gramps2

Comment Stream » QQQQ

Comment Stream
Filter comments by:
Highest rated Latest comments
Or filter by symbol:
  • After G-20: The Beginning of the End of the Old Order
    Glad you are starting to see the light that the IMF is not relevant, no longer has a purpose, and is lead by economies that are no longer relevant either. I pointed out in comments to your last article about China and Brazil's under representation ... which you ignored. Nice to see your eyes work better when the Washington Post says the same thing.

    Next we have to get you to look at the effect of Keynes policies... Keynes policies completely screwed up the United Kingdom and turned it into an international bailout case by the 1970s. In the U.S., his policies were implemented in the form of the "Great Society" -- which failed in every way imaginable to achieve its goals. When you consider the economic costs dragged on through the 1970s and early 1980s when Paul Volcker finally cleansed the system via a very painful recession.

    And yet, we still have head in the cloud college professors / socialist pretending Keynes policies were something other than a failure. Since we failed to learn from history, we now seemed doomed to repeat it.

    Lets hope Volcker talks some sense into Obama.
    Nov 19 14:48 pm |Rating: +1 -1 |Link to Comment |View article
  • Time Not for a Bailout, But for Nationalization
    Why does Seeking Alpha allow political commentators like Brad Delong to publish on an investment website?

    Come on SA editors -- keep this partisan trash off your website or change the name to Seeking Politics
    Sep 27 16:01 pm |Rating: 0 0 |Link to Comment |View article
  • Bailout Talks Lose Sight of the Cost Question
    jdbe: OK, so first you want to tell us the bumbling corrupt bureaucrats are not going to set the price -- rather the price will be set by the bankers who demonstrated such ineptitude in pricing the risk in the first place... Are you trying to make us feel better or to scare the pants off us?

    THEN... then you suggest the Treasury is now placing a floor on the price of the assets. Hedge funds can buy them from the Treasury knowing the price "cannot" go below what the Treasury paid.

    So in essence, you are proposing that the Treasury sell call options for free/cheap to hedge funds? heads, the assets go up and the hedge funds make even more money, tails the asset prices go down and the hedge funds stick the taxpayer with the problem again?

    They say a fool and his money are soon parted... Its becoming clear the US taxpayer is about to part with a LOT of money
    Sep 27 15:59 pm |Rating: 0 0 |Link to Comment |View article
  • Bailout Talks Lose Sight of the Cost Question
    tvb: what technicals? Long term investors don't focus on "technicals" -- that is something money losing day traders like to focus on.

    Long term investors focus on cash flow, the internal rate of return (compounded) that said cashflow generates, and how that IRR compares to both their cost of funds and to other investment opportunities.

    Since homeowners aren't making payments, there are no cashflows. Valuing these things at 30-35 cents on the dollar is saying that the other 65-70% default. That means they don't pay principal AND they don't pay interest. The 30 or so percent that do pay are going to be paying their mortgage rate (around 6% plus or minus). From that 6%, you still have to subtract future defaults, which will not be zero... and all this "analysis" assumes that one is able to correctly identify which loans will pay and which loans will default -- Wall Street has proven that they are unable to do this. Buffett has said he doesnt think he is able to either. Distress investors have not expressed any confidence in their ability either.

    It is absurd to suggest a bunch of government bureaucrats, led by Hank Paulson, are going to be able to properly value these assets.

    The only way to help the banks is to overpay for the assets (in which case taxpayers incur a huge loss).

    If the tax payer makes a profit, it will mean the banks have to take even more write downs -- and they are already capital impaired as it is.

    Paulson's plan is a terrible idea and should be thrown in the recycle bin. Rather than rushing through a terrible, poorly thought out plan, we need to wait until January when a new set of faces can come at the problem with new ideas. Paulson has no credibility left, and he knows he is leaving so his heart isn't in the game at any rate.
    Sep 27 14:21 pm |Rating: 0 0 |Link to Comment |View article
  • Bailout Talks Lose Sight of the Cost Question
    If these assets were actually paying 18% yield, I have to wonder why long term investors with deep pockets (Buffett, Carlyle group, Blackstone) don't snap them up as fast as they can?

