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  • The Top 20 Russian Companies [View article]
    most of them weren't even listed anywhere in 1998, lol. i'd be careful shorting them now, with PEs in low single digit ranges, and very remote risk of currency trouble like 98.

    On Sep 07 08:54 AM NUCLEAR1929 wrote:

    > all this top20 are excellent shorts, i remember their 1998 prices
    Sep 7 12:02 PM | 4 Likes Like |Link to Comment
  • Eye on Unemployment: Should the U.S. Stop Immigration? [View article]
    there is a major point you fail to address here:

    The vast majority of the current LEGAL immigration to the US is FAMILY BASED. if i remember it correctly, 90% of those roughly 1 million folks obtaining green cards are not necessarily the skilled labor folks that enter the country on H1-Bs, but relatives of the American citizens (wives, parents etc). Compare the 65K H1-Bs issued per year, and >1 million of Green Cards issued.

    Add to that the illegal unskilled labor, and you will realize that the skilled labor folks represent probably only 3-5% of new immigrants to the US. A drop in the bucket. Interestingly enough, you focus on the skilled labor guys, and unswervingly so- they are the ones who contribute most to the economic power of this country. Ironically, because of huge backlogs, it takes them FOREVER to became permanent here (7-10 years), while family based folks get their permanent status in 2-3 years.

    I think we are better of discussing the issue of "what kind of immigration this country needs". 100K SKILLED immigrants that currently enter the US workforce annually is not a number to complain about.
    Aug 2 11:43 AM | 4 Likes Like |Link to Comment
  • Big New Housing Problem: Mortgage Insurers Back Off [View article]
    I dont even know where to start to critique your thesis. First of all, MGIC IS NOT EXITING the business. Quite to the contrary. They are restricted by the regulator to write new business if their risk-to-capital ratio exceeds 25:1 and anticipate that that will happen at the end of this year. So they decided to set-up a new entity called MIC, with fresh capital, through which they will continue writing. of course, the funding will come from the old entity, which will make the RTC to jump there, and might at the end hurt the clients, but thats different subject (see MBIA, for example).

    As for your point that LTV > 80 loans need to go away, this model has been around for as long as mortgage market existed. you want to kill it NOW? Just because cars have accidents sometimes, does it mean we have to stop using them?
    Jul 16 01:45 PM | 4 Likes Like |Link to Comment
  • Can We Insure Against Systemic Risk? [View article]
    Here are two major points nobody mentions:

    1. AIG was brought down not by the REAL losses on these tranches, but by mark-to-market SWINGS. It was offering to post collateral through a mechanism called CSA, if prices went too far against the protection buyer. Other players like AIG (monolines), did not offer these margin posting service.

    2. It is still not clear whether the real losses that AIG will suffer will be enough to wipe out its capital. For example, MBIA seems to be ok in this regard.

    The CSA offer from AIG was a suicide. Their exposures were close to $1 billion in each deal, with VERY ILLIQUID deals 5-8 years in maturity. With this type of setting, if a price on your tranche jumps from 10 bps to 100 bps, you get slaughtered. (they clearly thought it would not happen.)

    For example, if you sell 5y protection, $10 mill exposure on a liquid name and things go against you, i doubt you'd suffer that much.

    Thats the reason its critical that this systemic risk issue is brought up. NOBODY is big enough to withstand this type of hit (except the govt). Of course, there was a reason the banks wanted to unload these tranches- to free up capital. Easy fix would be to make changes in Basel to view these types of exposures as "capital light".
    Jul 15 01:26 PM | 4 Likes Like |Link to Comment
  • Winter's Coming for the Boomers: Part 2 [View article]
    I am a huge fan of Strauss and Howe, it is interesting that the book "Forth Turning" was written in 1997 and anticipated many events that transpired later.

    I also appreciate the article.

    Can anybody teach me how to save the article in the "Read later" section of the SeekingAlpha website?? I would like to be able to share it later with friends. TIA.
    Jul 13 01:48 PM | 4 Likes Like |Link to Comment
  • Goldman Code Theft Bombshell [View article]
    if true, this is an outrage. i hope somebody does something about it.
    Jul 8 05:25 PM | 4 Likes Like |Link to Comment
  • Buyer Beware: 30 Biggest Bankruptcy Risks [View article]
    Made couple of spelling errors in previous post. Should read: CDS traders follow tens of companies.

