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| 5/24 |
| 2008/11/19-25 [Finance/Investment] UID:52050 Activity:moderate |
11/19 http://market-ticker.denninger.net/archives/664-Ben-Steins-Idiocy.html Angry sysadmin's comments today are pretty good, and extend beyond Ben Stein's idiocy. What he really needs to do is nail Krugman. \_ You need to find yourself a new hero. \_ can you point out what's wrong with his position? \_ besides the complete lack of data backing his own position, and the logical fallacies present in virtually every paragraph? -tom \_ click on November 18. Ignore any discussion of technical indicators--they are not necessary to support his position. \_ click on November 18. Ignore any technical analysis--it isn't necessary to support his position. Yes, I try to ignore the hand-wavy statements. ignore the hand-wavy claims. \_ He is mostly wrong here, too, the credit markets have in fact mostly unfrozen, which you can see by looking at the LIBOR rates. He is just looking at recessionary indicators here. \_ Corporate bond yields. Commercial paper. Securitization market. CDS spreads on BRK. here's a Reuters article saying the "credit markets are still frozen": http://tinyurl.com/5snj6q consensus (which may be wrong) is that credit markets are "thawing" \_ Risk is just being priced appropriately, with a major recession looming. Money is there to be borrowed, the interest rates are just high. \_ what is it called when market rates are so high that the seller of debt can't afford the rate, and therefore doesn't want to sell bonds? and therefore doesn't sell the bonds? consensus is also that central banks are the only entities lending right now (in volume). \_ What do I call it? A return to rationality in lending. Okay, yield spreads are higher than I realized, but plenty of bonds are being issued: http://tinyurl.com/5by2g8 (Reuters) in lending. Non-junk bond yeild spreads are not unusually high. Billions of dollars of commercial paper are being rolled every day, so your "consensus" (which is not what I have seen in places like the WSJ and The Economist) is wrong. \_ "growing signs of a thaw" != "in fact mostly unfrozen" \_ fair enough \_ Recession looming? We're in it. We just haven't made it official yet. \_ Yes, he is a moron with no understanding of economics. We do in fact need inflationary government deficit spending, so as to avoid a deflationary collapse. Pretty much every economist agrees at this point, outside of the Austrian school nutters. \_ I think the misunderstanding here is that deficit spending is not necessarily exclusive of the transparency he is not necessarily exclusive of the transparency/reform he proposes. \_ In this post at least, he mostly claimed that stimulative government spending would lead to hyperinflation, which is plainly wrong. He has some points, but they get lost in the big mistake he makes where he presents the false dilemma of deflation vs. hyperinflation. \_ a huge weakness is he does not forecast an inflection point. sure, we spend like Yermom, but when is it when foreign purchasers decide U.S. Treasuries are not a good bet? This could theoretically last 20 more years or forever for that matter. -op \_ Well, since long term Treasury rates are under 4%, we must be a long way from saturating the demand for US backed bonds, don't you think? \_ the uncertainty here is exactly my point. there is the rumor that the Fed is buying long-term T's to reduce the rate, but I'd consider that tinfoil for now. -op \_ You understand how unlikely that is, right? That would reduce the money supply, which is the exact opposite of what The Fed is trying to do right now. \_ can you please stop repeating what I'm saying back to me and sounding like you made a point? it's irritating. \_ I can agree that transparency would be good, but I don't think he has any data which show that lack of transparency is the root cause of the market problems as he claims. -tom \_ okay, step by step. shadow banking system. SIVs. securitization. major effect on the global market? yes/no. take all the data you know yourself--let's not confine it to this one blog post. \_ Wake me up when he starts talking about ameros. \_ ameros are truly tinfoil -op |
| 5/24 |
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| market-ticker.denninger.net/archives/664-Ben-Steins-Idiocy.html for penning this article: In this situation, the governments that care about their citizens should and must have extremely expansive policies. That would include running very large deficits -- which we are doing, not even mentioning tax hikes until the situation is stabilized, and possibly cutting taxes as a temporary measure. Public works projects, tax rebates, even to people who paid no taxes, extensions of unemployment insurance payments -- all of these are necessary. Bailing out the big auto companies, offering loan guarantees to encourage banks to lend, making sure lending facilities are in place for credit card issuers - all of these should be done and immediately. Deflationary depressions are nasty business, but they are created by governments who attempt to stimulate economies beyond the point of reasonable credit and business growth, thereby guaranteeing a deflationary bust. Mr Stein was NOT, if I recall correctly, one of the people who sounded the warning back in 2000-03 about the excesses in credit growth nor did he advocate stopping that stupidity - going all the way back to the 1980s! In short, where was his objection to creating the mess in the first place? In fact I distinctly remember Mr Stein being unabashedly bullish