stocks are a better bet.

Is owning housing an investment? Maybe for some people. When we turned it into an investment we toppled the first domino.]]> Sat, 12 Dec 2009 10:54:12 -0500
The cost of ownership for housing is very high. You get paid to own stocks. So stocks are a better bet.

Is owning housing an investment? Maybe for some people. When we turned it into an investment we toppled the first domino.]]> http://seekingalpha.com/article/177291/comments?source=feed#comment-797834 797834
What's another $25 b? It is a rounding error. We never get a rounding error that is smaller. $25 here $25 b there. Pretty soon we get to big numbers.]]> Wed, 09 Dec 2009 09:25:27 -0500
What's another $25 b? It is a rounding error. We never get a rounding error that is smaller. $25 here $25 b there. Pretty soon we get to big numbers.]]> http://seekingalpha.com/article/176621/comments?source=feed#comment-791510 791510
-It is a medium of exchange for all cross border trade and finance. The $ does a great job at this role.

-It is a story of wealth. The dollar does a terrible job at this. Take a look at currency rates from 1945 to date. It begs the question"who won that war".

In ten years their will be 10 currencies that work as a store of global wealth. We will have earned our fall from grace.]]> Sat, 05 Dec 2009 09:26:41 -0500
-It is a medium of exchange for all cross border trade and finance. The $ does a great job at this role.

-It is a story of wealth. The dollar does a terrible job at this. Take a look at currency rates from 1945 to date. It begs the question"who won that war".

In ten years their will be 10 currencies that work as a store of global wealth. We will have earned our fall from grace.]]> http://seekingalpha.com/article/175980/comments?source=feed#comment-786360 786360 That is correct. But what is the time table for measuring this? Six months? A year? We have seen that QE works. And if Bernanke persists it will continue to have a short term beneficial impact.

But six months means nothing in terms of success. A better question is where will be in 5 years or even 10. For me there is no question but that QE will destroy us if sustained. There is a growing awareness of that in the markets. It is distrust of US policy that gets gold to 1200. Not inflation.

Will the markets force Bernanke's hand? That is my contention. If he ignore the markets signals then he risks the wrath of the market. Keep in mind that we have to sell $1 t in new debt every year for the next decade. That will not happen in an environment of distrust.


On Dec 01 09:54 PM Laundry Analyst wrote:

> Could you explain why you think the Fed would give up QE if gold
> gets to 1200 and the Euro reaches 1.5 and the Yen is at 85.
>
> To me, Fed would give up QE only if they are confident enough about
> an economic recovery - which is not yet happening.]]> Wed, 02 Dec 2009 10:26:40 -0500 That is correct. But what is the time table for measuring this? Six months? A year? We have seen that QE works. And if Bernanke persists it will continue to have a short term beneficial impact.

But six months means nothing in terms of success. A better question is where will be in 5 years or even 10. For me there is no question but that QE will destroy us if sustained. There is a growing awareness of that in the markets. It is distrust of US policy that gets gold to 1200. Not inflation.

Will the markets force Bernanke's hand? That is my contention. If he ignore the markets signals then he risks the wrath of the market. Keep in mind that we have to sell $1 t in new debt every year for the next decade. That will not happen in an environment of distrust.


On Dec 01 09:54 PM Laundry Analyst wrote:

> Could you explain why you think the Fed would give up QE if gold
> gets to 1200 and the Euro reaches 1.5 and the Yen is at 85.
>
> To me, Fed would give up QE only if they are confident enough about
> an economic recovery - which is not yet happening.]]> http://seekingalpha.com/article/175476/comments?source=feed#comment-779866 779866
bk]]> Fri, 27 Nov 2009 14:35:31 -0500
bk]]> http://seekingalpha.com/article/174737/comments?source=feed#comment-776744 776744
Are you kidding? That is not at all what the President should do. Nor is it what he will do.

What the President should do is withdraw his support for Bernanke. The Fed has become the lightning rod for everything that is going wrong. For good reason.

He has very little support for his QE/zero interest rate policy. The markets are reacting. Do you think it is a good thing to wake up and see the $ lower and gold higher every day?

Maybe you are short the $ and long gold and making money and cheering this on. Trust me. QE will end very badly. There will be no winners. We will all lose and BB will take the fall. As he should.

