J. D. Swampfox

CDS Recoveries: Down and Out

Default rates expected at "2 standard deviations below the historic average." Now that's beginning to sound like one of Nassim Taleb's Black Swan events.

Obama's toughest critic: "Krugman may be exaggerating the decay of the financial system or the devotion of Obama's team to preserving it. But what if he's right, or part right?" (Newsweek)

Newsweek says, "By definition, establishments believe in propping up the existing order. Members of the ruling class have a vested interest in keeping things pretty much the way they are. Safeguarding the status quo, protecting traditional institutions, can be healthy and useful, stabilizing and reassuring. But sometimes, beneath the pleasant murmur and tinkle of cocktails, the old guard cannot hear the sound of ice cracking." The establishment to which they refer is the banking oligarchy, from which Tim Geithner hails and to which both politcal parties are bound. The ice could be cracking indeed.

Nassim Taleb. He got it right, but still gets no respect.

Dr. Taleb and Dr. Mandelbrot should be heeded, but it looks like we may have to go through more than one "fat tail", "not in our lifetime" event before they are given proper credit.

What Else Are the Banks Hiding?

Simon Johnson has a great article in the The Altantic about how the bankers oligopoly have staged a "quiet coup", bringing the US government under their thumb since World War II and the urgent need to put them in their proper place before we spin off into depression. see: www.swampreport.com/po.../

Friday's Game Plan

If the banks are going to be able to sell their bad assets to the public/private partnerships at book value then this is good for banks that are solvent, but doesn't help ones that already are insolvent. See Roubini video at www.swampreport.com/. Still either way, it looks like we can expect much volatility in FAS and FAZ over the next weeks.....

U.S. Sets Plan for Toxic Assets: According to WSJ, the plan could be unveiled as soon as Monday and has three parts: a new entity to purchase and hold loans, an expanded TALF, and the establishment of public/private investment funds to purchase MBS and other securities.

User 357469
Your accusation is not true. I do have friends and family who follow my posts on this site and others. I do not operate multiple accounts, nor have I ever systematically voted down any other user on this site.


On Mar 21 10:50 AM User 357469 wrote:

> J. D. Swampfox,
>
> You are using multiple accounts to boost your own ratings, and downgrade
> others. SA will likely terminate your account very shortly.
>
> On Mar 21 10:31 AM J. D. Swampfox wrote:

Beat Up Small Cap Bank Stocks Provide Trading Opportunities, But Tread Lightly

Some bank stocks were good trades in this time, but not good investments.

On Trading With the Trin

Where can a regularly updated chart of the Trin be found?

Here We Go Again: Another U.S. Bad Bank Plan

"holographic carrots" and "That's Another Laughable Failure"...you're on a roll Macro man.

New proposed MTM rules increase the spread between what banks are willing to take and what other investors are willing to pay...

While tending to narrow this spread, federal financing of private/public partnerships increases the risk that Congress will expropriate (er... tax) private profits from participation in the program...

What are the odds that someone will ask Timid Tim if he is going to resign as he makes the formal announcement about his new "program"?

Credit and Oil: UK Industry Update

The sort of information in this article and in Professor Banks comment above leads me to think energy prices will one day explode. It's just hard to judge exactly when to take an investment position...

FDIC's Increasing Travails

The systemic exception says, "only if the Board Of Directors of the FDIC, The Board of Governors of the Federal Reserve System, and the secretary of the Treasury, in consultation with the president, determine the least-costly approach 'would have serious adverse effects on economic conditions or financial stability.'" NONE of these groups, particularly not President Obama, have made ANY effort to EXPLAIN to the American people WHY bank bondholders are to be kept from suffering ANY loss and are more important to him than taxpayers.

U.S. Sets Plan for Toxic Assets: According to WSJ, the plan could be unveiled as soon as Monday and has three parts: a new entity to purchase and hold loans, an expanded TALF, and the establishment of public/private investment funds to purchase MBS and other securities.

The government has a nice plan, but anyone who partners with the government is likely to be targeted for control by congress and the administration, now or later, at their whim. The risk that the private investor who participates in this new program will be sacrificed when convenient is very real.

The FOMC Pulls Out the Stops

All currencies are racing to the bottom as the nations see who can inflate the fastest. A good case can be made (for example, A. Gary Shilling) that when its all said and done, the dollar will still come out on top.

RMBS Opportunities in 2009: Recap from IMN's Distressed Investment Summit

The writer reports: "For a Performing Loan Portfolio with the following assumptions, ROI reaches 17% (or higher with a purchase price closer to 40):

* Default rate of 10% per year
* Prepayment rate of 5% per year
* Recovery Rate of 50%
* Eventually trades at par

Most of the panelists agreed on the assumptions and projected ROI, but this all assumes that the market price will strike at the 40 range, instead of the 50-60 range."

As said, apparently no one else will buy them at the 50-60, so the current holders are going to have to hold on to them. If the current holder's pre-write-down cost is 95, those current holders will be earning a return that is maybe 6 or 7%...but since they are enjoying almost zero cost of funds thanks to the Fed, that's not a bad spread - right? And, if they can hang on long enough they could earn a fair return, while they wait to sell the RMBS off later - right?

Markets Are Now in a Healing Period

The FED knows something we don't. I predict once whatever that is, is out, that old low will be broken.