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Mill Rat

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  • Should We Ban Naked CDS? [View article]
    As a follow-up to my recent comment, I would also like to refer you to the latter-half of this article from Kyle Olbert, beginning with the section he titles as...
    "EXPLAINING THE FUNDAMENTAL PROBLEM: A BREAKDOWN IN THE PRICE DISCOVERY MODEL"

    seekingalpha.com/artic...
    May 12 09:04 PM | 1 Like Like |Link to Comment
  • Should We Ban Naked CDS? [View article]
    However, in hindsight, we can also now see that...

    ...prior to 2008, Credit Default Swaps often functioned very poorly as a "risk discovery" mechanism.

    They caused Collateralized Mortgage Obligations to be PERCEIVED AS being much SAFER than they actually were (courtesy of the idiots at AIG, for instance). The excessive abundance of CDS protection fooled the lazy credit rating agencies into giving high scores to nearly-worthless "I.O.U's" (aka the higher-risk CMO tranches). This made it easier to sell the nearly-worthless CMO tranches, which then exacerbated the over-investment of capital into the housing marking.

    HOWEVER, perhaps an even WORSE CULPRIT behind the housing bubble has been the so-called "CDO's-squared" and "CDO's-cubed". These are collaterallized debt obligations composed of the worst CMO tranches. They served to further destroy transparency and have had the side effect of significantly concentrating risk rather than dispersing it.

    Bryan
    May 12 08:37 PM | 1 Like Like |Link to Comment
  • Is Greek Contagion Crushing Crude? [View article]
    See the following articles from 2008 regarding the role of speculation in oil markets.

    www.spiegel.de/interna...

    www.businessweek.com/l...


    Bryan
    May 6 08:06 PM | 1 Like Like |Link to Comment
  • Taxes on Rich Are Poor Man's Burden [View article]
    Among the reasons why the middle class has been eroded (or partly destroyed), I would suggest the following sequence of events as one of the culprits:
    1) First, "easy credit" exploits the natural greed of people and entices them into going too heavily in debt.
    {Footnote: CDO's [aka the "shadow banking system"] were a very large source of that easy credit. However, the Fed does not escape blame, either.}

    2) The resulting** inflation then reduces the middle-class' disposable income as well as their ability to make debt payments.
    {Footnote: During inflationary periods, most middle class Americans either (a) do NOT get a pay raise from their employer or (b) get a very meager pay raise which is LESS THAN the true inflation rate.}
    {**2nd Footnote: I also do agree that a "weak dollar" policy was a significant driver of the inflation in the 2007-2008 time period.}

    3) Those persons who are the most heavily indebted begin to default on their debts. Meanwhile, other sectors of the middle class begin to increase their use of credit in order to continue to buy food, gasoline, etc. Eventually, some of them may also begin to default.

    A question to ponder (because I don't have the data to answer it):
    During the last 8 or 9 years, to what extent did the wealthy actually use their tax cuts to create or fund new businesses? (as the supply-siders would suggest) and to what extent did the wealthy simply transfer their tax cut windfalls to some hedgefund for speculation in energy and agricultural products? (thus driving up inflation for everyone esle) Does anyone have the data to answer that???

    Term for the day: "Inflation Tax"
    Apr 21 08:52 PM | Likes Like |Link to Comment
  • Will Tax Rate Cuts Completely Pay for Themselves With Increased Revenue? [View article]
    I love it when people cite data to make their argument.
    Thank you, "Explorer", for providing these tax rates of other nations for comparison!

    Meanwhile, a similar conclusion can, perhaps, be gleaned from examining historical US tax rates and comparing them to the particular state of the economy for their corresponding time period (with an appropriate time lag, of course).

    For now, I will not explicitly state what conclusion I am drawing here. Hopefully, it (like the sarcasm of the above comment) is rather obvious to everyone.

    (If / when "disputing", please identify which of the above named countries would be preferrable to living in the United States.)

    Bryan
    Apr 20 09:22 PM | Likes Like |Link to Comment
  • Thoughts on the 0.00% Yield [View article]
    Solar works well for drying clothes, too.

