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vikas writes:
Wow.
First?
vikas |
03.28.08 - 4:29 pm | #
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conspiracy Theories writes:
Do Not Panic
conspiracy Theories |
03.28.08 - 4:30 pm | #
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Dickeylee writes:
Another Friday afternoon massacre. Of course your principle is safe with us, of course.
Dickeylee |
03.28.08 - 4:31 pm | #
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vikas writes:
A 20% haircut while the stuff is under lock and key would make me panic.
vikas |
03.28.08 - 4:31 pm | #
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Tiltmom writes:
I *so* want to be first, but words fail.
Tiltmom |
03.28.08 - 4:32 pm | #
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REBear writes:
Are we talking about brokerage money market accounts?
thanks!
REBear |
03.28.08 - 4:33 pm | #
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jg writes:
Geez, I hope Jimmy Cayne did not put his $61 million in proceeds into an 'enhanced cash', ARS-boosted money market fund.
Actually, I hope that he did.
jg |
03.28.08 - 4:33 pm | #
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trail writes:
It makes me sick every time a cd rolls over at a new derisory rate, but now is not the time to be chasing yield.
trail |
03.28.08 - 4:35 pm | #
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4822 writes:
"I hope Jimmy Cayne did not put his $61 million in proceeds "
Don't know, I'm putting Cayne's name on google watch to see where he flies away to in coming weeks.
4822 |
03.28.08 - 4:35 pm | #
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CalculatedRisk writes:
REBear, these aren't brokerage money market accounts. These are investments that were sold to mostly wealthy individuals as an alterntive to the money market account.
Basically the clients were told they would earn a little extra interest, but they could only withdraw money once a week - or something like that.
Best Wishes.
CalculatedRisk |
Homepage |
03.28.08 - 4:36 pm | #
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REBear writes:
Thanks CR!
REBear |
03.28.08 - 4:38 pm | #
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BR writes:
Principal protection, my ars*.
BR |
03.28.08 - 4:40 pm | #
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albrt writes:
From the Telegraph:
"Iceland is more than just a Nordic hedge fund masquerading as a country. It is also the first of the deficit states to succumb to investor flight, sending an early warning signal of potential troubles across a great swathe of Eastern Europe and the Mediterranean."
The article talks about trouble for debtor nations that have benefited from the Yen carry trade, but for some reason doesn't mention the US. Hmmm.
albrt |
03.28.08 - 4:40 pm | #
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David Pearson writes:
High Net Worth (aka Fat Cat) investors will get three unpleasant susrprises in their March statements:
-long/short hedge funds had one of their worst months ever, were down in many cases MORE than the S&P, and have given up their 2007 gains on a ytd basis.
-equity and high yield bond holdings were down significantly in the month.
-muni holdings, whether ARS or l.t. bonds, also suffered during the month.
Interestingly, ordinary investors have been pulling money out of mutual funds for months now, presumably because they need the cash. Now its the turn of the HNW investor to redeem and go into Treasuries or muni's. Combine that with the scaling-back or elimination of stock buybacks and LBO's, and you have a situation of excess supply of equity shares on the market.
David Pearson |
03.28.08 - 4:45 pm | #
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bacon dreamz writes:
too...many...puns!!
*head explodes*
bacon dreamz |
03.28.08 - 4:46 pm | #
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freakdog writes:
I'm speculating that Cayne had to sell due to a huge margin call for all the money must have borrowed against his $1 billion in BSC shares that he was never going to sell. It seems the only likely reason he would have exposed himself to such scrutiny...
freakdog |
03.28.08 - 4:46 pm | #
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ac writes:
I know investors in ARS, and their banks have been telling them they can't sell - but their principal is safe - it is just a liquidity problem.
I know people that make the same basic argument about their houses.
"I wouldn't try to sell in this market -- I won't get what the place is worth."
A close acquaintance of mine made this argument when house prices were about 10% higher here.
ac |
03.28.08 - 4:50 pm | #
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iceman writes:
Can we just say, as a general rule, that you shouldn't trust an financial instrument that is abbreviated to 3 characters?
iceman |
03.28.08 - 4:51 pm | #
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foo writes:
C has only one character.
foo |
03.28.08 - 4:54 pm | #
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Bob_in_MA writes:
Well, thank god most of us weren't wealthy enough to qualify.
