klarsolo

Reading the Stress-Test Leaks

Could it be that the Treasury itself is leaking various figures to see how the market reacts to them?

Time to Bury the Rotting Carcasses of Dead U.S. Banks

Sean, your profile says you are a CFA associate. May I ask what that is? Are you a CFA charterholder or a candidate? As far as I know there are no associates.

Too Big Has Failed: KC Fed Prez Says We Need Temporary Nationalization

I still haven't read a single article dealing with the question how the proponents of nationalization, who also are in favor of wiping out the preferred and debt holders, will deal will the chain reaction of these moves.

If you seize Citigroup tomorrow and wipe out their creditors, the debt of all banks, regardless of perceived quality, will go to 30-40 cents on the dollar. That will put insurance companies on the brink, even more than they are today. I guess they'll get seized then as well.

Why? I don't mind leaving this on the table, but why can anybody even think that this is the next best option? We haven't even started the bad bank or given Geithner's "plan" time.

Two Fed Graybeards Speak Out

"Test of the marketplace"? Is that guy kidding? Looks like every single wouldn't pass the test. Banks that replaced management went down. Banks that didn't replace management also went down, almost as much it. Is there any stock that is actually up compared to 01/01/2008?

Why Nationalize in 2016?

normthefedup, Felix Salmon is not a money manager, he's a journalist. Panic always sells. He'll keep "selling" whatever gives him the most readers. Right now it's panic. It is sad, but people like him make sure that good money managers have great opportunities. The more people panic, the more mispriced the market is. But yes, there comes a tipping point where his gloom & doom posts get out of hand, and I think with his perpetual glorification of nationalization he's going too far.

U.S. Debt Watch: Paths to Repudiation

Oops, post got cut short. I meant to say: But yet, people do the mistake all the time that they follow somebody just because his last few forecasts turned out to be correct.

U.S. Debt Watch: Paths to Repudiation

raytayzmd, I just skimmed the post, so I didn't get anything out of it. I just wanted to make a statement to the effect that just because somebody was right a few times in a row doesn't necessarily make him a much better forecaster than somebody who was wrong a few times in a row. But yet, people do that all the time.

U.S. Debt Watch: Paths to Repudiation

raytayzmd, unless you have reason to believe that the validity of a particular blogger's ideas are serially correlated (and either all right or all wrong), I think it is advised to analyse every post on a stand-alone basis.

Nationalization: Why Continental Illinois Isn't Relevant

Rhunzzz, it certainly wasn't meant as an ad hominem attack, but as an attack on his expertise. Felix critized somebody that has far more experience with the practice of nationalization and simply declared that guy's view as irrelevant, which is quite a tall order. I then did the same with Felix's views, simply because of Felix's inexperience with anything other than blogging about financial matter. That's all I did.

I think I clarified in my next post that I do enjoy some of Felix's articles, and I do think he is an educated man. But there still is a big difference between book smarts and what works in reality.

I apologize if my response came across as a personal attack.

Nationalization: Why Continental Illinois Isn't Relevant

To rephrase my statement: who'd you rather have an advisor: somebody who's been through nationalization and knows how it works (and advises against it), or some young guy with some book knowledge (who is for it)?

Good old Felix, who does provide interesting articles at times, currently reminds me of the young guy in Braveheart who keeps telling the old, experienced king on how to do his job, because he has been "taught in the art and strategies of war" (but has actually not been in any one battle). Well, watchers of said movie know how well that ended for him.

Nationalization: Why Continental Illinois Isn't Relevant

Hmm, who are we to believe: a financial blogger who never managed a dime in his life (except maybe his 401(k)) and only read about Continental Illinois or a guy that was actually there?

Bank Nationalization: It's No Panacea

Very good article. I don't know why some people think wiping out more wealth is the answer to our problems. We need solutions that build confidence, not destroy it even more.

Guaranteeing Bank Stock Prices Is Not the Answer

Your argument that this plan creates perverse incentives might sound valid on paper, but in practice it doesn't work. Do you really believe any of the big banks would start reckless lending left and right because of a plan that can be revoked at anytime whenever the government pleases? Do you really believe they would stake the future of their bank on this?

What we need is more confidence in the markets, plain and simple. Looks like every blogger is crapping over every single idea that doesn't involve nationalization. Why are people begging so much for more capital destruction? This won't fix anything. Lehman's bankruptcy last year must have made all these people's wildest dreams come true. Everybody got wiped out, all them greedy bankers. But why did create such incredible chaos then, if it is such a good idea?

Do you guys not get it that when you start destroying capital in Bank A, you also destroy capital in Banks B,C,D, and E? The markets at this juncture can't think rationally; they'll instantly replicate whatever you do to one bank to every other bank and insurance company; regardless of them being healthy or not. Is this what you want? Gradually nationalize every single financial institution? Are you guys all short?

Any plan that will work does not involve more value destruction, but a buildup of confidence. Now bloggers, up and at'em. Come up with some good, original ideas. Don't just tear down what other people come up with; you can do that with ANYTHING, but that ultimately proves nothing.

Eight Reasons Bank of America Is Going to $20

Proximo, can you lay out BAC's lethal credit exposure for us so that we understand that nationalization is a given?

Too Big to Bail: Lehman Brothers Is the Model for Fixing the Zombie Banks

Seriously, where do you find clowns like Christopher Walen? Lehman the model for fixing functioning banks? Wiping out bond holders just because it worked so great the first time? Who's paying for these articles?