epeon

U.S. Handling of Financial Crisis - A Less Optimistic View

I must admit that I am very disappointed by Obama. Since the US government owns several banks what I don't understand is why the administration doesn't break these up into smaller pieces. Pieces that are not "too big to fail." What Obama is doing is just giving tax money away. Very disappointing.

'Too Big to Fail' Is Too Hot to Handle

Any bank that received TARP money should be viewed as a fail institution. Therefore, as part of the "workout", the goal should be to reduce its size so that it is not "too big to fail." Thus citigroup and bank of america should be broken up into smaller banks that can be allowed to fail.

Big Banks: The Consensus Is Cracking

I completely, totally agree. This whole concept of "too big to fail" is just disasterous. The best way to handle this is to break up these big oligopolies so that they are, indeed, small enough to fail with no systemic consequences. Why a democrat like Obama wants to defend such concentration of power is beyond me.

The Real Deal with Ken Lewis

One thing not mentioned is that when he found out bad news about Merril Lynch he intentionally hid this information from the stockholders. Ken Lay did the same thing. Frankly, the deceit bothers me more.

The Coming Consequences of Banking Fraud

Man, talk about gloom and doom. Anyways, I think it is far exaggerated. We have always had fraud and we have always had exaggeration. But, a couple of points.

Blowback is not a term coined for the cia. It occurrs many places, primarily in the blowback principal of firearms. Many of the low caliber weapons have a simple blowback mechanism that rechambers the weapon for the next round. However, as the round becomes more powerful, the blowback effect has many unintended consequences. These include ejecting the old shellcase with such force that the shell case will travel 20 meters. If the round is large enough, you can actually see a flame from the ejection port. Large rounds make a simple blowback weapon non-workable as the force will break things. Thus, Blowback referred to the unintended consequences of ejecting a shell from a weapon. As the shell became larger, the unintended consequences become larger and larger. This was an analogy for the consequences of CIA actions and, as the actions became larger, the blowback was larger.

As far as the huge writeoffs, yes , we have had them and, no doubt, will have more. Many bonds were selling for 50% discounts against their face value a few months ago. That has changed because we now have a modified "mark to market" rule. The old rule caused a lot of these problems because it exaggerated the losses of banks. If you could not market a security it was assumed to have a value of zero. That is clearly not right, but it caused a lot of panic.

That politicians are on the "take" is no suprize. Sure, it is legal, but do you think Reagan taking large speaking fees was anything different then what we are doing today (at least Reagan was interesting, but both Ford and Carter were getting similar fees - ugh!).

In short, there is nothing new in your article. Just same old, same old.

Where Rubin Went Wrong

Isn't Rubin kind of the symbol for the whole Clinton 90s thing? We had an economy booming on the internet bubble and we had Citigroup booming because Rubin created the legal environment to allow it to be created. Everyone collected their fees and let the future worry for itself. Well, we got the future now.

If Asset Prices Are Dropping, Why Are Bank Stocks Rising?

All that you say may be true, but the cost of money for the banks right now is next to nothing. And the spread is pretty good. So, business going forward is going to be very lucrative. Can the banks earn enough to eventually work themselves out of the current mess? Maybe so, which is why the bank stock prices have been good. Particularly those that don't have a lot of trash on their books.

How You Can Profit from the Obama Economy

Going long on debt is probably a good idea. You can pay back with inflated dollars latter on. Buying a house now with a 30 year not is probably a very good idea.

Why GM's Not the Only Company Rush Limbaugh Should Boycott

Gosh, I seem like such a piker. I just bought a Ford vehicle because it was the best value. And, so far, I really like it. Didn't know I was supposed to be making a political statement.

Fast Money Recap -Will This Be GM's Last Quarter? (5/6/09)

Just out of curiousity, why would the bondholders exchange $27 billion for 10% of the company and the union gets 39% for half of the Veba payment ($10 billion)? I mean, they would have to be braindead to accept that deal (or on TARP which is pretty much the same thing). Secondly, some of the bondholders have CDS on the debt, so they get repaid in the event of a GM bankruptcy. Bankruptcy is inevitable.

Wall Street Breakfast: Must-Know News

Sorry to say this, but Obama is forcing GM into bankruptcy. He fired the chief opponent (Waggoner) and he has removed the two chief obstacles (by government guaranteeing warranties and debtor in possession financing). The new boy has gotten the message: "you want your job, go to bankruptcy."

I think what Obama wants is for the bankruptcy judge to make the politically difficult cuts. He can say his hands are clean to the unions. Of course, this is bullshit, but the rank and file is sold that sort of nonsense all the time. The political danger is that they may realize that he is playing them for doops.

The economic danger is that they think they can get through bankruptcy quick. I am betting with all the legal wrangling, they will be in bankruptcy about as long as Delphi (i.e. years).


On Apr 13 08:24 AM pattisw wrote:

> If Gm goes bankrupt it will throw thousands more on the unemployment
> roles and a few hundred thousand retirees into poverty.
> The guaranteed government pension is a substantial cut in the pension
> now received.Ours would be cut in half.We would not be able to stay
> in our home or keep up our vehicle payment(repo time).We are a tiny
> sample,there will be more home foreclosures,repossesi... card default,food
> stamps needed and $13.5 billion needed by the government pension
> plan.It is underfunded and will need government aid,so the taxpayers
> will be paying anyways.
> Many retirees are too old to get a job and those that are not...well
> where would you get a job in a state like Michigan where I live?
> Wouldn't it be cheaper and better in the long run to LOAN GM the
> money and get it paid back someday than to spend billions that will
> never be repaid?
> Obama will never be elected to a 2nd term if he stabs the union in
> the back and allows the retirees to be thrown away(think AARP,UAW
> support).

Warren's (Ridiculous) Prescription for Banks: Wipe Out Shareholders, Fire CEOs

There are elements of truth to what she says. For example, have not the stockholders of Citigroup and BAC been already wiped out? It wasn't long ago that Citigroup was 50, for example. And, much of the management should be replaced. Maybe not all, but certainly some of it. And, why are the boards not held responsible?

Head of Congressional Oversight Panel Slams Geithner, Again

I assume that Ms. Warren and Geithner never dated?

The Big Banking Emperors' New Clothes

I have been looking at some mortgage backed securities. These things are about 92% performing (i.e. paying interest). The bank securitized this by issued bonds which paid 6.75%. The underlying mortgages would pay about 7% plus fees (when people sold houses, the banks get lots of fees). The bank sold 95% of this loan. So, the bank is not getting 7% anymore. They are getting abot 6.5%, yet they are still paying 6.75%. Thus, the cashflow is negative. So, marking the loan mark to market or not doesn't save the bank any money.

Worse, there is no reason to believe that these aren't going to go to about 85% performing (others are). The underlying assets are in California so the values are down about 30%.

Thus, these are money loosers and marking them to anything isn't going to help.

An Unconventional Option - Go Long Financials

Well, my strategy has been (for the last seven months), to buy SKF on dips below 100 and sell it when it gets above 105. This is a very short strategy on banks and it has been, to this date, very profitable. I just don't see why I should change. I see nothing in the financials that makes the situation different. Unless BO actually passes another trillion dollar giveaway to the banks. But, at this point, even those in his own party are uncomfortable with that.