Reclined

7 Comments

    • Counterparty Risk Could Spread Beyond Credit Markets [view article]
      This article is a disappointing advertisement. Jun 30 10:27 PM
    • Rating Agencies Target Guarantors to Deflect Subprime Blame [view article]
      Tom,
      You have a point regarding the short-sightedness of the agencies' evaluation game. Unfortunately being right here does not help MBIA/ABK since they have too much leverage to gain back credibility in these confusing times. As always in the short term it does not matter whether you will be able to pay and survive but only whether people believe you'll be able to. Might be a big difference!

      I wish I had the ability to correctly analyse today's exposure of financial players. I believe I would become exceedingly rich :-)       Jun 24 12:12 PM
    • Why Wall St. Needed Credit Default Swaps [view article]
      Thank you for this excellent analysis of the drivers behind CDS usage. Apr 22 02:44 PM
    • JP Morgan: $6 Billion Capital Raising Is "Routine" [view article]
      Maybe, just maybe they are eying more acquisition opportunities. Or they are very afraid ... Apr 17 05:06 PM
    • Mannkind Slammed: No Guarantees in Drug Safety [view article]
      Well said, North Observer,

      our society is obsessed with risk. With the regulatory process one can be pretty sure of not missing any MAJOR risk. Of course, there might be minor ones that will be discovered later (and pharma is much better organised to discover these than, say, toy manufacturers) and then one can still pull a drug off the market or amend its label. Since the risks are minor, little harm is usually done. But don't try to explain that to a politician who faces TV pictures of sobbing victims and the resulting public outrage.       Apr 11 02:29 AM
    • Mark to No Market [view article]
      Everyone is now bashing mark to market. I question whether it would be better if we had 'mark to performance'. It makes the valuation even more opaque for the investor in financial institutions. A loan will be at risk a long time before the first default and mark to market uses the best instrument known to mankind in measuring the value of something: the market. And for evaluating a banks options of raising cash mark to market obviously is quite well suited.

      Since loan performance figures are routinely provided as well everyone can make up their own mind of what these assets' values are when held to maturity.

      Would you buy a bundle of subprime mortgages today that have not defaulted so far (= perfect performance)?       Mar 18 04:53 PM
    • TheStreet.com on Primus Guaranty: Wacky and Uninformed [view article]
      Wow, someone's certainly furious here ...

      I like Tom and his ideas but would love for him to more directly address the central concern. While the TheStreet.com article appears somewhat unstructured it is not entirely oblivious of most of the points Tom is making in his article (no serious risk of BK or losing the AAA rating, currently only m2m losses etc).

      Key sentence in the TheStreet.com article is "Given Primus' high cost structure and its book of credit protection that could be easily replicated today at much better prices, the stock will remain in trouble."

      TheStreet implies that Primus has most of its available capital employed and might not have a lot of dry powder left to take advantage of the current spreads. Recapitalisation probably is difficult/too dilutive with the stock price so low. Therefore competitors who are starting in the current environment might have a much better priced portfolio in a short time. Tom's data shows that Primus is currently writing more business than it has done before which is a good thing. The remaining question then is how much dry powder there is left in case the current "mispricing" will stay with us for say the remainder of 2008.

      And, of course the argument with a cost structure, that according to TheStreet is 60-100% higher than industry average, also needs to be addressed (though this might be more open to management's intervention).

      I would love to hear Tom's view on these two points specifically.       Feb 21 08:03 AM
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