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  • Crude Oil Inventories Show a Sharp Decline [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.

    Thoughts, anyone?
    Nov 4 05:59 PM | 1 Like Like |Link to Comment
  • Derivatives: A Banking Time Bomb Waiting to Go Off [View article]
    Yesterday, on Seeking Alpha, Reggie Middleton published a much more detailed analysis of this same topic (the topic of banks holding derivatives). It was titled: "The Next Step in the Bank Implosion Crisis."
    Oct 29 05:48 PM | 2 Likes Like |Link to Comment
  • The Surge in Expectations [View article]
    Thanks for this fresh analytical perspective. (It's a little different from the "same old" recycled commentaries that I so often see from other contributors.)

    Oct 28 08:47 PM | Likes Like |Link to Comment
  • The Credit-Wealth Cycle: Consumer Credit Outstanding, August 2009 [View article]
    I already found a critical typo in my comment. My correction is below in "all-CAPS". I had omitted the word "expired".

    ....natural consequence would have been for the lenders to shorten the length of their "lending" to make sure that their loans EXPIRED before the Year of Jubilee.
    Oct 14 06:26 PM | Likes Like |Link to Comment
  • The Credit-Wealth Cycle: Consumer Credit Outstanding, August 2009 [View article]
    After seeing "derryl"'s reference to Steve Keen's suggestion for a debt Jubilee, I offer the following perspective:

    Several months ago, while reading, for the first time, about the Kondratief cycle (which one might describe as a natural risk-tolerance and/or debt-tolerance cycle), I would see references to the Biblical "Year of Jubilee" (which occurred every 50 years). Consequently, I read its description in Leviticus and then also read several commentaries on it.

    My conclusions:
    - I think that God's real intention behind the "Year of Jubilee" (with respect to the debt forgiveness) was actually to persuade potential lenders to begin RESTRICTING their extensions of credit as the Year of Jubilee approached.
    - Given that everyone in that society would have known, many years in advance, that "debt forgiveness" would be occurring in year "x", it seems that the natural consequence would have been for the lenders to shorten the length of their "lending" to make sure that their loans before the Year of Jubilee. (In fact, Leviticus may have explicitly said something to that effect. I can't remember right now.) Then, whatever debt forgiveness that actually occurred in the Jubilee Year would have been for those remaining debtors who were "late" on their payments.
    - I do NOT think the Year of Jubilee was intended to allow irresponsible borrowing.

    Comments welcome. Corrections encouraged.

    Oct 14 06:22 PM | Likes Like |Link to Comment
  • We're in a Pattern of Increasingly Longer Employment Recoveries [View article]
    Without unemployment benefits, monetary velocity will plunge even faster and more deeply.

    I suppose that the "Austrian School" economists would respond to that with: "Bring on the resulting deflation - the faster, the better."

    Although I do find myself agreeing with some of the "Austrian School" economic theories, I also believe that society still needs to provide a modest safety net to those who have become unemployed through no fault of their own and are still willing to work.
    Oct 8 08:22 PM | Likes Like |Link to Comment
  • John Thain Comes Clean [View article]
    It looks like the Nomura link did not get attached properly.

    If the above does not go completely go through, and you only get the home page, click the following sequence of links, beginning at the home page:
    "Kwok, Yue-Keun"
    "Nomura - CDOs - Squared-Demystified"
    or you can 'search engine' the last item on this "chain" of links.
    Oct 7 08:32 PM | 1 Like Like |Link to Comment
  • John Thain Comes Clean [View article]
    Attached here are links to 2 in-depth articles ("white papers") about the behavior of CDO's-squared and their risks. One is from Nomura (published in 2005). One is from Fitch (published 2004).

    One might be tempted to describe these "white papers" as a description of the mathematical output of "models". But, I'll let you judge for yourselves.
    Oct 7 08:17 PM | Likes Like |Link to Comment
  • John Thain Comes Clean [View article]
    Given that John Thain did not even join Merrill Lynch until November of 2007, I would assert that the real culprit behind their demise was the previous leadership (under Stanley O'Neil). By late 2007, the damage was already done.