Given that these big brokerage accounts aimed at wealthy investments seem to be frequently used to unload some security that another part of the huge parent firm is trying to market, do these people really beat index funds?
Bob_in_MA |
03.28.08 - 4:54 pm | #
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12th Percentile writes:
Iceman, I'm assuming that includeds the instrument abbreviated USD?
12th Percentile |
03.28.08 - 4:54 pm | #
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cars writes:
What's the explanation?
Are they cutting the principal so they can make them liquid? How would that be possible, dumping them into a new secondary market?
cars |
03.28.08 - 4:54 pm | #
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warlock writes:
So... if their account was marked down, and they were using margin, would this also result in an instant margin call?
warlock |
03.28.08 - 4:55 pm | #
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Vikram writes:
CR, are these corporate ARS ? What about muni ARS ? Will they also get marked down in the future ?
Vikram |
03.28.08 - 4:57 pm | #
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Jim writes:
Geez, I dumped UBS as my broker some time ago when they tried to lock me into a credit card attached to a bank account. It was not easy; they have sticky fingers. But thank God they can't "revalue" any of my assets. When will they begin to change the value of stocks held in street-name if the mood hits them? I will marvel if they have any brokerage customers left by the end of June.
Jim |
03.28.08 - 4:57 pm | #
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Eric writes:
I love the fact that the banks are currently lobbying SEC and the accounting firms to relax the mark-to-market rules, but they're the first ones to mark something to market when it's not *their* money.
Eric |
03.28.08 - 4:58 pm | #
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--Andrew writes:
All I can say is Ouch! And I imagine that not all of those ARS investors were wealthy individuals. Going to be a few small institutional investors in there also (e.g., there will be some unhappy small Mom & Pops that invested through funds set up by their brokers).
If this keeps up, it will be interesting to see if any of the big Money Market investment sponsors break rank and stop making up/pass through the underlying losses for their funds.
--Andrew |
03.28.08 - 4:59 pm | #
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Jim writes:
...a little extra interest...
Words to beware of. They often hide terrible terrible thingies within.
Jim |
03.28.08 - 5:01 pm | #
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energyecon writes:
Morgan Stanley Says It's Seeking Smaller Credit Line (Update1)
By Christine Harper
March 28 (Bloomberg) -- Morgan Stanley is in talks with lenders to obtain a reduced credit backstop for its commercial paper after cutting the outstanding short-term debt to $16 billion at the end of March from an average of $25.3 billion last year, spokesman Mark Lake said.
``We do not need the amount of backup credit lines that we had previously,'' said Lake, declining to comment further on the loan negotiations. Morgan Stanley also boosted its pool of cash and liquid assets to $123 billion on average in the first quarter from $85 billion in 2007, he said.
The New York-based investment bank is seeking $7.5 billion to replace $11 billion of credit that expires on April 16, Reuters reported earlier today, citing unidentified sources close to the situation. Lenders are only willing to extend about $4.9 billion, Reuters said. JPMorgan Chase & Co. is arranging the financing.
[snip]
energyecon |
03.28.08 - 5:02 pm | #
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The Dude Abides writes:
@Eric, Investment Banks love FAS 159. How else could they obfuscate their earnings so "legitimately"?
@warlock, you'd better believe this could result in margin calls.
@cars, they're just re-calculating the value of the principal for purposes of valuing accounts. It doesn't sound to me as if anything is being sold per se. However, as warlock points out, margin calls could trigger unplanned sales.
The Dude Abides |
03.28.08 - 5:02 pm | #
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Allen C writes:
CNBC - FGIC downgraded by S&P to BB
Allen C |
03.28.08 - 5:03 pm | #
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cd writes:
CR- I knew I posted in the wrong thread a bit ago
cd writes:
UBS headlines-Auction rate securities
http://online.wsj.com/article/ SB...=googlenews_wsj
cd | 03.28.08 - 3:36 pm
finally halved the hole, I'm going for a birdie next..Of course your lead is safe.
