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  • Goldman's Success: Put Down Those Pitchforks [View article]
    Once more a touchy feely post that touts godlaman's benefits while all the hard data points the other way. I have yet to see an article that uses actual data to point out the good that goldman does. Yet those who stand up against what is going on have a huge amount of data to back their case.

    All I have to say is this. Every reform effort has been torn asunder and the only hope of enacting some real regulatory reform is via public anger. The financial industry is buying washington to the tune of millions and millions of dollars. they have the resources and connections.

    This is not about the profits, but how the profits are derived. a public company using fed window access to prop up stock prices and manipulate the stock market. this does not add to the economy, but in fact destroys wealth.

    Nobody mentions the secondary effects of the overpriced S&P. this allows other markets to inflate, increases inflation on commodities, and raises the costs that the tax payer has to pay back on the borrowed money for the defect, and kills the dollar.

    The fed policy of zero interest rates, a huge subsidy for the industry, kills the saving of millions of americans.

    The fed tells us the economy is fragile, but that is not reflected in market prices for securites. this creates huge macro imbalances which we have to pay for in the log run.

    Everyone knows the connections issues, etc. what galls me is that we are creating the seeds of another crisis by allowing these companies to manipulate the markets. Every legit pundit has pointed this out.

    Goldman profits and we suffer because of it.
    Jul 19 10:20 AM | 35 Likes Like |Link to Comment
  • Book Review: Great Depression Ahead [View article]
    please provide supporting data

    On May 08 08:20 AM Cetin Hakimoglu wrote:

    > Sorry, but I disagree with your article regarding the demographic
    > analysis. There is a huge influx of young consumers in the United
    > States from foreign countries who are contributing to the economy
    > and compensating for spent boomers. There will be no appreciable
    > showdown in consumption in the United States that can be attributed
    > to demographics.
    May 8 08:59 AM | 34 Likes Like |Link to Comment
  • Bail Out for Dummies - Part I [View article]
    But, our government wants us to believe the issue is a liquidity issue instead of a solvency issue. This is the major reasons programs aren't going to work. There is truly only one way to make this whole mess work, and that is to kill the bad banks, haircuts on debt holders, and use the fed to try and make pensions, (the taxpayer) more whole instead of companies.

    My conspiracy theory says that is going to happen anyway, but the aim of the banks until it happens is to squeeze the tax payer for as much as they can (with government approval). Using fraud, etc.
    The government knows exactly what you have written, so they use illegal means to to funds to the people they want via backdoor methods. below is a reprint from the financial times.
    The Gasp is worse than you think

    By Laurence Kotlikoff and Jeffrey Sachs

    Published: April 7 2009 03:00 | Last updated: April 7 2009 03:00

    Economists' Forum (Laurence Kotlikoff, professor of economics at Boston University, and Jeffrey Sachs, professor of economics at Columbia University and director of the Earth Institute): The Geithner-and-Summers Plan (Gasp) to buy toxic assets from the banks is rightly scorned as an unnecessary give-away by virtually every independent economist who has looked at it. Its only friends are the Wall Street firms it is designed to bail out. In an article in the FT, one of us (Sachs, March 23) described the systematic overbidding entailed by the proposal. Others have since made similar calculations, including Joseph Stiglitz and Peyton Young.

    The situation is even worse than it looks, however, since the Gasp can be gamed by the banks that own the toxic assets to boost the purchase prices for their bad assets even higher than has been suggested to date.

    Suppose that Citibank holds $1bn face value of toxic assets that will pay $1bn with 20 per cent probability and $200m with 80 per cent. The market value is $360m. The Gasp calls on investors to establish a public/private investment fund (PPIF) to bid for the toxic assets. For each $1 that a private investor brings in equity to the PPIF, the Treasury will put in another $1, and then the Federal Deposit Insurance Corporation (FDIC) will leverage the $2 in equity with $12 of non-recourse loans (6-to-1 leverage).

    It's easy to show that a risk-neutral and arm's-length PPIF will bid $636m, financed with an FDIC loan of $545m, Treasury equity of $45m and private equity of $45m. (The expected profit to the private investor is a half of 20 per cent of $1bn minus $545m, or $45m. The private investor therefore has a net expected profit of zero.) The PPIF overpays by $276m, which equals the expected loss to the Treasury. The ultimate beneficiaries are Citibank's shareholders and bondholders, whose net worth rises by $276m at the taxpayers' expense. But the outcome could be even more outrageous than this. Citibank can arrange to receive even more than $636m for its assets by setting up its own Citibank PPIF (CPPIF) to bid for its bad assets. The CPPIF will bid the full $1bn in face value for its own toxic assets!

