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    • Tue Nov 25th 17:34 PM
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      Rating: +1 -1
      Commented on:
      Demonic Short Sellers
      If you can prove your assertion (show your sources and work) I would be more inclined to believe you were on the up and up. Instead I think you are just one more short seller trying to change the subject.
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    • Tue Nov 25th 15:08 PM
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      Demonic Short Sellers
      Hence the need for complete transparencey, particulary with respect to statements about the market or individual companies. When a noted hedge or mutual fund manager publlically opines that comapny A is (a) a great investment, or (b) is headed for the crapper, the opiner should be required to disclosue whether they are long or short the company, including the impact of CDS positions.

      Financial media should be required to disclose their sources and source exposure to the comapny on which they are providing data. Period.
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    • Tue Nov 25th 14:03 PM
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      Rating: +1 0
      Commented on:
      Demonic Short Sellers
      The real problem with the CDS market is that buyers don't need to have an insurable interest when buying or selling a CDS. In the bad old days of individual insurance, this lack of insurable interest lead to speculators buying life insurance on some unsuspecting soul, then hiring someone else to do in the insured so that the policy ownere could collect.

      Kind of like what seems ot be going on in the CDS space today, except that buyers of CDS coverage don't need to hire intermediaries to kill the insured. All they need to do is give away stories for free to the media who will happilly help kill any organization in return for eyeballs.

      A CDS is not de facto a bad thing, but without transparency and a clear insurable inteerest, the CDS marklet is driving lots of unintended and perhaps quite evil consequences.
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    • Sun Nov 23rd 21:57 PM
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      GM: Bankruptcy Is No Longer an Option
      Alan, an excellent and absolutely correct analysis! If this is extended to the entire auto industry (Ford, Chrylser and the most closley connected supliers with UAW-type cost structures) as it must since that entire industry is in the same state of crisis, one component of a lasting solution should be to nationalize the pension problem in some way. Otherwise, the industry will be back in ten years with the same set of problems.

      Detroit needs to rest its employee cost structure to more closely match Toyota et al.
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    • Fri Nov 14th 15:39 PM
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      Rating: +1 0
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      The Right Kind of Bailout
      In a perfect world that isn't already in crisis because of the Wall Street mess, Shelby woudl be right - let the auto's collapse and trust that the capital markets will fund a new, smaller and nimbler industry. But wait - the capital markets are's working now, so that woudl be an incredibly stupid thing to do woudln't it?

      The auto industry needs an industry-wide horoic solution to the non competative legacy beneftis package that keeps dragging them down. Something like the rairoad retirement system that was established early in last century to resolve the legacy rairoad pension system.

      The auto industry was THE significant driver in creating the post-WW II midle class. Think of the increase in the number of cars per capita over thr past 50 years and the establishment of the great American surban landscape. For better or worse, auto's were the driver, and the country can't just discard the aging workforce that was at the heart of this process.

      Solution: a prepackaged reorganization of the entire industry that begins with a nationalized auto retirement system (income and health insurance), funded over a long future period by profit participation from the new unfettered re-capitalized businesses. Force the UAW to accept a radically restured work environment and wage structure in return for full government guarentees of the auto retirement system.

      View article »
    • Fri Oct 24th 10:31 AM
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      Rating: 0 0
      Commented on:
      Comcast Looks Incredibly Cheap
      Crappy dividend. Another baseball card.
      View article »
    • Thu Oct 23rd 11:07 AM
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      Commented on:
      Understanding Credit Default Swaps: A Case for Regulation
      Imagine a market that would allow you to buy life insurance on a randomly selected individual. In fact, if you go back a hundred or more years, that market existed and lead to a fair amount of abuse as could well be imagined (like buying insurance on someone and then nudging them towards dangerous activities). The life insurance market evolved so that today you cannot purchase insurance on someone when you don't have an insurable interest in seeing them continue to be alive on this good earth.

      It would seem to make perfect sense to limit CDS purchases using some sorrt of dynamic insurable interest standard that would limit the size of the CDS market to the amount of the investments being insured, and would require that an entity buying and holding a CDS has an ongoing equivalent insurable interest in the underlying security that is being insured through the CDS.
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    • Mon Oct 20th 10:57 AM
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      Rating: 0 0
      Commented on:
      Credit Default Swaps, Part One: Origins and Implementations
      If principal risk can be fully insured via a vibrant CDS market, why should there be a yield difference amongst corporate bonds with differnt credit grades, and for that matter why should coporate yields be significantly higher than Treasury yields?
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    • Sat Oct 18th 12:22 PM
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      Rating: 0 0
      Commented on:
      Fundamental Valuation: How Low Could We Go?
      It doesn't make any sense to look a price vs. book without interest rate context. For example, today risk-free long Treasuries are yielding half what they were in the early 1980's. Hence all other things being equal, current PE ratios could be twice what they were in the early 80's without being particulary out of wack.
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    • Mon Oct 13th 20:11 PM
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      Financial Crisis: The Blaming of the Nerds
      Where do these people (the ones who state with absolute authority that ACORN is an ant iAmerican organization) come from?

      I'm actually quite worried that there will be a neo-con reactionary backlash after Obama wins that could push the US into a very unpleasant state.
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    • Thu Oct 9th 15:12 PM
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      Rating: 0 0
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      The Longs are Getting Squeezed
      So today they are shorting everyghing else. We are in a race to the bottom driven by unbridled short interest. Think about it for a moment: If a stock float is 100 shares, one can borrow all 100 shares and sell them inot the market, thereby inflating the float by 100%.

      Our financial system cannot stand the waterfall effect of doubling the available shares of every stock one by one, which appears to be what is happening. The end game will be to starve all companies of new capital (can't sell new shares to expand if your stock has been driven down 50% by short sellers.)

      What a great outcome for our country.
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    • Thu Oct 9th 10:30 AM
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      Commented on:
      Did Derivatives Cause the Crisis?
      Felix, I'm puzzled by the notion that $1T of bad mortgage paper is worse that $65T of wildly gyrating CDS paper.
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    • Fri Oct 3rd 13:29 PM
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      Bailout Datapoint of the Day, AIG Edition
      I though ther terms of the bail out required AIG to pay interest on the $85B even if they didn't draw it down. Thsu they woudl be stupid not to draw it an invest it to try to at least break even.
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    • Fri Oct 3rd 13:26 PM
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      Rating: 0 0
      Commented on:
      Hedge Funds Eat Their Young
      An extremely elegant solution!
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    • Tue Sep 30th 11:58 AM
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      Why Have Things Gone So Wrong?
      Very well said. It is quite amazing to see the total lack of intellectual honesty employed by Paulson et al in trying to sell this plan to the American people. They either thought Americans are dumb as bricks, or thought that folks still believe that the current government leadership "knows" what the right action is and will actualy do the right thing. Wrong on both counts!
      View article »