My headlines suck!
I think this will be real bad..
cd |
03.28.08 - 5:04 pm | #
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FFDIC writes:
More bad news for retail shopping. Hey, it's about time for FDIC to put out a Friday bank closing press release.
FFDIC |
03.28.08 - 5:05 pm | #
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barely writes:
BubbleVision saying FGIC just got a haircut from A to B... JUNK AH. SHould set up the open nicely to close out the qtr.
barely |
03.28.08 - 5:05 pm | #
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Bob writes:
You take the blue pill, the story ends. Your browser closes and you believe whatever you want to believe. You take the red pill, you stay in wonderland. And, I show you how deep the rabbit hole goes.
Red pill anybody ?
Bob |
03.28.08 - 5:08 pm | #
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WTC#7 writes:
Imploding ... fast in 7 seconds ???
WTC#7 |
03.28.08 - 5:14 pm | #
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FFDIC writes:
Blue pills? Wonderland? Holes? Are we back to doing Spitzer again?
FFDIC |
03.28.08 - 5:14 pm | #
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cd writes:
SAN FRANCISCO (MarketWatch) -- Standard & Poor's on Friday cut its financial strength ratings on Financial Guaranty Insurance Co. and its holding company FGIC Corp. six notches because the firms have failed to re-establish themselves as viable operating entities. S&P cut Financial Guaranty Insurance Co. to BB from A, and FGIC Corp. to B from BBB. S&P ratings lower than BBB are not investment grade debt. The outlook is negative. S&P also suspended its ratings on public finance and corporate transactions insured by FGIC that do not have an underlying public rating. "In our opinion, FGIC has been slow to identify the unfavorable insured portfolio trends that have emerged and has failed to implement a strategic plan to re-establish itself as a viable operating entity capable of writing new business," S&P said in a statement.
cd |
03.28.08 - 5:15 pm | #
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Peripheral Visionary writes:
If the principal is safe, then why would it be marked down? The markdown is presuming that the issuing entities are facing solvency events--which they very well may be, but the bank has given no explanations detailing that.
I realize there are arguments to be made that because something is illiquid it should be considered as being worth less, but that is a bit of a stretch. A private island resort may take a long time to sell relative to a tract home, and in fact may have no active market to speak of, but does that reduce its value?
Liquidity and intrinsic value are not the same thing, even though there can be a relationship between them, but I suspect that that point is being missed in the rush to try and move the credit crunch off the banks' balance sheets and onto the balance sheets of private entities.
Peripheral Visionary |
03.28.08 - 5:15 pm | #
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Kp writes:
Remember...all I'm offering is the truth....nothing more.
Kp |
03.28.08 - 5:18 pm | #
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Rob Dawg writes:
If my Fidelity MM breaks the buck the four horsemen cannot be far behind.
Rob Dawg |
Homepage |
03.28.08 - 5:18 pm | #
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jussumbody writes:
Blue pills? Does Rush Limbaugh read this blog?
jussumbody |
03.28.08 - 5:20 pm | #
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Detroit Dan writes:
Time to clean house. Or should we wait until Bernanke doles out another $1 trillion to prop up the investment banks? This is absurd.
Some things are just too obviously stupid to even think too much about. Like the Iraq War, where the neocons blamed the intelligence agencies before the war because they were too soft on Saddam, and blamed the intelligence agencies after the war as if they (Bushco) had been misled.
You don't need to think deeply about that. You don't need to think deeply about whether the Fed should be accepting crappy mortgage backed securities that no one else wants, and get nothing in return. It's wrong.
Detroit Dan |
03.28.08 - 5:20 pm | #
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Ed writes:
"Blue pills? Does Rush Limbaugh read this blog?"
Ah, but the red pills are the more interesting pills.
Ed |
03.28.08 - 5:23 pm | #
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Bill writes:
What basis is UBS using? Presumably there is no market price.
Bill |
03.28.08 - 5:25 pm | #
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get sum writes:
S&P cuts FGIC
http://www.marketwatch.com/news/...08A5ECC2924C%
7D
get sum |
03.28.08 - 5:26 pm | #
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Bill writes:
Detroit Dan is right.
