Joe Eifrid

4 Comments

    • Bailout: Reaching a Deal [view article]
      We need this plan and we need it now. To think we don't is being very short sighted. The little guy is the one that benefits most from this bill. Oh, you think it is the mega-rich? Who do you think will be picking up these assets for pennies on the dollar after many of the little people have lost their homes and their jobs. Without this bill we risk any form of wealth in this country being redistributed to a wealthy collection of mostly foreign investors.

      Maybe the assets of our banks will end up in the hands of those with links to Russian Oligarchs bought for a few pennies on the dollar? Look around you and look where the money is. So, what did we accomplish? We screwed the middle class, we expanded the lower class, and we upped the ante to join in the upper class.

      You that think this bailout is un-American?...maybe unneeded in a free market? - you really need to look at the problem with more of an open mind.

      Write your Congressman? I would bet that most here on theses boards saw the excesses and potential issues 2-3 years ago. I know I was writing about them in 2002. Why no calls complain about how things were too good - too good to be true before this mess blew up?

      Greenspan said this in September of 2002;

      "An example more immediate to current regulatory concerns is the issue of regulation and disclosure in the over-the-counter derivatives market. By design, this market, presumed to involve dealings among sophisticated professionals, has been largely exempt from government regulation. In part, this exemption reflects the view that professionals do not require the investor protections commonly afforded to markets in which retail investors participate. But regulation is not only unnecessary in these markets, it is potentially damaging, because regulation presupposes disclosure and forced disclosure of proprietary information can undercut innovations in financial markets just as it would in real estate markets.

      All participants in competitive markets seek innovations that yield above-normal returns. In generally efficient markets, few find such profits. But those that do exploit such discoveries earn an abnormal return for doing so. In the process, they improve market efficiency by providing services not previously available.

      He also said this in the same speech;
      "No one can deny that fully informed market participants will generate the most efficient pricing of resources and the most efficient allocation of capital. Moreover, it could be argued that, if all information held by individual buyers or sellers became available to all participants, the pricing structure would more closely reflect the underlying balance of supply and demand. Thus full information would appear to be the unambiguous objective. But should it be?"

      He argues against a well informed market and regulations that would make it more informed. Where was the outrage then?

      I pray this bailout gets passed. It will save jobs, keep many in their homes, and especially guard against even more foreign financial influence in our great Country. We screwed up and must fix it now before we see even more harm to our economy and financial well being.

      Joe Eifrid
      Sep 28 04:04 PM
    • AIG Shareholders Left in the Cold [view article]
      You know this AIG deal is getting a lot of bad press but for the shareholders I think it is good news if the alternative was possible bankruptcy. My understanding is the U.S. government will effectively get a 79.9% equity stake in the insurer in the form of warrants called equity participation notes. AIG has to ability to borrow up to $85 bil but it must be paid back in two years. If it is not paid back then the government and and only then can exercise those warrants to take ownership of nearly 80% of AIG.

      Here's the thing - AIG may not ever need to tap those funds. AIG does not have a cash flow problem that makes if difficult to pay their day to day obligations. The rating agencies downgraded them for their apparent inability to rasie capital to increase collateral as their more toxic debt was marked to market. Their was never any solvency issue at this point. The rating agencies still had them on investment grade status. As I said, the issue was the ability to raise more capital - something many others are not able to do at this time.

      So, it is very possible that there will NOT be these huge interest payments to the government, and it is very possible that the current shareholders will still own 100% of this comapny in two years.

      On a side note - still not interested in AIG stock but like the 'story' a want to participate. AIG has two exchange traded debt instruments that you might be interested in. They trade like stocks and are listed under symbols AFF and AVF. AVF pays 7.70% interest on the face amount of $25.00 on the unsecured subordinated debentures. That $1.925 interest per year. Currently AVF is selling at $3.87 per share for a yield of 49.7% interest. The gove has pretty much guaranteed AIG paying their debt payments for 2 years, you can almost get you money back spent on the shares at that time.

      Now AIG does have the right to defer interest payments for a number of months, but it still accumilates. IMO, AIG is not going to stop interest payments on these shares. Relative to the big picture the obligation on the face amount of these two exchages trades debt instruments is just $1.75 bil. Small potatoes to AIG's total debt.

      In addition, the government is noted to have the ability to stop dividend payments to the comon and preferred shares. I can't see where AIG has any real preferred shares. At least I can not find any listed. The government does not have the ability to end interest payments on debt.

      Worth a look in my opinion.

      Disclosure- I own some common and AVF and AFF shares.
      Joe Eifrid - Joe Stocks       Sep 18 11:11 AM
    • Is AIG a Buy Following the Government Bailout? [view article]
      Why buy the common anyways when you can buy AIG exchanged traded debt shares that are currently yielding up 55%. Symbols AVF and AFF.?? The gov has pretty much guaranteed debt payments for two years.

      Also, keep in mind that AIG may not need to borrow on the $85 billion line of credit anyways. AIG's problem has not been cash flow. The rating agencies downgraded them only because of their inability to raise more capital if needed to shore up collateral due marking to market of some of their debt. The warrants for 79% of the company are only good if AIG fails to payback anything they drew off the $85 bil line of credit. Again, that could very well be nothing. I think AIG is steal here at just over $2. But, like is I said, a lot less risk buying AVF or AFF as you get paid to wait to see what happens.
      Joe Eifrid       Sep 17 09:31 PM
    • Looking for an Inflation Linked Parking Spot [view article]
      Bill Gates parking some last week in WIA

      www.insidercow.com/his...       Jul 12 05:45 PM
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