back in January of 2008. Indeed, here's what he said January 4th of this year: This isn't a development to strike terror into your hearts -- if you're a long-term investor, it signals a time to buy. Why, you'd only have lost what - 40% of your money listening to this buttclown (the SPX was at 1440, more or less, on the date that column was published, down 125 pts from its top! For examples you can look at Weimar Germany or Argentina, both of which resulted in the destruction of what were democratic political systems, right up until the government decided to take Mr Stein's general approach. Let's look at some more from Stein's most-recent piece of stupidity: I desperately hope I am wrong and I may well be, but the government has to put in a bottom here. Government created this mess by removing leverage limits and blocking state enforcement of predatory lending laws. In 2004, specifically, our present Treasury Secretary lobbied as CEO of Goldman Sachs for the removal of one of the last safeties on the nuclear credit weapons, obtained his requested change, and in doing so set the timer on the bombs. Where is Mr Stein's call for the people responsible for this to be recognized, outed and punished? In fact if you read Mr Stein's writings archived over on Yahoo Finance you will find unabashedly bullish BS all the way down the pipe, until he finally got hit over the head with a Clue-By-Four. Was it when YOUR retirement accounts got clobbered for 40% of their value that you finally woke the hell up? And how does one avoid taking the pain that results from setting off a firecracker in your hand once you've lit it and it explodes? Let's continue: If workers can only rely on dividend and interest income and not on long-term capital gains of 8% or 9% per annum, pre-retirees have to save enormously more than they had anticipated to adequately fund their retirement. You mean that spending more than you make and betting on silly credit expansion - that is, granting loans to people when you have no reasonable expectation of ability to pay, isn't a valid and appropriate strategy? Finally, he says that because we can't expect people to behave prudently, he calls for: This makes reflation even more desperately needed. Evil, his Treasury Secretary, Henry Paulson, and work with President-Elect Obama to get a large, serious stimulation package into the economic bloodstream pronto. Advocating the impossible is puerile and idiotic, and that you managed to find an audience in Congress to spew this crap today in the context of the automaker bailout hearings is even more stupid. If you're dumb enough to listen to someone who has this sort of public, easily-accessed record of accuracy you are better off with paying a weatherman to guide your investment and economic strategy. The weatherman, after all, is right about whether it will rain at least half the time! There is apparently some "backlash" to my idea of boycotting the automakers if they get bailed out, with people wondering where my anger was at Wall Street. Gee, have 'ya read any of what I've written for the last year and a half folks? The tens of thousands of dollars I've spent trying to stop this crap? I've advocated what amounts to a personal credit boycott the entire time, have advocated that people look into whether it makes sense to walk away from their underwater homes, and have advocated other actions that amount to personal acts of retrenchment that will punish those who did unsound (and I'd argue evil) things in the context of Wall Street securitization and the credit bubble. Funny how people want an exemption when the anger against bailouts extends to them, eh? This, by the way, is one of the reasons that the idiocy of Wall Street (and Main Street) requires leadership from Washington to stop, and if its not forthcoming we will see the destruction of our economy. EVERYONE is against bailouts - until its their pet industry, firm, or region that is going to be bailed out. Congress needs to let the adults into the room and banish the mouth-breathers who have consistently been wrong since the beginning of this mess, acting as an adult to remove the punch bowl and force the detox process that will purge excessive credit creation from the system. Why various support levels keep falling, and the stock market, while it has sharp rallies from time to time, remains in a confirmed downtrend? It is happening because government keeps changing the rules and there is still no transparency nor is there any reasonable belief there will be any going forward, and the bleating continues to produce "free money" - which the market fully-understands is in fact not free. As a consequence there is no way for anyone to value companies and industries on a clean, transparent basis. Neither I or anyone else can determine if a given company, whether it be a bank or industrial concern, is fairly priced, overpriced, or underpriced in the stock market. When I cannot determine the value of a company the only price at which I am willing to buy (as a stockholder) is for pennies, spreading my bets around with "stink bids" while being willing to be wrong at least half the time - because all I'm doing is guessing. There is no floor on valuations and thus prices because there is no way to derive an honest understanding of underlying value! I have said this all along - so long as the government continues to meddle in this fashion the market is going to continue to fall, because literally every sector of the market is potentially subject to the same sort of crap! So as each sector comes under suspicion it is taken out