The most galling example is in the JPM/Bear deal. The papers say that the Fed is giving a $29 billion non-recourse loan on $30 billion of toxic, subprime sludge (their words). I keep asking myself, on what basis are they saying it's worth $30 billion? And since it's accompanied by the PUT at $29 billion, it might be fair to say that JPM bought Bear for free.
Bill |
03.28.08 - 5:28 pm | #
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Kicker writes:
If the principal is safe, then why would it be marked down? The markdown is presuming that the issuing entities are facing solvency events--which they very well may be, but the bank has given no explanations detailing that.
Let's assume one fine day you've got $100 dollars in your wallet and you're hiking on a glacier. Then, disaster! You drop your wallet into a crevice.
Later that day, you wander by a hot-dog vendor. And, you propose to him that in exchange for a hot-dog you will give him the rights to your wallet. You explain to him that since the wallet was holding cash, your principal is safe. And, since the glacier advances at a known rate, he'll be able to retrieve the dollar 10-15K years in the future.
The hot-dog vendor for some reason turns down your offer. And worse, he's says you've "lost" your money.
But, that's ridiculous! The principal is safe!
Kicker |
03.28.08 - 5:31 pm | #
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Ceilingfan writes:
Now this is scaring me. What is next? Will regular savings accounts be in danger? CDs?
Ceilingfan |
03.28.08 - 5:33 pm | #
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Billy Hill writes:
Were the only holders of these ARS securities retail customers, or are some institutions carrying them on their books?
kicker--- the glacier story is great!
Billy Hill |
03.28.08 - 5:34 pm | #
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WTC#7 writes:
Kicker,
"But, that's ridiculous! The principal is safe!"
They can't sell them, there won't be a run on the brokerages because they can't get their money out. But they are still getting interest.
WTC#7,
6.8 seconds to be exact. and the other two... both, in less than 11 seconds.
Every structure that's rigged from the inside fall very fast. Including the IBs.
WTC#7 |
03.28.08 - 5:36 pm | #
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gab writes:
For those with money in money-market funds, I believe ARS were/are not legal for purchase.
gab |
03.28.08 - 5:36 pm | #
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El Cliffo writes:
Peter Schiff says:
"Steve Forbes, in an interview on CNBC earlier in the week, proposed that the government suspend 'mark-to-market' rules for one year so that holders of unsellable mortgage-backed securities no longer have to recognize losses. . . Mr. Forbes believes that the markets can be spared unnecessary pain if participants can simply pretend that their holdings are worth par value. This amounts to a plea for accounting by mutually beneficial mass delusion."
http://www.safehaven.com/article...rticle-
9740.htm
El Cliffo |
03.28.08 - 5:41 pm | #
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Topher writes:
"This is the right thing to do," said Martin Hoekstra, head of wealth management at UBS. "It doesn't make sense to delay the pain. As a principal, we think we should tell clients what their securities are worth, and if it's an illiquid market, estimate what they are worth."
UBS wouldn't disclose the total value of auction rate securities held by its clients, but Hoekstra said it was "a reasonable amount" concentrated among wealthier clients. The banks U.S. wealth management unit oversaw about $920 billion in client assets at the end of 2007.
Topher |
03.28.08 - 5:41 pm | #
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Topher writes:
By Evelyn Juan, Jed Horowitz and Andrew Dowell
Of DOW JONES NEWSWIRES
Topher |
03.28.08 - 5:43 pm | #
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UrbanDigs writes:
I look forward to my SKF revaluing at $150 soon!
Some other revaluations I look forward to:
SRS to $135
EEV to $120
Go Debt!
UrbanDigs |
Homepage |
03.28.08 - 5:44 pm | #
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REBear writes:
About FGIC downgrade - As far as i understand, credibility of monolines is at rock bottom. Does this downgrade make any difference? Or are there contracts that kick in when a monoline is downgraded to junk status?
Thanks!
REBear |
03.28.08 - 5:45 pm | #
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Kp writes:
Link to Wikipedia's ARS page
http://en.wikipedia.org/wiki/
Auc...n_rate_security
There is even a bit at the bottom about this very incident with UBS.
