s243a's Comments

Credit Writedowns : Seven reasons to be skeptical of Obama's economic plans

Tue, 27 Jan 2009 19:35:05 +0000

I’m not sure the US has enough money for more stimulus. See the documentary: I.O.U.S.A. www.cbc.ca/documentaries/passionateeyeshowcase/20...target="_blank">http://www.cbc.ca/documentaries/passionateeyeshowcase/20... As for the U.S. government buying up mortgages. I agree that it can keep prices artificially high but they can do so in a way to help keep american’s in their homes. www.thepeacearch.com/forum/showthread.php?t=12797...target="_blank">http://www.thepeacearch.com/forum/showthread.php?t=12797 These points you mention concern me a lot: •Obama is silent on prosecuting financial industry villains •Obama must re-regulate, but not go overboard •Obama must beat back the protectionists But I do think China does do currency manipulation and without some appreciation of the Chinese dollar it is going to be harder for things to get into balance.

Credit Writedowns : Bailouts: catching a falling knife

Mon, 26 Jan 2009 04:39:26 +0000

Anarchus, I hope the house prices don't have another 20-40% to go. However, if they do then maybe they are trying to use currency devaluation to cover the remaining gap.

Credit Writedowns : Why is General Electric paying a dividend of 10%?

Mon, 26 Jan 2009 04:08:22 +0000

So GE has a return on Equity of 15.57% and their retained earnings seem to be growing. From that perspective it looks as they can afford it at least from a historical perspective. Not sure about future projections. http://finance.google.com/finance?fstype=bi&q... However, Their return on Assets is only 2.14%. Their assets seems seem to under perform their 10 year treasury while their equity seems to over perform their 10% dividend. I think I need to learning more to understand why these two numbers are so different.

Credit Writedowns : Dividends are under pressure

Mon, 26 Jan 2009 03:54:12 +0000

That's too bad dividends are coming down. The high dividends were a great opportunity for investors.

Credit Writedowns : Bailouts: catching a falling knife

Wed, 21 Jan 2009 20:22:52 +0000

I remember reading your past comments when I was watching squeezeplay last night: http://watch.bnn.ca/squeezeplay/january-2009/sque... And so many of your comments:: Pushing on a string: Insolvent banks: today your post remind me of some points I saw on the show. Another point that Kevin made on squeeze play is that the recapitalization of banks dilutes shareholders earnings and for that reason he would rather buy debt the equities. The prospect of banks being insolvent after considering future loan loses is scary is scary. However, is there a chance that future inflation could inflate the value of assets and help counteract loan losses?

Credit Writedowns : Bernanke speech at the LSE

Wed, 14 Jan 2009 15:56:01 +0000

There are proposals for keeping American’s in their homes: http://www.thepeacearch.com/forum/showthread.php?...And buying up say corporate bonds makes it easier for businesses to borrow money.

Credit Writedowns : Crony capitalism in U.S. banking bailout should end

Wed, 14 Jan 2009 02:03:24 +0000

Sorry. I read that wrong.

Credit Writedowns : Bernanke speech at the LSE

Tue, 13 Jan 2009 19:37:31 +0000

I think the move for the FED to buy other types of debt besides treasuries is good. However, if the fed is going to by securities, then I hope that it buys quality securities and not ones which are synthetic/secondary and overly opaque. The Fed should buy debt products that continue to make payments sufficient enough to justify the expenses/risk. The Fed should not by products which have systemically failed due to bad finical engineering.

Credit Writedowns : Crony capitalism in U.S. banking bailout should end

Tue, 13 Jan 2009 19:31:24 +0000

"A prohibition on acquisitions of solvent banks by firms receiving TARP funds (The acquisition of NCC by PNC Bank and of Chevy Chase Bank by Capital One Financial after the acquirers received TARP funds are two acquisitions that should never have happened.) " Didn't you say that liquidity shouldn’t be given to illiquid companies not insolvent ones? Isn’t it the propping up of failed companies that creates the moral hazard?

Credit Writedowns : Links: 2008-01-09

Fri, 9 Jan 2009 19:18:34 +0000

Part of me says that if Obama is getting flack from democrats then it is a sign that he is governing from the center as he should. However, I agree with Kerry. Keep taxes were they are. Wait for a recovery to either rais or lower them. Investment in infrastructure gives something tangible for the stimulus and will be filtered to consumer though the jobs it creates.

Credit Writedowns : Galbraith makes a comeback

Fri, 9 Jan 2009 05:16:03 +0000

Maybe I should put him on my reading list. The two books I bought recently which are most relevant to the crisis are: "The Dollar Crisis" by Richard Duncan "Structured Finance & Collateralized Debt Obligations" by Janet M. Tavakoli I only read a bit of the second one and a fair chunk of the first. I highly recommend both books but the second one is quite expensive.