    To see this, note that on a bid of $1bn by the CPPIF, Citibank would finance $71m in equity of the CPPIF, the Treasury would add another $71m in equity, and the FDIC would add $857m in loans to the CPPIF. The CPPIF will either break even (20 per cent of the time), or go bankrupt (80 per cent of the time). The CPPIF is therefore a wash-out - with no chance of profits, yet also zero liability.

    On the other hand, Citibank gets a sure boost of $1bn minus $360m, or $640m in net worth, for which it pays $71m. Citibank's gain from the CPPIF's overbidding is $569m, which exactly equals the taxpayer's expected loss that is incurred by the FDIC loan and Treasury equity. The real icing on the cake is that Citibank still ends up owning the toxic assets even after the assets are "auctioned", but this time in an off-balance-sheet structured investment vehicle called the CPPIF. The toxic assets revert to the FDIC when the CPPIF goes bankrupt.

    It's possible that some fine print of the Gasp would try to preclude explicit hyper-self-dealing of the type just described. But when there is free money on the ground, Wall Street will figure out ways to pick it up. For example, Citibank could arrange to overpay Bank of America for some unrelated securities in exchange for having Bank of America do its bidding at the auction. Indeed, Citibank, Bank of America and other toxic asset owners might join together in a consortium to finance an "arm's-length" PPIF on favourable terms, with the proviso that the PPIF bid for the toxic assets of the consortium. BusinessWeek has reported that "administration officials confirm Treasury may allow such seller financing".

    The sad part of all this is that there are excellent alternatives to the Gasp that are vastly more transparent and cheaper for the taxpayers.

    The best of these involves separating a weak bank such as Citibank into a "Good Citibank" that holds Citibank's good assets and its deposits, and a "Bad Citibank" that holds the toxic assets, the bondholder debt and the shares of the Good Citibank. The Good Citibank returns quickly to normal business, while the Bad Citibank is eventually liquidated under bankruptcy, with the bondholders and other uninsured claimants getting partial repayments depending on their priority under bankruptcy. The best description of this approach is by Jeremy Bulow and Paul Klemperer.

    Over time, we should consider more fundamental reforms, including the idea of establishing limited purpose banking, in which the liquidity services provided by banks are undertaken by institutions with 100 per cent reserve requirements and which, therefore, are immune from runs, panics and reckless gambles. It would be absurd and self-defeating to bear the enormous social costs of the current financial crisis, only to return to the same kind of flawed banking institutions that got us into this mess.

    The Geithner-and-Summers Plan should be scrapped. Mr Obama should ask his advisers to canvass the economics and legal community to hear the much better ideas that are in wide circulation.

    Copyright The Financial Times Limited 2009


    this morning I wrote senate and house banking boards, andrew cuomo, and GAO. only we can stop it because the amount of lobby money involved is too huge to overcome any other way.
    Apr 8 08:00 AM | 28 Likes Like |Link to Comment
  • Geithner Loses It After Bair Refuses to Yield Power to the Fed [View article]
    Geithner, is the problem not the solution. Of course he is angry, he wants to make sure they system is even more rigged for the investment banks. You don't get to be head of they NY Fed without doing that!!!

    I wish the right wing instead of going after abortionists started to go after the real criminals. What good is a right wing hick if they don't know who to go after.
    Aug 4 08:36 AM | 26 Likes Like |Link to Comment
  • Dollar's Days of Dominance Are Over [View article]
    For anyone actually following this debate it has been clear for some time that what you describe is going to happen has actually been the plan by our government all along.

    I always advocate a rigid black box analysis that ignore rhetoric, but looks at the interest groups involved in making the policy, the policy that comes out, and what the problem to be solved is.

    Using this analysis it has been clear this was the plan all along. Of course the american tax payer is going to be the last to figure it out, and wall street will be ahead of the game.