Our whole system is baed on the notion that fiat money has value. Benranke is doing his best to prove that is does not. Unfortunately we do have a fiat system., and Bernanke is going to break it.]]> Wed, 25 Nov 2009 08:39:54 -0500
Are you kidding? That is not at all what the President should do. Nor is it what he will do.

What the President should do is withdraw his support for Bernanke. The Fed has become the lightning rod for everything that is going wrong. For good reason.

He has very little support for his QE/zero interest rate policy. The markets are reacting. Do you think it is a good thing to wake up and see the $ lower and gold higher every day?

Maybe you are short the $ and long gold and making money and cheering this on. Trust me. QE will end very badly. There will be no winners. We will all lose and BB will take the fall. As he should.

Our whole system is baed on the notion that fiat money has value. Benranke is doing his best to prove that is does not. Unfortunately we do have a fiat system., and Bernanke is going to break it.]]> http://seekingalpha.com/article/174643/comments?source=feed#comment-776647 776647
This stuff works? Sure it does, but just for a short while. Then the pain begins.

These things do not work for us. They hurt us. They are the drugs that we are addicted to. They are killing us.]]> Wed, 25 Nov 2009 08:23:28 -0500
This stuff works? Sure it does, but just for a short while. Then the pain begins.

These things do not work for us. They hurt us. They are the drugs that we are addicted to. They are killing us.]]> http://seekingalpha.com/article/174965/comments?source=feed#comment-774945 774945
The CB's just swapped their holdings of Fannie and Freddie paper for direct Treasury obligations. So really they have not increased their holdings as you suggest.]]> Tue, 24 Nov 2009 08:42:41 -0500
The CB's just swapped their holdings of Fannie and Freddie paper for direct Treasury obligations. So really they have not increased their holdings as you suggest.]]> http://seekingalpha.com/article/174461/comments?source=feed#comment-770392 770392
We have laws on this. The Treasury debt ceiling is a real deal.

If the US woke up one morning and said, "The hell with the ceiling, we are just going to issue debt and ignore the limits", we would have an immediate crisis on our hands. Gold would jump to 2000, bonds would collapse and the dollar would just get beat to hell.

That is not going to happen. There may be some noise and arguments about this but the debt ceiling will be raised again. Count on it.]]> Sat, 21 Nov 2009 09:23:38 -0500
We have laws on this. The Treasury debt ceiling is a real deal.

If the US woke up one morning and said, "The hell with the ceiling, we are just going to issue debt and ignore the limits", we would have an immediate crisis on our hands. Gold would jump to 2000, bonds would collapse and the dollar would just get beat to hell.

That is not going to happen. There may be some noise and arguments about this but the debt ceiling will be raised again. Count on it.]]> http://seekingalpha.com/article/174501/comments?source=feed#comment-768599 768599 Fri, 20 Nov 2009 08:03:45 -0500 http://seekingalpha.com/article/170659/comments?source=feed#comment-752122 752122
There is no one that looks like that but GS and Buffett. Sorry, no auction.


On Nov 02 11:56 PM RK wrote:

> I am not familiar with the complexity of the deal. Why can't AIG
> just auction off the tax credit? On the other hand, I am enjoying
> seeing how the government runs GM, Chrysler, AIG, Fannie, Freddie
> and Citi. While I am sure it will not be good for these companies,
> perhaps the rest of the country and the pols will learn a lesson
> and think twice about having the government be a majority shareholder.
>
>
> If I were an employee (especially a valuable employee) at these companies,
> I would bail.]]> Mon, 09 Nov 2009 08:25:17 -0500
There is no one that looks like that but GS and Buffett. Sorry, no auction.


On Nov 02 11:56 PM RK wrote:

> I am not familiar with the complexity of the deal. Why can't AIG
> just auction off the tax credit? On the other hand, I am enjoying
> seeing how the government runs GM, Chrysler, AIG, Fannie, Freddie
> and Citi. While I am sure it will not be good for these companies,
> perhaps the rest of the country and the pols will learn a lesson
> and think twice about having the government be a majority shareholder.
>
>
> If I were an employee (especially a valuable employee) at these companies,
> I would bail.]]> http://seekingalpha.com/article/170530/comments?source=feed#comment-741356 741356 Mon, 02 Nov 2009 18:30:04 -0500 http://seekingalpha.com/article/170306/comments?source=feed#comment-739585 739585
The average mortgage is 200k. Assume the INCREMENTAL cost of dumping these into the market is $10,000. There is a minimum of 4MM of these. I think it is much bigger. My guess is it is 8mm.