    (Sorry...couldn't resist the opportunity for some humor today, albeit truthful humor, in this case.)
    Mar 16 06:56 PM | 3 Likes Like |Link to Comment
  • The Grip on Consumer Credit Finally Loosens [View article]
    The raw data from the Federal Reserve actually supports the comment from "j-dub".

    I visited the zerohedge.com website today and found this interesting article from "Tyler Durden" (title: "The Primary Source Of January's Surprising Boost To Consumer Credit? Why, The US Government Of Course")

    He provides a link to the Federal Reserve's website to support his claim. Here is that link again:
    www.federalreserve.gov...

    Take note that... the ONLY column for which January is higher than December is the column labeled "Federal Government".

    Bryan
    Mar 5 08:35 PM | 3 Likes Like |Link to Comment
  • Wealth Disparities in U.S. Approaching 1920s Levels [View article]
    By 2006, the damage had already been done. (Nevertheless, I will grant that the damage was a bi-partisan "effort".)

    seekingalpha.com/artic...

    seekingalpha.com/artic...

    Also note that, by 2006, today's crisis was already showing up in the yield curve. See the following article from econobrowser.com:
    www.econbrowser.com/ar...
    Feb 23 06:23 PM | 5 Likes Like |Link to Comment
  • What Are Leading Economic Indicators Telling Us? [View article]
    The topic mentioned in the comment below ("coincident to lagging indicators ratio") could be an excellent subject for a future article. [...unless it was meant sarcastically] By chance, are you able to recommend any well-written articles on it? It sounds intriguing.


    On Dec 17 06:44 PM bbro wrote:

    > If you don't like the leading indicators...use the coincident to
    > lagging indicators ratio it has a better track record and it has been going up for 8 months....
    Dec 17 07:48 PM | Likes Like |Link to Comment
  • Economic Indicators: The Good, The Bad and the Ugly [View article]
    I apologize for the double-posting of my above comment.
    Dec 11 09:54 PM | 1 Like Like |Link to Comment
  • Economic Indicators: The Good, The Bad and the Ugly [View article]
    I liked this artcle because the data was well-communicated.

    Consequently, it allows us the opportunity to make our own judgements and draw our own conclusions.


    Bryan
    Dec 11 09:50 PM | 1 Like Like |Link to Comment
  • Economic Indicators: The Good, The Bad and the Ugly [View article]
    I liked this artcle because the data was well-communicated.

    Consequently, it allows us the opportunity to make our own judgements and draw our own conclusions.
    Dec 11 09:48 PM | 1 Like Like |Link to Comment
  • Bond and Stock Price Returns vs. Total Returns [View article]
    You do an excellent job of "letting the data tell the story". I have learned a lot from your various articles during this past year or so. I wish that more of the Seeking Alpha contributors had your communication skills.

    Thanks,
    Bryan
    Nov 25 08:00 PM | 1 Like Like |Link to Comment
  • AOL’s New Model: Fighting the Downward Trend [View article]
    AOL's decline may accelerate if it's e-mail users are experiencing what I have recently been experiencing with AOL (as of Monday), which is.... I am no longer able to view my AOL e-mail via Windows Explorer. Although, I can easily "log in" to my own account, I am, nevertheless, unable to view my own e-mail list or the e-mail itself.

    Consequently, those of you researching this IPO may want to "ask around" and research the extent to which this issue is affecting other AOL users.
    Nov 25 01:30 PM | Likes Like |Link to Comment
  • Hefty Gasoline Supplies During Slack Demand Period Open Door to Call Sellers [View article]
    Below is a link to an interesting Wall Street Journal story from 14 months ago (Sept 4th, 2008).

    At the time of the article, the CFTC apparently felt the need to investigate whether "energy market players" were manipulating the oil inventory data which is reported to the EIA.

    online.wsj.com/article...

    Thoughts, anyone?
    Nov 4 06:26 PM | Likes Like |Link to Comment
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