    This bails out the banks, is the best solution for wall street, allows the government to engage in plausible deniability (it was a tsunami we couldn't see ), and keeps the special interst money flowing. By then all assets will be own by the banks, and the american tax payer will be destitute. We will be Argentina or Iceland eventually. I think it is unlikley they will allow the effect to happen too fast, but by the end of this "retest" I will be out of dollars, and if I had listened to my own advice I would have been out of dollars on the monday 9:00 am after March 9th!!!!

    The only way to analyze what our government does is to completely ignore what is said. Then things can become a bit more clear!!!
    Jul 5 08:55 PM | 25 Likes Like |Link to Comment
  • The Fed Must Be Crazy [View article]
    Everybody keeps looking at the fed, treasury, congress, and white house actions in isolation. That is silly because you are missing the real picture. All are acting to continue the wealth transfer back to the already wealthy. I challenge anyone to explain the entirety of these actions any other way. you can't, and I know because I have tried. The fed is not interested in helping the economy, it is interested in keeping the money flowing to the banks. Didn't even Liddy say today the fed knew about the AIG bonus. Today, I have negative real interest rates, destroying the savings I have worked my life for. my dollars in my account dropped 3% against the Euro, robbing me once more. What does this do to my purchasing power, and how does that effect the economy? If I am on unemployment, fixed income or my salary isn't going up, how does this help my purchasing power? Lower energy prices, stronger dollar increases my spending power, a controlled deflation helps me, it hurts wall street banks. AS rogers keeps saying these guys are either idiots, or they are in on the game. This is the only way that makes all the pieces fit together. If the market appears to be turning, if the banks are starting to make profits again, if fed ex is saying the global economy is stabilizing, why are we doing this now? The largest transfer of wealth in the history of man is happening back to the have from the have nots and it is directed by our government in exchange for lobby money and well connected jobs. Christopher Dodd removed language that would have prevented the Aig Bonus scandal. Congress got caught with their hand in the cookie jar, and now they are pretending outrage. It's all false!! Paulson, Thain. Lay, Look at the Goldman connection, did you know industry chooses who runs the NY fed? Now it's a goldman guy. Why is the only person doing any investigation the NY state AG (Cuomo)? Because the federal Government doesn't want it ti happen. Why were Goldman et al paid in full for CDS's that haven't defaulted? The list goes on and on, and there is no other way to explain it. I did not used to think this way, but all of the evidence points to it, and then everything makes sense. Mark to Market, the TALF (low interest loans to private equity and hedge funds with loss provisions) with no income limitations, TARP, how do these things help me? They don't, but they help wall street. Wake up people!!!!!
    Mar 18 05:23 PM | 25 Likes Like |Link to Comment
  • Do You Believe Borrowing Leads to Prosperity? (Part 2) [View article]
    During my MBA I would sit in awe AS MULTIPLE PROFESSORS TAUGHT THE GOSSIPAL of debt. you couldn't argue with them. additionally corps get tax breaks for taking it so the return on equity improves the more of it you have (in good times of course). Therefore, the system is gamed to reward too much debt. ceo's get stock options based on equity prices, and the the guy in the market is happy his stocks are rising. conversely, no debt gets no breaks for the stockholder, cash to pay dividends doesn't reward the ceo (doesn't raise stock prices). there are multiple effects.

    when you take maco economics they sit there with all these curves (happiness curves i think) explaining how someone early in life will rationally borrow money against future cash flows. Of course they fail to explain how the consumer is going to do it rationally, or how you know cash flows will appear. But, once more you can't argue with the prof.

    So in summary you have a whole system that is rewards too much debt because it allows for log return instead of linear, and they assume debt will be used rationally. It is so fucked up. This was why when I learned the amount of money in the system from mortgage equity withdraws based on overvalued houses I knew shorting the market was a given when things came to a halt. Add to that decreasing earnings over a generation and the outcome is given.

    It is impt in this crisis to think ahead on how our government is going to get out of this mess. The clear easy answer for white house and congress is kill dollar and cause inflation to reduce wall street debt. Let fed take heat and they do not have to make any difficult choices that will upset those lobbyists that pay the bills.

