Redman

Central Banks Are Destroying Traditional Risk Spread Methodologies

A very good article. Despite the so-called "dangers' of this new methodology..you gotta do what you gotta do! There would be no reason for this if the banks had kept their collective eye on the ball in the first place! These above 'normal' rates companies are paying now are a direct result of a pricing mechanism that didn't/doesn't work in any environment. The market (bonds, stocks, Libor, etc.) are trying, albeit lamely, to re-price what they think is the current value for instruments that they and the banks invented and possibly never really understood! Who ever thought that home values would collapse? Certainly not those who invented and marketed these products! Hence the neurosis surrounding the current atmosphere. If we are to survive this crisis then the steps being taken ( and remember, these are short-term steps) will have to be accepted as they are until the de-leveraging process works itself out.

Vikram Pandit Rejects CitiSachs?

Maybe Citi had it's eye on Wachovia at the time. They are also smiting from their complete structural breakdown and "pride" surely had it's place in the scheme of things. When you get right down to it...Citi is right back where they started under John Reed..albeit with a slightly higher stock price.

Dollar Strength: An Illusion

OK...so if you were a foreigner and wanted to buy..what currency would you buy? Euros? Yuan? The Euro has been artificially propped up for some time and is probably falling to a level more appropriate with the current economic climate in "the Zone". The Yuan?...you say? If you don't remember...China is STILL a Communist country that, notwithstanding their export-driven capitalist nature, is basically isolationist with world-standing desires.
The U.S. is about 6-9 months along with their crisis..which means everybody else is being driven out of their "denial" phase at a much slower pace in relation.
I remember the fall of '91 when the Bank for International Settlements increased the capital requirement rules for all central banks. The 30 year was at 9 5/8% , and when the banks started to buy treasuries to enhance their balance sheets, rates tumbled, the Japs..who were cross-capitalized in the Nikkei, had to sell stocks and buy treasuries. The rest is history.
The markets may be confused at times but they are the arbitor at the end of the day..despite their lack of pricing power during these times.
The rest of the world is taking their lead from the Fed despite what anyone thinks..right or wrong.
Stay in cash and watch the dollar.

Why Is Everybody Selling as Buffett Is Loading Up?

Buffet can afford to wait...but he could be early and wrong this time around...consider his previous over-weight allocation in insurance.
Sure he'll get a 10% dividend on his preferred shares..IF..Goldman and GE don't have future problems. Nothing is sacred in this atmosphere..even Buffet.

Leverage 101: The Real Cause of the Financial Crisis

While I partially agree with this "lesson in leverage"..the fact that the Fed (Alan Greenspan & Co.) allowed rates to stay at 1% for too long. This opened up the door for a classic period of speculation by the so-called 'fast money' players who borrowed cheap and invested in anything that moved..real estate included.
I mean..how dumb was that? What were they thinking? If you can borrow at 1+% (more or less) and use that money to leverage yourself..you don't need to be Fellini to figure out that sooner or later the bubble will burst..aka..today's problems.
If the bankers who packaged these "products" can't price them..why does anybody think the geniuses in D.C. will be any better?!
In my humble opinion...let nature take it's course, so to speak, let the govt. pay as little as possible (with some form of guarantee) and let the institutions pay the price for their actions. Sure, there will be pain..but let Wall St. feel what everybody else is feeling for a change!

Short Ban: Government Policy Created Too Hastily

The boneheads at the SEC should never have eliminated the "uptick" rule in the first place..which, I believe, opened up the door to naked shorting.
When I first got into the biz 30 years ago..I would always get a charge out of hearing someone from the floor over the house squawk box saying:
"The locals are covering their shorts!" What were they doing with their shorts down in the first place!? Couldn't they leave the pit to go to the men's room?!

NY Times Screws Up Royally on Morgan

This is yet another reason why the media should be held somewhat responsible for spreading rumors in an atmosphere that's all ready on tenderhooks.
In it's zeal to sell papers or the t.v. versions efforts to sell ad space..all we get at times are rumors and inuendo.
Information...accurate information..quality reporting...is what's needed.

The Great Consumer Crash of 2009

A very good data-based article. But...and this is a very big but (no pun intened..but why not!?)..Americans always fight back..as he said...so why not now? Give us the right tools and the job will get done as it always has!
And, there are always ways to make money in the market...always.

Are Hedge Fund Programs Driving the Market?

Good article...especially about the mindless wonders who try to report the everyday goings-on. What I'd like to know is why doesn't the media delve into these real reasons behind the markets moves. Are they afraid the sponsors will opt out..or nobody will listen?
I've watched the program traders for a long time and try to explain to my clients the reason the markets jump 150 points in the last 20 minutes of trade....it's just like the full moon cycle: every month, a few days before and after the full moon, the markets (all of them) act very hinky! Take a look at a monthly chart of the S&P and check out the turns..they coincide with the lunar cycle. Spooky and I never fool with mother nature!

A Letter to Warren Buffett

I totally knew that!! Yet when Mr. Fuld reads this "joke"..along with whoever else comments on it, maybe...just maybe...he and all the other CEO's will finally get the picture...it's your mistake and the taxpayer ain't gonna bail you out!

A Letter to Warren Buffett

Mr. Fuld has rightfully acknowledged Mr. Buffet's skepticism of the business visa vie his past experiences with Solomon..time notwithstanding. But I believe there is no fundamental difference between the mentality that existed in 1991 and today's circumstances in that "human nature drives market psychology". This fundamental fact hasn't changed since the days of Jesse Livermore 100 years ago. And, sadly..it will never change no matter how Mr. Fuld "dresses it up". Traders are and have always been..risk takers, and to say that Mr. Buffet fits into that catagory is a bit ludicrous given his modis operendi for longer term investing.
And make no mistake...from what I remember about him trying to "rein in" Solomon's desk..it ultimately did nothing to diminish the "Solomon Mentality".
Maybe some of us remember that originally Philip Brothers (Phibro) took over Solomon only to have their roles reversed.
All of this seems a bit rhetorical given the timing. Where was this offer a year or two ago if Lehman was such a great investment?
With respect to both parties..yes..such an investment could bolster confidence in the financial sector...BUT...and this is a very large BUT..these investment banks, who, many times, have tried to "re-invent" the financial wheel so to speak...are/were supposed to know what they were doing. After all..it is their business to know! So why should Mr. Buffet, or anyone else for that matter plunk down huge amounts of money to bail these guys out? "Your country needs you?" I think that's re-packaging a financial company like they re-packaged and called-in the mortgages that this countries foundation is based on!

Is It Time to Put Citigroup Out of Its Misery?

This is an interesting concept..nay the fact that it would need cross-border regulatory approval...not to mention approval from Citi's Mid-east investors as well.
I remember in the 90's when Citi was trading below $10...and was referred to as "sh-itty bank". Then came Weill & Co. and turned it into the future mess that it became!
On another note...I also find it amazing that despite all the problems the brokers and banks have...they can still find it in their money-hungry hearts to downgrade (rate) their peers. The marketplace has entered a stage that I haven't seen in almost 30 years in the biz...complete 'mundo bizarro'..I mean look at the extremes...if this isn't the proverbial "accident waiting to happen"..then I'm not quite sure what truly will occur.