Finance Addict - Latest Comments

Re: Did Lloyd Blankfein just call the top of the tech bubble?

Finance Addict — Thu, 26 Apr 2012 16:47:04 -0000

As in, cash looking for a place to nest in the face of persistently low interest rates in many of the biggest economies? That's certainly a part of it.

Re: Did Lloyd Blankfein just call the top of the tech bubble?

linhares — Thu, 26 Apr 2012 14:18:58 -0000

It's a currency meltdown

Re: Norway’s new move — what does it mean?

Finance Addict — Wed, 04 Apr 2012 16:33:00 -0000

Great question re the SS Trust Fund. I'm guessing its exclusion comes from its very lack of adventuresomeness, as you put it. The others in the list have quite a bit more latitude in what / where they can invest whereas, as you rightly mention, the SS Trust Fund is restricted to old US government issued & g'teed securities. Where's the fun in that? (Although, I'm not terribly keen on SS getting all Norwegian with my old age money.)

The Sovereign Wealth Fund Institute includes France's "Strategic Investment Fund" on its list, which they say is managed by the CDC. At $28 billion it comes in at #25. The list is pretty interesting, have a look!<http: fund-rankings="" www.swfinstitute.org=""></http:>

Re: Norway’s new move — what does it mean?

guest — Wed, 04 Apr 2012 05:53:43 -0000

Isn't the SS Trust Fund (measured in the several of trillions USDs) the Largest SWF as well as being the most transparent? Of course it is the least adventuresome (owns just USTBs) but in comparison to Germany which runs on a pay-as-a-you-go, it warrants inclusion. Also surprised not to see France's CDC...

Re: Bernanke: the man, the legacy and the law

Finance Addict — Fri, 23 Mar 2012 11:04:28 -0000

I agree with you on the Fed action fulfilling the condition re “unable to secure adequate credit accommodations from other banking institutions.” This is worded very broadly and can be broadly interpreted. I'm less sure about the "loan" vs. "asset purchase" question. Was it a "loan" in name only if its pre-determined purpose was to specifically and exclusively purchase illiquid securities? Also, what about the fact that the "loans" were made, not to the party "unable to secure adequate credit accommodations" but rather to a specially created, arm's length SPV?

Re: Bernanke: the man, the legacy and the law

Guest — Fri, 23 Mar 2012 10:17:08 -0000

Interesting points are raised, but I think the Fed was on legal grounds. First many "purchases" that are reported in the news are realy repos (repurchase agreements) which are considered to be loans - thats what got Lehman Brothers in trouble with the "repo 105" scam when they tried to book repos as sales and not loans (thus moving assets off their balance sheet).
Second, one of the main questions raised by the Penn study is whether the SPVs really had no access to the lending markets (thus violating #3 above). I think the answer to this is a simple yes since the reason Bear collapsed in the first place was a run on the bank and loss of short term interbank lending. This only got worse as time went on. It seems highly unlikely that a SPV trying to get funding to aquire the very same assets that were being offloaded at firesale prices would have much luck in the market... hence the need for the Fed to act as a lender of last resort. Thats the difference between the Fed now and during the Great Depression.

Re: Government’s role in the subprime crisis

Finance Addict — Tue, 20 Mar 2012 00:59:32 -0000

To expand on my Twitter comment, if the GSEs are guilty of anything than it seems to me to be more a halo effect of their general, gargantuan role in the housing market. (A role that's being greatly debated.) If I had to describe it in my own words I'd say that the GSEs have two missions: (1) to give broad support to the housing market and (2) to encourage the fulfillment of narrow goals around providing affordable home ownership to minorities and low-income support. The research paper hones in on goal 2, but goal 1 certainly had a lot to do with the general carelessness seen in the market.

I agree: the researchers do take a very narrow focus and this is an interesting counterpoint to the similarly narrow focus of observers who swore that there had to be a direct link between affordable housing goals & subprime. (And who may well continue to think so, despite this evidence to the contrary.)

Re: Government’s role in the subprime crisis

David_Merkel — Mon, 19 Mar 2012 23:19:11 -0000

"Our results indicate that the extensive purchases of risky private-label mortgage-backed securities by the GSEs were not due to affordable housing mandates."

That is the relatively limited finding of this paper, which examined two hot markets during the worst of the origination. It doesn't mean that by providing a ready market for Subprime RMBS, the GSEs did not add to the crisis. It also does not mean that the GSEs did not add to the crisis by guaranteeing more & more debt against housing which with easy monetary policy, led to overborrowing against housing, helping to create a speculative bubble.

Don't get me wrong, I have not been in the camp that says the CRA or affordable housing mandates drove bad lending. I do think the GSEs played a moderate role in the crisis, mainly through facilitating too much seemingly normal lending as house prices rose too rapidly. Same for the Mortgage Insurers and Home Equity Lenders who allowed deposits to drop to minuscule levels.

There's a lot of blame to go around in the financial crisis, I think the GSEs deserve some of it, but they don't get star billing either.

Re: Government’s role in the subprime crisis

Finance Addict — Mon, 19 Mar 2012 17:00:01 -0000

Indeed, some of the researchers' results support this theory, proving that a loan made to a borrower with income less than the median income in the Metropolitan Statistical Area was 2% less likely to default than one that did not qualify for Fannie / Freddie's income goal.

Re: Government’s role in the subprime crisis

Swami_Binkinanda — Mon, 19 Mar 2012 15:55:54 -0000

Ritholtz and Yves Smith explained this quite a while ago in internet time. CRA loans likely came out better than the subprime and prime originated by private mortgage bucket shops simply because the banks subject to CRA likely did more due diligence on the CRA loans simply because there would be more scrutiny of them. Countrywide et al weren't under CRA and simply cranked out fake loans as fast as their greedy pudgy little fingers could type in imaginary numbers.