    Also, another comment. Technical issues sometimes amplify things. Look at MBI which is on the list. It sells insurance, and thus poses counterparty risk. So many folks who buy insurance from them, are forced to buy protection on MBI (buy CDS), which is fairly illiquid. They still buy it and drive CDS level up. So how much of liquidity premium is built into MBI CDS spread? Trust me, nobody knows.
    Apr 21 11:47 AM | 4 Likes Like |Link to Comment
  • Could the Dow Sink Another 50% by 2012? [View article]
    I had to go through all this negative hogwash to find out at the end that the author is actually long the market. LOL! Why do SA editors allow such nonsense?

    Apr 5 03:20 PM | 4 Likes Like |Link to Comment
  • Geithner's Plan May Not Be So Bad [View article]
    "He has presented absolutely zero data on the prices and corresponding historical loss curves for the various vintage-product types (eg, Alt-A mortgages, 2006, average current price and losses). He doesn't have the data, he wouldn't know how to set it up. It's the kind of detail he is ignorant about but does not think is important. Details matter. Subprime, Alt-A, conforming, vintage, seasoning all matter."

    Bingo!!! As a analyst on all this stuff for over a decade, I am in total agreement with you here. Roubini, Krugman et al, are smart folks but they are 1) biased, 2) have never been in the "tranches", ie observe the war from a distance, 3) use econ vs market models. Let them. Still too early to tell if it works, but if it does, I'd like to see them on John Stewart's show. Or, at least admit, they were wrong. Which, of course, wont happen.
    Mar 23 03:28 PM | 4 Likes Like |Link to Comment
  • Putin, the Economics Professor [View article]
    with average P/E of 3.5 (lowest for all markets) and oil/metals scraping the bottom, I would be VERY careful shorting russian markets based on whatever Putin says... whatever he says has not changed since mid-08, when the RTS was ~5 times higher...
    Feb 2 09:27 AM | 4 Likes Like |Link to Comment
  • This Time It's Different? [View article]
    where can i get that 2% for margin money?
    May 12 10:46 AM | 3 Likes Like |Link to Comment
  • 6 Reasons Stocks Have Likely Entered A Bear Market [View article]
    No offence, Erik, but I'd recommend readers to check your earlier articles on SA.
    Jun 3 12:29 AM | 3 Likes Like |Link to Comment
  • Chart Of The Day: The CDX NA IG 9 Basis [View article]
    I am not expecting Felix to reply but what he says is wrong. Or maybe I am not reading his thoughts correctly.

    Basically, a negative basis trade works when buying CDS (synthetic) protection is cheaper vs. identical bond (cash). For example 5Y bond yields 5% and CDS protection costs 4.5% (450 bps). Its as simple as that.

    Therefore, in negative basis environment we are at right now, I makes sense to BUY synthetic CDX when you hold cash position, not SELL it. AND when you BUY it, and basis tightens as the chart shows, you actually make money.

    The only reason JPM would SELL CDS protection on CDX -the-index when basis is negative is when you are SHORT cash bonds. Or when you speculate.

    My personal take on the whole situation is that Felix is wrong in thinking that it is about basis trade. It is something else, ie bet on the economy, or as some other commentators suggested, it is a curve flattening trade.
    May 11 11:41 PM | 3 Likes Like |Link to Comment
  • Why It May Finally Be Safe To Short The 30-Year U.S. Treasury Bond [View article]
    Just a naive non-professional opinion here: I used to be short TBT but gave it up. I calculated TBT decay to be roughly 15% annualized if rates do not change. If they dont move much over next 3 years, TBT will hit single digits from current $18-$19. The Fed prints and buys bonds from Treasury, and I highly suspect the other players frontrun this trade. Bernanke wants to keep rates artificially low for extended period and this makes me think TBT with its decay will continue suffering losses for quite some time (up to 3 years). I might be completely wrong here and would love to hear opinions on why that is not the case. Oh, also, I agree with Soros who said last year that when yields start moving up, it will put downward pressure on the fragile economy and that will force them down again. This period of de-leveraging will last for quite some time I am afraid.
    Jan 30 03:23 PM | 3 Likes Like |Link to Comment
  • ECRI Recession Watch: Growth Index Drops Further [View article]
    The Fed must be paying attention. QE3 is on its way.
    Oct 21 07:55 PM | 3 Likes Like |Link to Comment