Fredrik

Geithner's Complex Plan Won't Fix the Problem

mikeg3
what you write here is why we are not progressing
you are promoting a world away from marking assets to market
we know now very well what the world you are promoting is like - frozen credit markets and global trade leading to mass redundancies and economic depression, the banks are essential to greasing the cogs of the economy and the lack of marking losses leads to immense distrust
you cannot just 'hide' the losses (like volcker did) and hope that economy will recover because the credit losses is the reason why we are here (unlike volcker)!! hence we will NOT recover until they are recognised and disclosed, the more people we have like you and seemingly the folks in DC who hope the problem will just go away the longer and more damaging this will be... so i've just explained the significant downside in not marking to market - where is the upside in what you advocate ??


On Feb 11 06:45 AM mikeg3 wrote:

> The alternative is to suspend the mark-to-fire-sale-mark... rule
> and treat the underlying loans as loans. On a present value basis,
> with reserves taken, the big banks are OK. Most borrowers do not
> default, even on upside down mortgages, unless they lose their jobs.
> We just need to wait for a job recovery and the banks will recover.

Recession, Rate Cuts and Stocks: Why This Time It's Different

good call!


On Dec 01 05:38 PM jepittman wrote:

> OK this time its different. It appears you are solidly within the
> consensus here. Bearish sentiment is very high and risk aversion
> is at a record. There are virtually no returns for ten years in a
> treasury bond and the corporate market is virtually closed. Short
> term interest rates around the world are plunging and gasoline prices
> are at multi year lows. There is a new and popular president about
> to take office whose intangibles are off the charts. Huge fiscal
> stimulous packages will be passed and implemented within weeks not
> just in the US but also in China and other countries. The US Federal
> Reserve is engaged in unprecedented monetary stimulation - the money
> supply is going hyperbolic. The banks have recieved billions in capital
> injections and are being told in no uncertain terms to lend to qualified
> borrowers. Large banks are being backstopped and the Fed is buying
> mortgage paper by the billions. As a result lower mortgage rates
> are allowing homeowners to refinance their mortgages. The news flow
> is a constant drumbeat of negativism. Everything is given a negative
> spin as the fires of fear are fanned. Yes its different this time.
> None of this matters. Its just all going to he--.

Self-Defeating Stimulus Packages: Retaining Short Bias for S&P 500

'The equity and bond markets have obviously built up a degree of underlying optimism' - I'm curious to learn in which security prices you are seeing this? I can only see deflation being the overwhelming consensual position in the various securities markets I look at. That said, I think you are correct in being critical of the stimulus packasges being announced. However, the discussion whether it is 'right' or whether we can afford it is in my opinion irrelevant for the next couple of quarters because the cash is regardless being injected into the economy and it will reflate it. I would not be short during this period, better review the short case around the Q2 stage.

How to Succeed in a Bear Market

yes, people who do their homework usually come out on top but that does not mean that studying company fundamentals will necessary earn you better than market returns. it is much better in my opinion to do your homework on such subjects as financial history and market behaviour. a great example is that i will bet you that the when we have hit the lows and a new bull market emerges it will not be the great companies that perform in fact it will be exactly the opposite, the garbage companies will perform extremely well, have a look at financial history instead, everytime this amazes the fundamental stock analysts and the MBA types because it doesnt 'make sense', the fact is its just what markets do...

Fundamental Valuation: How Low Could We Go?

interesting article
with respect to your observation that SPX trades at 1.5x book value but traded below book value during the great depression its also worth pointing out for purposes of scenario stressing that the Nikkei is currently trading just below book value, i personally think the nikkei is a much more interesting long than SPX but thats another big discussion...