WAdem

Sell in September? Time for a Reality Check

Great insight, but isn't it just possible that due to the perception that September is a downer, many investors take this conventional wisdom into their trading consideration. In other words, are we simply creating a self-fulfilling prophecy? Another thought that comes to me is that traders coined the, "sell in May and go away", so they could close out their positions and take a long Summer break. The still do that which is why the recent rally has occurred on such light volume. It follows that when the pros come back from vacation, they pounce on the opportunities left by retail investors. Just a thought.

Bonus-Tax Stocks Get Whacked

I think we are missing the important points of this issue. First, many of these AIG bonuses were put in place to retain certain employees in order to unwind the toxic assets. If this is so, then taxpayers are being held hostage to the same unethical people who created these financial instruments. From what I have gleaned, their initial actions were not illegal. Their implied threat to sabotage efforts to mend the World's capital markets unless they receive large bonuses is criminal and we should not accept anyone using the current meltdown for personal enrichment. Also, it seems obvious to me that Hank Paulson was part of the problem while trying to find a solution last year. He encouraged Geithner to allow these unconscionable bonuses since they are routine for Wall Street. Paulson treated LEH much differently than BSC due to his personal animosity for Dick Fuld stemming from their longstanding professional conflict on Wall Street. Allowing LEH to fail was the single largest mistake made in trying to resurrect the economy and Paulson blew it. The systemic risk was far worse than it needed to be. Paulson could have found a partner for LEH just as he did for BSC if he wanted to.

Why AIG Wasn't Allowed to Fail

Mbuna- you say that big banks have gamed the system and that there are no prosecutions. Of course not! When Gramm-Leach-Bliley removed the regulation of the banking system, it removed any legal consequences. How can the shadow banking industry including subprime mortgage lenders be held accountable when there ARE NO RESERVE REQUIREMENTS? In addition, Hank Paulson himself lobbied Congress to allow increased leverage so that GS and others investment banks and hedge funds could securitize these unregulated financial instruments and sell them off to unsuspecting investors as quickly as they could so that they could sell more and create more derivatives and make more false profits and, hence, more bonuses. Despite the obvious ethical failures, what are the crimes they should be charged with? Now, we hear from those who did everything in their power to eliminate the regulatory protections of the Glass-Steagall so-called banking act that has served us so well since the Great Depression, that we shouldn't be too hasty to regulate and oversee the financial markets lest we stifle their entrepreneurial spirit! Well, bulls**t!! If we have learned nothing in the last go around of unfettered free markets, it's that businessmen cannot be trusted to self-regulate. DUH!!


On Mar 17 03:10 PM Mbuna wrote:

> AIG and the big banks have gamed the system. They have become successful
> at widespread extortion of the taxpayer and the government is caught
> in the web. And this is all legal, apparently. There are no prosecutions
> of any significance going on here. No laws have changed so guess
> what? Let's get into the CDS business!
> I'm sure there are lot's of buyers so we can grow really fast and
> pay ourselves lots of money in the process (especially those bonuses!).
> Then when we started defaulting on our contracts good ole Uncle Sam
> will step in. No Problemo! Just rinse, repeat, and laugh all the
> way to the bank.
>
> The CDS business should be shut down or at the very least heavily
> regulated. Now let's here from all the morons who think otherwise......but
> full disclosure only please, lol.

Why Zombie Banks Won't Be Nationalized

I can't help noticing that all of the "free marketers" like Larry Kudlow are calling for the suspension of mark-to-market for the banks toxic assets. Funny, I thought mark-to-market was pricing as determined by the free market. Silly me.

I don't care if the banks are kept in private hands, what I want is for the present management to be discharged and the balance sheet cleaned up so that if can properly function once again. The notion that the very individuals that thought housing prices can only go up and that securitization and leverage could be done with limited risk shows their collective incompetence. Let us rebuild the banks with new management for the new business model they will operate under. And spare me the sermon on how detrimental regulation and oversight is to businesses. I'll take a side of that as well.

Options Trader: Thursday Outlook

Reagan was also the first president to hitch his wagon to Art Laffer's supply-side economic theory. The same one George H. W. Bush called "voodoo economics". The same theory that left 41 with no option but to raise taxes to mop up Reagan's folly. If we have learned anything over the last few months, it's that the simple minded laissez-faire approach to government has failed. If supply-side Reaganomics worked, we would be flourishing right now instead of perched on the precipice of another depression. We need regulation and oversight to prevent greed from overtaking honesty in our market economy.

How Much Can We Blame the Uptick Rule?

I am a little confused. Cramer didn't contradict himself. The market simply rose from his 2005 statement. Hedge Funds short when a particular stock is declining in price, right? And bears like to decimate small floats by shorting them coupled with rumors to take them down thru this strategy. This is illegal and we need to root it out. I think the BSC case will reveal that the very hedge funds that were rumoring liquidity problems with Bear Stearns were taking there money out of the company while shorting as rumoring down the stock. Unconscionable!

Missing From All the Credit Crisis Coverage: A Realistic Assessment of Where Home Prices Are Headed

I think your assessment is only partly correct, Michael. Those communities that enjoyed the largest increases will, no doubt, pay a greater price in the downturn. The "fly-over" country and other major metro areas you cite will probably continue to see small price appreciation as long as housing price increases have not outpaced wages and rents and taking into account the increase we will see in coming years as mortgage rates return to their historic levels in the upper-single-digits.

These controversial mortgage products that have been the catalyst for the credit crisis are unprecedented. I doubt we will see them revived any time soon. The real reason there is so much fear in the markets right now is that we have never been here before with so much debt and so many marginalized buyers.

How U.S. Housing Bust Can Affect Emerging Markets

One thing you're missing; China and other emerging countries are becoming cosumers. They aren't like Japan. They can and will replace our consumers purchases with their own. Now that's a novel thought, isn't it? Do you think they'll just keep sending their hard-earned cash back to us for treasuries?

Adjusted Case Schiller Housing Data

Yes, you probably could have made it more realistic with an adjustment for rents, although Houston is hardly the typical market. In California and Florida, million-dollar homes rent for $3500 per month!

Another oversight like the one mentioned, income tax benefit, is the less obvious lost opportunity of investing in equities. Dr. Shiller mentions that over the 1890 to 2006 period, I think, residential real estate has returned just slightly more than treasury bonds! Not a very appealing investment.

By the way, most of us are actually renters. We rent money from mortgage lenders to occupy their house (until we pay it off). It is little different from renting the same house from a landlord, in fact. And, as we are learning, with great financial risk. Think bankruptcy as the downside vs. "the American Dream".