Kp |
03.28.08 - 5:45 pm | #
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12th Percentile writes:
Kicker - nice example. With clear thinking like that you should make sure to never try to work on Wall Street or in Corporate America. They might have you nut hutted for such thoughts.
12th Percentile |
03.28.08 - 5:46 pm | #
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MR writes:
from bloomberg:
``The fact that they aren't worth par or may not be worth par is not going to be acceptable to any owners of these securities,'' said Gary Miller, a partner at the Houston law firm of Boyar and Miller. ``It's certainly not acceptable to me.''
Miller invested $750,000 from the sale of his house in auction-rate securities with UBS last December. After signing a contract on a new home, Miller said he called his broker to cash out of the securities and was told he couldn't. When he bought the debt, Miller said he asked his broker whether there had ever been an unsuccessful auction.
``The answer was, `No, there's never been a failure in the auctions,''' Miller said. He has sold $300,000 of his holdings. He still owns $450,000 of auction-rate preferred securities and municipal bonds.
Look out, here comes the litigation.
MR |
03.28.08 - 5:47 pm | #
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ajw writes:
Urban Digs (great blog, btw) - I am looking forward to the same thing!
ajw |
03.28.08 - 5:47 pm | #
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blowncue writes:
ECB Will Offer Six-Month Loans
http://online.wsj.com/article/
SB...=googlenews_wsj
In a fresh sign of the depth of policymakers' worries about the health of the banking system, the European Central Bank expanded its playbook by announcing it will offer six-month loans to financial institutions for the first time
blowncue |
03.28.08 - 5:49 pm | #
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Kp writes:
I am having trouble feeling sorry for the investors in these obscure products at this point. Everyone has to be wise that the Banks are not really worried about tarnishing "the relationship" anymore. If your placement isn't explicitly guaranteed then you are probably taking on more risk than you are being compensated for. Heck, even if it IS you are probably still taking a bigger chance than you know.
Kp |
03.28.08 - 5:49 pm | #
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MR writes:
Kp -- Careful, you just might be one of these investors in these obscure products if you have your money in the stock market, bond market, or money market. . .just about anywhere except a coffee can buried in the back yard.
MR |
03.28.08 - 5:51 pm | #
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ShortCourage writes:
How many more examples of a deflationary spiral do we need before inflationists lose confidence in their predictions?
And lose confidence that the Fed has the power to turn the tide?
I don't claim confidence either way. I just think you had better assign a significant probability of either outcome and be hedged whichever way you bet.
ShortCourage |
03.28.08 - 5:53 pm | #
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Troy writes:
This equities market reminds me of somebody pumping up a leaky tire. PUMP PUMP PUMP ssssssssssssssssssss PUMP PUMP PUMP ssssssssssssssssssss
Troy |
03.28.08 - 5:54 pm | #
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Ken writes:
A private island resort may take a long time to sell relative to a tract home, and in fact may have no active market to speak of, but does that reduce its value?
It definitely reduces its value as collateral for a loan, since in the event of a default it's much harder (and thus more expensive) for the bank to sell. There are many assets that historically weren't borrowable against (or only at usurious rates or low LTV, ala a pawn shop) that Wall Street has started to accept in recent years. This was not necessarily a good thing.
Ken |
Homepage |
03.28.08 - 5:55 pm | #
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Topher writes:
"There will be outrage and lawsuits galore - there will be billions of dollars vaporized with this - but maybe it's a good thing because it will force a solution," said one broker.
Other brokerages are expected to follow UBS's lead, though many said they won't make a decision on whether to take similar action until Monday, the last day of the month.
"Obviously everybody is going to have to follow at some time," said a Morgan Stanley (MS) broker who was told that the firm's original plan was to wait until April before taking marks."
Same source
Very Scary!
Topher |
03.28.08 - 5:56 pm | #
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conspiracy Theories writes:
Kristen rumored to hade made 100K+ shorting insurer's.
conspiracy Theories |
03.28.08 - 5:56 pm | #
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conspiracy Theories writes:
pardon me, aka "kristen"
conspiracy Theories |
03.28.08 - 5:57 pm | #
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UCLAMBA writes:
Sadly, this UBS action effects me in an indirect way :-(
I'm on the board of directors of a homeowner's association in Los Angeles and at our meeting on Tuesday, the treasurer informed us that about 1/2 of our reserve fund (roughly $250K) was in UBS ARS and was now untappable (I had no ideas as I was just elected in January).