and sold and the market goes down further. The private sources of money that, for example, came in to do a deal with Goldman or Citibank got screwed by the government and they will not be coming back. The stupidity of our government agencies in this regard has destroyed the analytical foundation in our equity markets and investors have sold out as a consequence of their inability to derive fair metrics for any firm in the United States, along with the intentional destruction of private equity investments. Look at the XLF since then - you've lost more than HALF YOUR MONEY listening to him; in May the XLF, the financial sector ETF, was over $25, today it broke $11! I said at the time his call was idiotic as there was no possible way for him to derive an honest valuation and thus there was absolutely no possible way for anyone to know what a fair market price was for these firms. the condensed version: "The Truth: The "powers that be" (including the media, The Fed and The Banks) are absolutely beside themselves with the possibility that stocks, especially bank stocks, might decline in value. DICK BOVE PUT A MARKET PERFORM RATING ON BEAR STEARNS STOCK ON MARCH 11th - JUST THREE DAYS BEFORE IT BLEW UP AND (THE FOLLOWING MONDAY) WENT TO $2! You have NOT and you WILL NOT see CNBC or DICK BOVE take... |
| tinyurl.com/5snj6q -> www.reuters.com/article/innovationNews/idUSTRE4AI5FA20081119 Several AIG assets are worth billions of dollars, and with the credit markets still frozen and stock prices swooning, potential buyers will find it hard to come up with the money to buy them, investment bankers and lawyers said. But the government is heavily invested in the future of the erstwhile insurance giant, so some advisers see financing from the United States as a possibility, they said. The government has not said it would finance any asset sales and it will be reluctant to do so, even more so after easing the terms of its loan to AIG, these experts said. But they added that there may be little choice when it comes to selling at least some of the bigger units of the troubled insurer. "In some circumstance if there were no other choice, the government may say it's a better credit risk to take the buyer's debt and in effect trade out," said William Bates, a mergers partner at law firm King & Spalding. "But again, their interest in going into AIG was to keep the system from failing," he said. "And I am not sure seller financing supports that rationale." AIG, once the world's biggest insurer by market value, averted bankruptcy in September with an $85 billion federal bailout. Last week, the government revised its bailout package, raising its support to $150 billion. It eased the terms of the loan and put in place a plan to stem the cash drain at AIG. AIG has said it plans to sell everything except for its US property and casualty, foreign general insurance and an ownership interest in foreign life operations. The new bailout package is designed to give AIG breathing room, with a cheaper loan and more time to pay it back, but the company still needs to sell assets to repay the government debt. If credit markets do not thaw, some assets such as AIG's US life insurance may be beyond the reach of any one company without government help. "Very few buyers have excess cash, and certainly that much excess cash," said Gary Parr, deputy chairman of Lazard Ltd, referring to large AIG assets in general. "I am quite sure the government would rather not provide financing," he added. Cybercrime as destructive as credit crisis: experts Help us advance this story. Provide relevant links or share your insights using our comment box. Please be considerate and help us by reporting any abuse you find. Reuters will delete comments that don't meet community standards. A government soldier walks through the looted village of Kayna after a day of fighting in eastern Congo, November 18, 2008. REUTERS/Finbarr O'Reilly Slideshow Slideshow A selection of our best photos from the past 24 hours. com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests. |
| tinyurl.com/5by2g8 -> www.reuters.com/article/marketsNews/idUSN1827829420081118 Stock Buzz), an offshore drilling contractor for the oil and gas industry, is expected to sell 5-year notes later Tuesday with size and price yet to be determined. Proceeds from the sale will be used to repay short-term debt. The issuance market has shown growing signs of a thaw in the last two weeks after slowing to a trickle at the height of the credit crisis in September. Companies have been reluctant to tap the market given the extreme levels of investment grade bond yields, which hit a record wide spread over Treasuries of 618 basis points on Oct. Monthly issuance of US investment grade corporate bonds averaged $83 billion in the 12 months through June 2007. Since June this year, issuance has shrunk to an average $28 billion per month. After iPhone, consumers seek handsome gadgets Fed up with ugly routers and clunky hard drives, a growing number of consumers are looking for well-designed gadgets that complement decor instead of cluttering desktops and clashing with furniture. A government soldier walks through the looted village of Kayna after a day of fighting in eastern Congo, November 18, 2008. REUTERS/Finbarr O'Reilly Slideshow Slideshow A selection of our best photos from the past 24 hours. New Yahoo CEO must be willing to do Microsoft deal To impress shareholders, Yahoo next chief executive needs just one qualification: the willingness to do a deal with Microsoft. com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests. |