    Our government no longer works for the benefit of the people, and this crisis has laid it out in the open.If you don't see it it is because you have chosen not too. I wish it wasn't that way, but facts are facts.
    May 7 07:56 AM | 22 Likes Like |Link to Comment
  • There Are Opportunities Everywhere - Barron's Interview [View article]
    The question I always need to ask is what was he saying before this time. without some idea of his history one doesn't know does one. The rally must stall if the public doesn't buy into it. so wait and buy cheaper. why do these people always come out of the woodwork when it is time for a rally to stall.
    May 3 05:43 PM | 22 Likes Like |Link to Comment
  • The Coming Consequences of Banking Fraud [View article]
    May I ask what your level of education is? I dont think you understand what a real patriot is in this country. the founding fathers attempted to set up a system that prevented your way of thinking. A real American says, why are we wasting the resources of our country and the few, why are we causing harm to the economy, why are we in endless foreign wars that drain the capacity of our country. The real patriots understand from the founding fathers how impt it is in democracy to question you leaders. In fact they tried to set up a system so there would be no oligarchy. But the money has corrupted the system. The true patriot speaks out against the collapse of the empire. the true patriot sees beyond jingoism and the simple slogans of those who are attempting to loot the empire while it collapses. Unfortunately too many people in this country think like you and are brainwashed. That's why the criminals get way with their crimes. all the while wrapping themselves in an american flag. Unfortunately you havent realized the banksters don't think in terms of nation states. they can live anywhere. It's a shame the american people are so easily manipulated, over and over again!!

    On Sep 09 11:40 AM Mrudula Shah wrote:

    > The author vents his frustrations as if he is a pro-China anti-Western
    > individual, going as far as chraging the likes of Tony Blair and
    > Gordon Brown as pupets of banking ologarchs - an exageration of the
    > opposite kind!!
    Sep 10 08:12 PM | 21 Likes Like |Link to Comment
  • High Yield Market Collapsing, Highly Leveraged Companies in Run-Off Mode [View article]
    credit implosions are a multi year problem, and don't get better when you have a government that is more interested in preserving vested interests than fixing the problem.
    Apr 24 09:14 AM | 21 Likes Like |Link to Comment
  • Citigroup's Horrible Conference Call [View article]
    the more I learn about Summers the less I like. At some point he lost his moral compass and because a wall street banker.

    I find thos so funny because it was the "leaked" pandit memo that stared this rally, then of course all the manipulation happened (benanke and buying t-bills), toxic assets, Mark to market, all for a nice big show at the G-20.

    If someone spreads a false rumor and it lowers the market I believe that is illegal? But of course if a company CEO does it for the upside it isn't?

    Our country has become a joke.
    Apr 18 08:32 AM | 20 Likes Like |Link to Comment
  • The Coming Consequences of Banking Fraud [View article]
    I can tell you that I have reaached the same conclusions as this man quite a while ago. I am also a trained scientist, an MD, and have finished 3/4 of an MBA (I left when I could clearly see the collapse, but my professors couldn't). When you run a blind box analysis, by that meaning plug in the data, and ignore the statements, it is the only real conclusion that fits the evidence. Otherwise you really have to strain.

    The political leaders and oligarchs are shielded from harm if things collapse. So while the collase concersn them the only ral threat they face is civil unrest. Just look at how the heads of the banking insdustry made out. very few if any in jail, unlimited money via the fed to reflate assets, no effort to curb crazy bonus schemes. The folks in office that hold any position of standing know they will be given a cushy job by indistry when finished office, so they are shielded. Come on. just think about the role the fed and treasury played in ensuring AIG and Merrill got their bonuses. and goldman getting 100 cents on the dollar from AIG instead of having to take a haircut. If thise three things don't at least make you say something strange is going on here I don't know what will. Geiter, head of the NY FED before the crash, who didn't have banks do anything (raise capital, etc). How can this guy be treasury secretary. From what he did, and the outcome that happened it defies common sense. Hence he got the job because he gives the indistry what it wants and doesn't get in their way. Summers made it so derivates didn't need to have capital held against them (swaps, not insurance). So he played a huge role in this mess. How the hell did he get the job. he did have a 5mil/year hedge fund job for one day a week of work amd made millions inspeaking fees to wall street. He's safe and has been bought a paid for already. He also knows what rewards him if he plays ball. the list goes on and on and on. Just too many things don't add up any other way. What is Greensapn making now as a consultatant from the industry?