That is $80 billion. We could use that money. It is 10% of the deficit.


On Nov 01 09:56 AM the gerald wrote:

> is it possible that the Hampton GA holding is just too small and
> too far away to muck with?
>
> there is question as to how to go about maximizing these sales of
> small value. time may cost more than sale price lost.
>
> how many bodies for how long can be assigned to enhance the sales
> of the 78 houses by say 10 grand.(780,000)?]]> Sun, 01 Nov 2009 16:43:25 -0500
The average mortgage is 200k. Assume the INCREMENTAL cost of dumping these into the market is $10,000. There is a minimum of 4MM of these. I think it is much bigger. My guess is it is 8mm.

That is $80 billion. We could use that money. It is 10% of the deficit.


On Nov 01 09:56 AM the gerald wrote:

> is it possible that the Hampton GA holding is just too small and
> too far away to muck with?
>
> there is question as to how to go about maximizing these sales of
> small value. time may cost more than sale price lost.
>
> how many bodies for how long can be assigned to enhance the sales
> of the 78 houses by say 10 grand.(780,000)?]]> http://seekingalpha.com/article/170306/comments?source=feed#comment-739574 739574
If one does a short sale or a deed in lieu transaction (walks on the property) they will have a six month blemish. They will also (maybe) still have some money in the bank. The ten year horizon you point to is too far. 2-3 years is more likely.

RE will recover some day. I don't see any upside for some years yet. Too much damage has been done. The Feds are 95% of the new mortgage market. That can not last for long. It will destroy us. When they step back there will be a shortage of mortgage credit. It does not add up to a win to me.

You also have the issue of demographics. Lots of boomers downsizing for the next decade or so.

I have a piece coming out tomorrow about the GSEs that touches on this. Thanks for reading.
bk


On Nov 01 01:21 PM jimmy46 wrote:

> We know that the biggest source of default in the current cycle is
> that borrowers are so far underwater they have no economic incentive
> to pay. So they don’t.""""
>
> That's like saying those people who had stock losses last March should
> have sold at the bottom of the market.
> RE will rebound, just like stocks have, and those that hang on will
> be glad they did.
>
> Anyone who defaults now won't be able to buy another house for at
> least 10 years.
> What kind of idiot wants to put himself in that position?]]> Sun, 01 Nov 2009 16:30:28 -0500
If one does a short sale or a deed in lieu transaction (walks on the property) they will have a six month blemish. They will also (maybe) still have some money in the bank. The ten year horizon you point to is too far. 2-3 years is more likely.

RE will recover some day. I don't see any upside for some years yet. Too much damage has been done. The Feds are 95% of the new mortgage market. That can not last for long. It will destroy us. When they step back there will be a shortage of mortgage credit. It does not add up to a win to me.

You also have the issue of demographics. Lots of boomers downsizing for the next decade or so.

I have a piece coming out tomorrow about the GSEs that touches on this. Thanks for reading.
bk


On Nov 01 01:21 PM jimmy46 wrote:

> We know that the biggest source of default in the current cycle is
> that borrowers are so far underwater they have no economic incentive
> to pay. So they don’t.""""
>
> That's like saying those people who had stock losses last March should
> have sold at the bottom of the market.
> RE will rebound, just like stocks have, and those that hang on will
> be glad they did.
>
> Anyone who defaults now won't be able to buy another house for at
> least 10 years.
> What kind of idiot wants to put himself in that position?]]> http://seekingalpha.com/article/170306/comments?source=feed#comment-739086 739086
Most comments on this piece suggest that the FDIC is doing the right thing by moving aggressively. I am not so sure about that.

My suggestion has been a swap of GSE Pref stock for REO. This is a junk for junk swap. But it would resolve the Pref problem and address a significant part of the REO problem.