    Buffett is collecting 11% on Goldman prefferred stock-- he didn't even touch the mortgage bonds

    The treasury will not receive 18% or anything even close. If a home owner defaults on their loan (something that those of us without an MBA seem to have figured out is happening) -- they don't make payments... This next mental step is probably too big for a Wall Street analyst to grasp, but work with me here: if the home owner isn't making payments-- the bond owner isn't getting ANY interest payment.

    The article cited (click through the link) says that the Treasury will **NET** one billion. 50/35 * 700 billion comes out to one trillion GROSS. Kessler neglects to subtract out the 700 billion cost, which (even if you agreed with his numbers) would leave you with only 300 billion profit.

    Earlier posters were suggesting that the difference (the other 700 billion) was the NPV of the interest payments... Treasury OAS on high quality mortgage bonds is a couple hundred basis points, not 10000+ basis points that you would need to net one billion in profit.
    Sep 26 22:08 pm |Rating: 0 0 |Link to Comment |View article
  • Bailout Talks Lose Sight of the Cost Question
    Kessler's article explains why Wall Street has lost so much money

    43% return on $700 billion does not net $1 trillion unless you are mathematically illiterate

    The present value of the interest payments is next to irrelevent -- unless you are a Wall Street "analyst" and forget to take the present value of the interest costs... This ranks right up there with EBITDA -- or the most recent Wall Street stupidity: earnings before all costs.

    Wall Street needs to learn some basic math skills.
    Sep 26 18:07 pm |Rating: 0 0 |Link to Comment |View article
  • The Great Inflation Debate
    This is a foolish debate... TIPs are not "inflation" securities, they are CPI securities. Go look at the BLS website, where they explicitly say that CPI is a price index, not an inflation index. TIP yields are nothing more than Treasury yields minus expected **CPI**, which is not the same thing as inflation.

    As for low Treasury yields, this reflects investor fear. With accounting fraud running rampant, a probable recession, and a general lack of leadership in Washington (both parties) -- investors are more worried about a return **OF** principal, rather than a return **ON** principal. Everyone knows Treasuries yields are "too low", but they also know that any positive yield (however small) is much better than a negative yield.
    Aug 20 14:46 pm |Rating: 0 0 |Link to Comment |View article
  • The Credit Bubble: Deregulation Gone Wild
    Deregulation is the big lie here. Government is MUCH bigger now than when Reagan took office. The Fed knew perfectly well what was happening, and on several occasions issued warnings. They had, and still have, the authority to regulate lending practices at the money center banks (and the little banks tend to follow). The other lending is done by FNMA and FHLMC, which are completely government controlled.

    Before you start expanding regulatory power, you need to ask why the regulators made almost no use of their existing powers. You need to establish that existing powers are insufficient -- as opposed to just unused.

    Even if you make the Fed into an absolute dictator, what good would it do if they don't use their powers (for good)?

    The problem isn't deregulation (which never happened except on paper). The problem is the regulations we already have were not enforced.

    The government had to choose between collecting higher taxes on bubble homes, or enforcing the existing rules. The government repeatedly chose higher taxes by turning a blind eye to a problem they knew about all to well.
    Apr 06 17:22 pm |Rating: 0 0 |Link to Comment |View article
  • The Fed Should Loosen 25bp Next Wednesday
    According to the Fed's own website: M1 is up 2%. M2 is up 6% and MZM is up 10%. Your statements about monetary growth are incorrect.
    Oct 26 22:08 pm |Rating: 0 0 |Link to Comment |View article
  • The Fed Should Loosen 25bp Next Wednesday
    According to the Fed's own website: M1 is up 2%. M2 is up 6% and MZM is up 10%. Your statements about monetary growth are incorrect.
    Oct 26 22:08 pm |Rating: 0 0 |Link to Comment |View article
  • The Fed Should Loosen 25bp Next Wednesday
    According to the Fed's own website: M1 is up 2%. M2 is up 6% and MZM is up 10%. Your statements about monetary growth are incorrect.
    Oct 26 22:08 pm |Rating: 0 0 |Link to Comment |View article
  • The Fed Should Loosen 25bp Next Wednesday
    According to the Fed's own website: M1 is up 2%. M2 is up 6% and MZM is up 10%. Your statements about monetary growth are incorrect.
    Oct 26 22:08 pm |Rating: 0 0 |Link to Comment |View article

gramps2's Comments Stream Stats

  • 113 Comments, 51 , 22
  • Total Comment Stream rating - = 29