    I have studies this crisis for over two years now. Mr. Kims conclusions were not the ones I first had. I startedto think about a cabal when i saw economic policies that made no sense to me, and when the very people who had a huge hand in the crisis we appointed to positions of power by Obama. The you have to start to add in the revolving door between the fed, treasury, and wall street. How about the "greatest" student of the great depression that doesn't understand the role of overleveraging in causing the crisis. how about the fact that we have hed 6 credit crisis since the 60's. but never lean from our mistakes. Then you have to start deciding who makes out from the leverage. thise that make money via leverage who have seen their incomes skyrocket, and the working man whose income depends on nominal GDP. His income has fallen.

    I'm afraid the facts add up to exaclty what Mr. KIm says. You can believe it or not and that is your choice. I have a group of about 20 well educated readers who I think all now believe as myself and Mr. Kim do. I convinced them via shoving such an overhwelming amount of evidence at them there was no other choice. I can happily send you easily 200 legit articles that would lead to the same conclusion.

    I am an American and jewish and in no way shape or form do I take Mr. Kims comments to be either anti american or jewish.

    May I add that contrary to popular belief many folks saw this down the pipleine. those in power choose to ignore it. Why? because those in the oligarchy benefit to keep it running, and those with the power to keep in running are richly rewarded for doing so.

    On Sep 09 12:28 PM Mrudula Shah wrote:

    > It's equally stupid to think that the western democratic system and
    > the political leaders and all major bank executives are out to get
    > the ordinary citizens and drag the economy down!! Tell me how these
    > oligarchs and political leaders benefit if the economy collapses!!
    > No body, including each one of them, benefits!! I Do not think these
    > guys are that stupid and are taking some stupid steps!! Stupid are
    > those who believe those who say the world is about to collapse!!
    > Also, I am not saying Mr. Kim is a Chinese - I am just saying he
    > expresses Pro-China anti-Western thoughts!! It's clear to me that
    > with Americans cutting down heavily on their consumption habits and
    > moving towards more savings (because theyt may be concerned with
    > their social security and medicare syastems health), the Chinese,
    > Japanese and Korean economiies are hurting!!
    Sep 10 07:50 PM | 19 Likes Like |Link to Comment
  • Finally: Congressional Pushback Against Taxpayer-Funded Wall Street [View article]
    geitner=traitor, Paulson=traitor, Summers=Traitor, Bernanke=traitor, Obama=traitor, Blankfien=traitor
    Jul 20 02:07 PM | 17 Likes Like |Link to Comment
  • Why You Should Stick With the Dollar and the U.S. [View article]
    For those who believe this post I would send you to the baseline scenario web site and read the article in the atlantic by simon johnson (former head IMF). One factor to understand is that there are two types of corruption. in Russia we have what I would call overt corruption. the type of thing that gets you in jail here. In the us we have sot corruption. In this "legal" process in the US, which doesn't merit moral outrage here< the political process is corrupted by the influence of money on the legislative process. The net effect is basicly the same. I am sorry I do not have the link anymore. While Russia ranked very high for the first type of corruption, the us was one of the world leaders in the second type.

    The clearest evidence is simply AIG. the bonus money wasn't allowed until the white house called Dodd and had it given. we could used the company to get money to godlman et al without the oversight restrictions of Tarp. Now they will repay what they got using the money we got to them via a back door. While naked shorting is against the law, the SEC didn't enforce and instead of getting a bribe up front they/ or their family get jobs in the industry when their time in the SEC is over with. One of Barney Franks's top Guys just got a job with Goldman. The bribe is still a bribe, it is just the order of payment has been changed in the US system.
    May 24 09:56 AM | 17 Likes Like |Link to Comment
  • Forget Green Shoots: These Are the Brown Shoots Turning Black [View article]
    Barak, the smoke and mirrors president, was taken to task for pointing out economic realities by the media and wall street, and for making us unhappy. With a bit of pressure he changed his tune, like he always does, and "green shoots". Well after a certain amount of time you can only talk about things getting better when they aren't, and you can only coddle wall street without doing anything for the economy before the public starts to realize.

    Now they have wasted trillions bailing out banks that should not have, and we are talking about a second stimulus and that things aren't getting better. When you do not address the cause of the problem, things don't get better, and they end up costing more in the long run. Now we are faced with a worse fiscal situation and have wasted trillions.
    Jul 11 09:14 AM | 16 Likes Like |Link to Comment