jerryguru69 (95.56)

February 2009

0

I was on the cusp of squandering a Ulysses S. Grant on a book by Bloomberg Press about CDS, when I read the Wikipedia entry on this subject. This led me to the entry on mark-to-market, and then on to the Bloomberg reports on this. I did a search, and came up with these names who do NOT support change in the MTM or Fair-Value or FAS157 junk: [more]

Recs

5

OK: you are a mega-financial-institution. You manage assets of $100b. There are all kinds of rules telling you how to place a $$$ value on those assets that are in your deep, underground, secret vault. Some are easy to evaluate: a thousand ounces of gold, 500 round lots of GOOG. But others are rather more tricky (level 3). You have one box of goofball papers: you are not sure what they are, but the word “tranche” is all over them. What are these things worth? You make several phone calls to powerful trading houses that turnover $1T per day, and even they are not sure. The last time they sold one of your thingies was 8 months ago, and were really kinda different, and they say they got no idea. [more]

Recs

2

Saw several interesting ideas floating around in the media today, so will blogit just in case I forget a few weeks hence. Problem is, the stories have sort of blurred, so not sure what belongs to whom, but the primary suspects are Volcker, Greenspan, Summers, Geithner. Nice ideas, guys; they are all things we should probably do so we do not get into this type of mess again, but these thingamabobs do not solve the current problem. [more]

Recs

3

Do you remember that schoolyard bully from grade school: he would keep punching your arm really hard over and over again in the same spot, then keep asking “does it hurt now? Does it hurt now?” Well, it stopped hurting. ATP, I really don’t care how low the stock market goes. Besides, the recession will end by the end of this year, and the economy will grow in 2010, so if we assume that the stock market is a 6 month predictor, the DJIA will start to go up rather dramatically by fall (OK, you can stop laughing now and get up off of the floor; I did not say this, Mr. HedFed did). [more]

Recs

6

Many media stories about how the Feds are going to convert their preferred equity for common stock, and about how this is going to improve the strength of C by improving TCE. Guh? What on earth is TCE? Looked in the usual places, but, surprisingly, found little info. This situation was not helped by the journalists writing these stories who probably do not understand these things any better than I. Found one article that TCE is an indicator of a Bank’s ability to survive. Then, a Fool article that you take net assets and strip out preferred stock equity. When a company liquidates, TCE, at least in theory, tells you how much dough is left behind for the common stock holders, dead last in line for money (so “common” in TCE refers to the cash that common stock holders will get in the event of a liquidation). OK, but still, how does converting preferred to common help the bank survive? Yeah, understood that this action improves the financial ratios, but how? [more]

Recs

5

Yes, I know, we are facing the worst financial crisis in many decades. Yes, I know, the dudes you replaced were not a big help. Still, after watching your actions, I am reminded of the old saw about fools rushing in were others fear to tread. I remind you that the depth and length of the depression of the 30's are widely blamed on well intentioned but incorrect actions by the govt. [more]

Recs

2

I was intrigued by a Fool article describing an initiative to create a lithium car battery factory here in the U.S.; the summary was to invest in MMM, one of the participating companies thereof. So, I did a lazy google search: I was not encouraged by what I found. [more]

Recs

5

13

When the stock market crashed in 2008, I was quite skeptical of the then current President’s efforts to do anything useful about it. The point man was Paulson: a past CEO of GS. Surely, if there is one who understood CDO’s and CDS’ and credit markets, it is the past CEO of the premier ‘Wall Street’ firm. It was famously reported that even the ‘Sage of Omaha’ did not understand CDS, and passed on the deal. If there is one person on the face of this planet who could have explained it coherently, it surely was Paulson or Corazine. [more]