Credit Writedowns : Who is Raghuram Rajan?

Tue, 6 Jan 2009 19:52:19 +0000

I love the first sentence in his answer "I worked for an association promoting housing, and it was my job to represent their interests. If you look at my actual forecasts, the numbers were right in line with most forecasts. The difference was that I put a positive spin on it." I’m sorry for being cynical but I can’t help but wonder what Greenspans interests were.

Credit Writedowns : Who is Raghuram Rajan?

Tue, 6 Jan 2009 04:55:47 +0000

Where were the mistakes? Awesome article! Anyway, with regards to Greenspan, perhaps what he says now as former chair of the fed does not necessarily reflect his true beliefs. Greenspan once touted the gold standard as economic freedom:

Credit Writedowns : Quote of the day: Stephen Roach

Sun, 4 Jan 2009 21:35:10 +0000

If you pay someone to store your gold then it yields zero interest just as cash would yield zero interest if you put it in a safe deposit box. Money deposited in a bank pays interest because you give the bank permission to loan out that money. Thus when you put money in a bank for safe keeping you are not really depositing the money in the bank for safe keeping you are loaning them the money and that is why it is pays interest. If you loan someone an asset that is fungible http://en.wikipedia.org/wiki/Fungible Then they can sell that asset and invest it in something that yields a higher return. When it is time for the loan to be repaid then then buy back the asset and return it to you. This ia a cary trade. http://en.wikipedia.org/wiki/Carry_trade#Currency Examples of carry trades are the gold carry trade http://www.zealllc.com/2001/gcarry.htm http://seekingalpha.com/article/94111-gold-future...http://www.gata.org/node/4279 http://www.marketoracle.co.uk/Article7624.html http://www.thepeacearch.com/forum/showthread.php?... short selling: http://en.wikipedia.org/wiki/Short_selling http://en.wikipedia.org/wiki/Naked_short_selling and the spread trade http://en.wikipedia.org/wiki/Spread_trader So now with respect to gold, we know that if we just wanted to store it then there would be a storage fee but if we gave the place we stored it at permission to lend out a fraction of that gold then the storage fee would be less and we might even be able to make some interest on that gold. Now I suggested gold as a hedge against inflation and that is probably overly conservative as there are lots of companies paying high dividends and equaties should also be a hedge against inflation. I agree that long term bonds are risky due to their price sensitivity to interest rates but that is why they can potentially give such high returns. I don't expect interest rates to be low any longer then 10 years that is why I suggested going long on the 10 year municipal and short on the 30 year treasury. It protects you against inflation because the net value of your equity in bonds would be roughly zero. I find the proposition attractive because in thoery you can make money on the difference in interest rates (since the 10 year municipal AAA bond pays more then the 30 year treasury) without have any net dollars invested in bonds. Clearly if we are concerned about risk we would buy bonds that are much shorter in duration and possible even protected against inflation. See TIPS. Or even keep money in cash as you suggest.

Credit Writedowns : Quote of the day: Stephen Roach

Sat, 3 Jan 2009 02:41:49 +0000

Since I don't have money to invest, I'm going to posted the opposite argument here: http://www.physicsforums.com/showthread.php?p=202... I'd actually short the 30 year treasury and go long on the 10 year Municipal (Play the spread), cover my margin in gold, which will hopefully will yield interest at a bank where I can deposit gold and collect interest on it. Basicaly, since gold is the main store of value I'd want to keep my net capital in gold and use it as leverage to try to make money on the spread between the interest rates.

Contrarian Profits : Why Now Is The Time To Short US Treasury Bonds

Wed, 31 Dec 2008 07:38:45 +0000

Where can I go to find information on the borrowing cost to shorting bonds? What brokers will do this kind of trade?

Credit Writedowns : Top ten predictions for the 2009 global economy

Wed, 31 Dec 2008 03:38:30 +0000

If I did my math right and the 30 year yield falls to 2% you stand to make 21% http://www.geocities.com/s243a/economics/yeild.xl...http://www.ustreas.gov/offices/domestic-finance/d... However, the interest rates can go up much more then they can go down.

Credit Writedowns : GMAC: Loosening credit standards in the teeth of recession

Wed, 31 Dec 2008 00:07:11 +0000

Obviously if the GMAC loans were really zero percent then they wouldn't make any money. http://in.rediff.com/money/2003/nov/13perfin.htm The price is somehow hidden in the price of the vehicle. Anyway, GM has to reduce inventory to improve cash flow and incentives to help people buy vehicles are certainly going to help.