phat cat

Default Risk for Key Financials

These CDS levels are only meaningful if the counterparty who sells it to you are solvent. Just some other levels, UK is at 45, State of Texas is at 78, State of New Jersey is at 135. China is at 119 (they are the largest US treasury holder btw). I saw even US is trading at 30. Who ever is looking to buy CDS on US Treasury is completely nuts, who's guaranteeing the seller?!! While this whole system is breaking down, a lot of things are getting mis-priced. So I really wouldn't pay too much attention to these numbers.

Wall Street Bankers: Rewarding Failure

There is another take on this. As most of these financial stocks have plummeted over 60%, some even more, there's a tax consequence to those who are granted stocks. Assume at a tax rate of 35%, if those bankers have not sold their company stocks, they are essentially paying all the bonuses to the IRS. For those unfortunate ones who's stocks drop below that threshold, they are in negative territory. So everyone should just relax as everything works out at the end.

Survival of the Longest

I meant:

Right on Thomas. I can't agree with you MORE!

Survival of the Longest

Right on Thomas. I can't agree with you.

If we are to stretch our imagination a bit more, it's not unforeseeable that we may be in whole lot of trouble more. With the Americans used to all the excesses and increasingly belligerent, and the developing countries like China, Russia and Easter Bloc just starting to taste the fruit of capitalism, a prolonged deep recession will lead to....WWIII. It will start with finger pointing backed by religious backlash (just see how Obama is being labeled as an Islamic terrorist!!! just ridiculous), followed by a mass scramble for resources, then a flared up nationalism, finally armageddon, created by ourselves.

The solution? Not clear. We need wise/responsible leaders who can see big pictures (not just finding Russia across the pond) and people start to take responsibilities for their own actions. We created this debt problem, we are the ones who are spending money we don't have, and we are just as greedy as those people on Wall Street. We know it, if put Joe Plummer on the trading floor, he will do exactly the same! It's time to tighten our belts and start to prepare for a long winter... and gold is not a bad idea at all (physical only, those ETFs might just be as worthless as the Lehman shares in the brokerage account)

The Weakness of the Treasury's New Bailout Plan

One thing I learned from the '97 Asia financial crisis is not to bet against the government. The date the HK government intervened in the stock market was the date the market hit the bottom.

Now we have a concerted effort by virtually all the governments in the world (minus iceland) on board to fight this beast, it'd be foolish to bet against them. I don't care how much the hedge funds have in their control, you are fighting against the guy with the money printing press. And where can you go if you don't like what the US is doing? Everyone is on the same boat this time! Look around, the Europeans are in even deeper, and the Asians are panicking even more because they need customers who buy their products!

In short, people, let's quit the doubting and move on try to make the plan work.

Morgan Stanley: Not Out of the Woods

Let's not bash clueless bloggers. Without opposite views, this website will be totally boring. Just like Fitch who just downgraded MS credit rating, this is what makes the market interesting. After all the turmoil, we, at least the more astute investors, should be able to separate the good from the bad and from the evil. I will put the rating agencies in the bad sector, angels like Buffet and UFJ in the good sector, and those who spread malicious rumors and try to benefit from chaos in the evil sector.

Morgan Stanley: Not Out of the Woods

MS shares are up 50%, looking at the previous volume, I wouldn't be surprised that some are taking profit. There's a good chance that the US is going to nationalize all the financial institutions, and even the whole economy, but I can't see that MS is in imminent danger of that, or any worse than Goldman, Citi or JPMorgan. With 9 billion USD in MS, Mitsubishi UFJ, the largest in Japan and second largest bank in the world, will defend its investment till end.

Moody's Dangerous Aggression

Frozen Tundra, just because the guys at rating agencies don't make the big bucks (maybe they are just not good enough to make the big bucks) and they take their analysis seriously, it doesn't mean they are capable or intelligent by any stretch of imagination. Maybe they are just only qualified to do menial jobs, maybe they are better off go rate electronic product safety or test mineral contents in vitamin pills.

I don't deny that there are too much greed in Wall Street, but isn't what capitalism is based on? Without the fundamental drive to create wealth, we might as well all go back to farming and barter system. What we need is some check and balance to make sure greed doesn't go out of control. Dick Fuld is guilty of his arrogence, but the system created him. Don't think for a minute that the guy who's working at the rating agency didn't want to make the same amount of money as Fuld.

Moody's Dangerous Aggression

It's incredible that people would still rely on these rating agencies for advice on what to buy/sell. These same agencies rated AAA tranches for CDO squared and the same one who downgrades the day after the company is bust. Their function in the market can be summed up as "the one to add fuel to fire", either in bull market or bear market.

Who's rating these rating agencies? Just like who's insuring hte insurance companies, or who's guaranteeing those who handing out those warranties you buy at electonic shops.

The Last Days of Morgan Stanley

To Tom in DC. When you look at a balance sheet, on the asset side, there's current asset (which means cash or cash equivalent) and long term asset. If you compare MS and AIG, which I think you should, you will see what the differences are.

My point above is that the Fed and Treasury can't allow another bank failure or their entire effort will be wasted. Also, I believe the Japanese will be good on their word--let's call it an oriental thing that they actually still abide by their word!!! So if you are selling/shorting the stock because you believe the money is not in, then I think it's very very risky. The company is trading at less than 1/2 of its book value which was verified by UFJ (their conversion price for the preferred is at 32 if I remember correctly, and that due dilligence was done 2 weeks ago). So I'd think twice before putting on shorts now.