    On the other hand, I'm not sure I would call him a financial genius, either.
    Oct 7 08:03 PM | 1 Like Like |Link to Comment
  • Securitization: Have We Learned Our Lesson? [View article]
    I agree with the last paragraph of djackson's comments. I especially agree with his statement that banks "should potentially be required to retain a first loss piece to induce them to perform adequate underwriting."

    There is a great need for better regulations in this arena.

    The more complex types of securitization, such as "CDO's-squared" are much more dangerous than the underlying ordinary CDO's from which they are derived. A CDO-squared is essentially a repackaging of the least reliable tranches of an ordinary CDO's for sale to another entity. (CDO's-squared and CDO's-cubed should probably be banned. They are "risk-concentrators" rather than risk diversifiers.)

    Note the discussion of "cliff risk" at the bottom of page 12 of this link from Nomura:

    An article from Fitch from 2004 regarding CDO's-squared and their correlation risk:

    Basic fundamentals of Asset-Backed Securities appear at this link:

    Likewise, Credit Default Swaps (the great "enablers" of stupid investment decisions), also need better regulation - in order to prevent another AIG fiasco. Credit Default Swaps didn't even exist until the mid-1990's.
    Oct 7 06:38 PM | 1 Like Like |Link to Comment
  • CDS Intermediation Gets Put on ICE but Doesn't Die [View article]
    Do you have any thoughts on the best way to regulate / control Credit Default Swaps - in order to prevent another AIG-type failure 10 years from now?

    If you were invited to give advice to Congress on this issue, what might you suggest to them?

    Oct 2 07:53 PM | Likes Like |Link to Comment
  • Felix Salmon Smackdown Watch, Zero Hedge Edition [View article]
    I have noticed that "Tyler Durden's" last appearance on Seeking Alpha was August 21st. Is this "scandal" part of the reason why we no longer see articles from "Tyler Durden" on Seeking Alpha?

    "For the record", I think Zero Hedge has made a valuable contribution to society by publishing their analyses. Why? Not necessarily because I think that they are always correct in their opinions. (I'm not smart enough to judge them.) Rather, it is because they have stimulated public debate. Furthermore, Zero Hedge quite often shows data and the sources of their data to support their opinions. (As the saying goes: "Without data, it's just an opinion.") (Of course, different conclusions can sometimes be drawn from a given set of data.)

    Likewise, I also applaud Felix Salmon and his contribution to these public debates.

    Oct 1 05:49 PM | 1 Like Like |Link to Comment
  • Why the Transaction Tax Isn't Such a Terrible Idea [View article]
    On Sept 29th, the following commentary appeared on the web site of the New York times:


    Although this type of taxation may not be a perfect way to regulate, the concept of using taxation to correct the economic distortions of structured investment vehicles still has many merits. Additional regulations would still be needed, however. And, I would not want to see us rely entirely on just a tax strategy to inhibit the potential abuses and economic distortions related to structured investment vehicles.

    Sep 30 07:35 PM | Likes Like |Link to Comment
  • Self-Regulating Derivatives? No Thanks [View article]
    Thanks for sharing the commentary by Satyajit Das. I certainly agree with his sentiments.

    Ideally, I would like to see legislation that restricts the sale of Credit Default Swaps to only those entities who actually own a piece of the underlying asset.

    Meanwhile, a less-than-ideal approach that has some appeal to me, would be the idea of TAXING the sale of Credit Default Swap protection. Again...It's not an ideal solution, but it could be a complement to other legislation.

    Any thoughts?

    Sep 28 08:48 PM | 1 Like Like |Link to Comment
  • Why the Transaction Tax Isn't Such a Terrible Idea [View article]
    I applaud this idea from Jeffrey Frankel.

    I especially like the proposal described above by Tom Armistead.

    Similarly, a few weeks ago, while commenting in 2 other articles, I suggested that consideration be given to taxing the issuance of Credit Default Swaps. The tax would be paid by the "seller of protection".

    Such a tax seems rather fair in light of the fact that very large sums of taxpayer dollars were used to clean up the consequences of AIG's reckless sale of CDS's.

    CDS's did not even exist until the 1990's.

    Aug 28 10:13 PM | 1 Like Like |Link to Comment