Ray Lopez

John Paulson: Long Financials

Does anybody wonder why GS traded so well? Did Hank Paulson tip them off? I wonder...

raylopez99.blogspot.com/

The US government, via the Federal Reserve and US Treasury, caused the financial meltdown in September 2008.

No this is not a conspiracy theory. No less than John Taylor of the Taylor Rule of economics subscribes to it, as do many conservative economists.

Five Reasons the Market Could Crash This Fall

See my blog post here on an argument that the US government was the cause of the financial meltdown of fall 2008: Ray Lopez: tinyurl.com/n7rwjy/

Interpreters of Data Should Exercise Care to Get Facts Right

Good article. Mauldin, a permabear, is indeed a censor. I disagree with this author's conclusion that Lehman allowed to fail was the cause (rather than an effect) of this credit crunch. Superheated water will boil at the slightest provocation. Mauldin also data mines--his latest missive about how bonds outperform stocks over certain time periods ignores the fact that outside these time periods stocks crush bonds. But Mauldin is free, as is this site, so you can't complain too much.

How Bailouts Are Messing with Capitalism

For you enemies of capitalism: "too big to fail" is a GOVERNMENT INVENTION. Who do you think invented Fannie and Freddie? It was not the free market.

Eight Reasons Bank of America Is Going to $20

BAC is worth $4 a share, worse case. You have been warned. RL
Valuation We are cutting our fair value to $16 from $30 as we incorporate a range of likely dilution from the government's third helping hand. At this point, we think it is unlikely Bank of America can pass the stress test's downside scenario with its current capital base. Consequently, the company will likely be forced to raise additional capital in the next six months. Depending on the results, we can see the dilution from being just the burden of additional preferreds that never convert to common stock on the low end to the government owning a 49% stake in the banking giant on the high end. These give us a range in fair value estimates from between $9 to $19. Additionally, we have increased our loan-loss assumptions for the next two years to 3.05% in 2009 and 2.5% in 2010 and reduced our assumed long-term value of Merrill Lynch from $20 to $10 per old Merrill share. If you assume Merrill is worthless, our fair value estimate would decline an additional $4 per share.