On Nov 01 07:17 AM BRUCE E. W. wrote:

> While I think it is vital that the open market interests keep a criticizing
> eye on Government in action, it is also important to recognize that
> these current real estate contradictions viewed from these GSEs are
> not "driving" property values down as much as "riding" them down.
> The property auctions should stay basically within traditional procedures
> if only to be certain that they are impartial and not parcel to some
> insider network of exploitation. The FDIC has a tendency to offload
> its liabilities with a least effort attitude which they tend to call
> the lesser of two evils.This is called a false dilemma since it proposes
> two options, both of which are unacceptable. When they are selling
> entire banks to private equity syndicates for pennies on the dollar
> they have a protocol of eating losses as the "least costly" over
> time. This is the same default loaded fallicy revisited with a difference
> only in degree. It seems you have hit on a similar example (which
> we can not afford) in the real estate markets. If I am correct in
> this assessment, than open complaints should be screamed from those
> roof tops being devalued. One would think that there would be plenty
> of damaged interests if this were to be a common practice, but it
> would also be (I believe) a great disservice to the public trust
> (ultimate their values being destroyed by complacency if not outright
> incompetence).
>
> I noted an earlier article you wrote :seekingalpha.com/arti...
> something of a public offering process to flip asset holdings. I
> don't like the idea of the public absorbing the costs while permitting
> a few well placed individuals to come in and clear out potential
> profits, but I think the basic idea of sort of "junk bonding" the
> total assets valued to public shares might be an interesting way
> of resolving the problem. If all properties were pooled as one major
> equity unit or regional portfolio, it could be securitized by a true
> value assessment and perhaps brokered at both ends of real estate
> sales and stock in the venture of displacing the debt jointly with
> maximizing the gains on each property (REOs).
> I would like to know your opinion on if you think this is feasible
> as a potential resolve. It would strengthen the GSEs in the process
> which would only enhance the entire process and generate an up tick
> to property values if it were instituted nationally. It would also
> give the average investor an opportunity to invest in the overall
> recovery process (afterall they have already paid for the failures)
> and perhaps build some equity into their own retirement accounts
> (while helping rebuild the country to boot)! It would also distribute
> the ongoing risk and perhaps see these real estate forclosures entering
> back into communities at fair market values (since there would be
> watchdog interests at stake).]]> Sun, 01 Nov 2009 09:28:52 -0500
Most comments on this piece suggest that the FDIC is doing the right thing by moving aggressively. I am not so sure about that.

My suggestion has been a swap of GSE Pref stock for REO. This is a junk for junk swap. But it would resolve the Pref problem and address a significant part of the REO problem.


On Nov 01 07:17 AM BRUCE E. W. wrote:

> While I think it is vital that the open market interests keep a criticizing
> eye on Government in action, it is also important to recognize that
> these current real estate contradictions viewed from these GSEs are
> not "driving" property values down as much as "riding" them down.
> The property auctions should stay basically within traditional procedures
> if only to be certain that they are impartial and not parcel to some
> insider network of exploitation. The FDIC has a tendency to offload
> its liabilities with a least effort attitude which they tend to call
> the lesser of two evils.This is called a false dilemma since it proposes
> two options, both of which are unacceptable. When they are selling
> entire banks to private equity syndicates for pennies on the dollar
> they have a protocol of eating losses as the "least costly" over
> time. This is the same default loaded fallicy revisited with a difference
> only in degree. It seems you have hit on a similar example (which
> we can not afford) in the real estate markets. If I am correct in
> this assessment, than open complaints should be screamed from those
> roof tops being devalued. One would think that there would be plenty
> of damaged interests if this were to be a common practice, but it
> would also be (I believe) a great disservice to the public trust
> (ultimate their values being destroyed by complacency if not outright
> incompetence).
>
> I noted an earlier article you wrote :seekingalpha.com/arti...
> something of a public offering process to flip asset holdings. I
> don't like the idea of the public absorbing the costs while permitting
> a few well placed individuals to come in and clear out potential
> profits, but I think the basic idea of sort of "junk bonding" the
> total assets valued to public shares might be an interesting way
> of resolving the problem. If all properties were pooled as one major
> equity unit or regional portfolio, it could be securitized by a true
> value assessment and perhaps brokered at both ends of real estate
> sales and stock in the venture of displacing the debt jointly with
> maximizing the gains on each property (REOs).
> I would like to know your opinion on if you think this is feasible
> as a potential resolve. It would strengthen the GSEs in the process
> which would only enhance the entire process and generate an up tick
> to property values if it were instituted nationally. It would also
> give the average investor an opportunity to invest in the overall
> recovery process (afterall they have already paid for the failures)
> and perhaps build some equity into their own retirement accounts
> (while helping rebuild the country to boot)! It would also distribute
> the ongoing risk and perhaps see these real estate forclosures entering
> back into communities at fair market values (since there would be
> watchdog interests at stake).]]> http://seekingalpha.com/article/170147/comments?source=feed#comment-738225 738225 Sat, 31 Oct 2009 09:25:34 -0400