Re: A win-win replacement for Wall Street bonuses

Swami_Binkinanda — Thu, 01 Mar 2012 17:38:49 -0000

You know whistleblowers often come to bad ends, right?

Re: Have banks been robosigning credit cards, too?

Neil Almonte — Fri, 24 Feb 2012 14:50:52 -0000

And the question no one is asking. Is the reason Chase isn't complaining about getting caught in that handful of states is because it is the same department, systems and people for accounts in all states with both internal attorneys, external attorney networks and collection agencies? Google Linda Almonte with the keywords Chase, SEC, NY Times, Wall Street Journal, Forbes, etc...

Re: Wall Street has a sad :-(

old.frt — Sat, 18 Feb 2012 01:29:50 -0000

Bingo!

Re: A $360 trillion confidence trick

Finance Addict — Tue, 14 Feb 2012 06:17:27 -0000

LOL! Gallows humor is an under-appreciated artform.

Re: A $360 trillion confidence trick

Finance Addict — Tue, 14 Feb 2012 06:00:01 -0000

Agreed. Self-regulation is no regulation, at all. Case in point is the British Bankers' Association, itself. Its Foreign Exchange and Money Markets Committee is intended to keep an eye on the whole Libor fixing process. From the bbalibor website:

"The Committee is chaired by a representative from a contributing bank who submits to a minimum of three bbalibor currencies."

Re: A $360 trillion confidence trick

Conscience_of_a_conservative — Tue, 14 Feb 2012 05:19:05 -0000

Ironically home owners benefited form this manipulation. What this shows is that Wall Street and the banks are not to be trusted with regards to self-reporting and that only actual prices work. There's a lesson here with regards to swaps which wall street wants to keep off exchange.

Re: A $360 trillion confidence trick

Captain_Willard — Tue, 14 Feb 2012 01:26:00 -0000

Well, they did always call it the Libor 'fixing.'

Sounds a bit like a George Costanza moment...

Mr. Lippman: It's come to my attention that you ~~and the cleaning woman have engaged in sexual intercourse on the desk in your office~~ have been fixing Libor. Is that correct?
George Costanza: Who said that?
Mr. Lippman: She did.
George Costanza: [pause] Was that wrong? Should I not have done that? I tell you, I gotta plead ignorance on this thing, because if anyone had said anything to me at all when I first started here that that sort of thing is frowned upon... you know, cause I've worked in a lot of banks, and I tell you, people do that all the time.
Mr. Lippman: You're fired!
George Costanza: Well, you didn't have to say it like that.

Re: Who really pays for the things we love?

Finance Addict — Mon, 13 Feb 2012 16:40:53 -0000

I completely agree. I read the other day that Nokia is moving the last of its Europe-based production sites to Asia, so unfortunately the trend seems to be toward more of these slave-labor arrangements rather than less. Looking at the Fair Trade movement, do you think consumers will soon start to demand "ethical electronics"?

Re: Who really pays for the things we love?

Derrickvwall — Mon, 13 Feb 2012 15:56:07 -0000

But this goes for nearly every product in U.S. consumption and I don't think it's fair to just point out Apple. I'm not defending Apple, but here me out. Literally, all across the board, companies are guilty of doing things like this every single day and it's ignored by society. We literally will just take it in, spit it out, and block it out of our memory just so we can have a cup of coffee in the morning, for instance.

Re: Why Dodd-Frank has already failed

ExWall Street — Wed, 08 Feb 2012 20:44:37 -0000

I agree with you and want to add to add the issues of regulatory capture and inexperience. The OTS tried to be the kinder gentler regulator.

Re: Have banks been robosigning credit cards, too?

Garand555 — Wed, 08 Feb 2012 20:01:48 -0000

Yup, they robosign. Citibank uses one of its subsidiaries, and that subsidiary measures affiant performance by how many affidavits they average per hour. 30-40 is the range that the quotas will be in. I know this because when I was sued, had they actually checked their records, the suit would have never happened. I did some extensive digging, and fortunately was able to scare them off without ever setting foot into a court room. Their record keeping practices suck, and people don't believe it until I start showing some of the docs that I have.

Re: The Super Bowl & general ad spend: bullish indicator?

Lewisamy3 — Tue, 07 Feb 2012 05:56:14 -0000

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Re: Are we going to own AIG forever?

David_Merkel — Mon, 30 Jan 2012 20:19:00 -0000

I think the US has two possible ways out with $AIG. Take control, break it up, and auction off the pieces. Or, put the companies into runoff. If the reserves are accurate, you'll get book value back. As cash flow comes in, buy up shares on the open market that are currently trading well below book, or dividend out the money to all shareholders.

But if you try to sell off AIG shares, that's a losing battle, because the US holdings are so big that they depress the value of what they would get in a sale. Purchasers won't pay up, because they know the US is a forced seller, and has a lot further to go.

Re: Davos shocked to hear that poor people exist

Finance Addict — Thu, 26 Jan 2012 21:27:28 -0000

That having access to the means for a good life is so dependent on connections is really a deplorable state of affairs.

Re: Davos shocked to hear that poor people exist

Steve Karasek — Thu, 26 Jan 2012 21:16:59 -0000

If we could _all_ invest globally, it could theoretically work. Unfortunately with all the problems that those not on the top have to deal with, such as paying down school loans, cost of living, mortgages, car payments, basically not having enough disposable income, they can't. That's why income is so disparate; some investments pay much more than others, and are unavailable to those without sufficient connections.