We don't need the money right away, but I instantly told the property manager to move the other 1/2 (money market) out of UBS and into FDIC insured accounts under $100K each at strong banks. Hope he got that done before the sh%t hits the fan.
We'll definitely have our lawyer look into litigation if this writedown becomes permanent.
UCLAMBA |
03.28.08 - 5:58 pm | #
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FiveAcres writes:
Troy: It's not a leaky tire: it's a shredded tire.
FiveAcres |
03.28.08 - 5:58 pm | #
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Octavio Richetta writes:
``We do not need the amount of backup credit lines that we had previously,.."
Sure, they now borrow from jus via the FED
Octavio Richetta |
03.28.08 - 5:59 pm | #
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Marlow writes:
Let me make sure I understand this: UBS is marking down the value of these ARS but its HNW customers still can't sell them because, presumably, there are no bids? Any ideas why UBS chose to voluntarily do this NOW -- that is, why risk incurring the wrath of your customers if your competitors aren't taking similar actions? Why not just let this toxic waste sit in customers accounts indefinitely and, in the absence of a functioning secondary market, value it at par? I'm confused as to UBS' motivation. Any ideas?
Marlow |
03.28.08 - 6:00 pm | #
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CRead writes:
These are the safest investments available in my wife's 401K fund pool. Can someone tell me if they are really "safe"?
PRRXX and PRTXX
Thanks.
CRead |
03.28.08 - 6:00 pm | #
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crispy&cole writes:
1st qtr house cleaning. They are going to write down up to $11 billion...I love Fridays
crispy&cole |
Homepage |
03.28.08 - 6:02 pm | #
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Topher writes:
CRead go to this site and check.
http://us1.institutionalriskanal...Survey.asp?
x=NQ
Topher |
03.28.08 - 6:06 pm | #
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Kicker writes:
About FGIC downgrade - As far as i understand, credibility of monolines is at rock bottom. Does this downgrade make any difference? Or are there contracts that kick in when a monoline is downgraded to junk status?
FGIC and others were so much selling insurance as they were selling volatility reduction.
See, the FASB requires that company’s mark-to-market any security if there is a deterioration in the credit of the underlying security.
Since that is hard to measure in security that consists of a pool of mortgages or car loans the CFOs were faced with marking-to-market every quarter. Even worse, the market for these products was very volatile. Marking-to-market would lead to wide swings in profits (and even losses) on a quarterly basis.
Instead, the companies started buying rated securities. As long as the rating held the rules allowed them to book the securities at par. Since the WallStreet is the worlds best "spinner" of rated securities they were sown into balance sheets around the world.
But, even that wasn't enough. If a security was downgraded it would lead to investor panic because the security had to be marked-to-market. How safe is this company, they bought XYZ bonds!
So, CFOs started to demand products that were rated, but also blessed by a company with a AAA rating. That way, it didn't matter what happened to the underlying security. The CFO would never be required to market it to market because it would always carry the rating of the AAA insurer (which was never supposed to change).
Hence the stand-off with the mono-lines. Downgrade them and every bank, insurance company, and corporate balance sheet is going to have to start marking-to-market.
Kicker |
03.28.08 - 6:09 pm | #
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UrbanDigs writes:
thx ajw!
UrbanDigs |
Homepage |
03.28.08 - 6:09 pm | #
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Anonymous writes:
The container blew up.
Anonymous |
03.28.08 - 6:10 pm | #
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rich writes:
What basis is UBS using? Presumably there is no market price.
This is in UBS' retail brokerage channel, the one they market on TV as:
You and us.
It's the personal relationship between the client and broker that builds their credibility and profits.
In situations like this, brokers tend to hide under their desks. They don't want to face angry clients with bad news. As other posters have shared here from personal experience, the bad news is both lower value and lack of liquidity.
UBS doesn't want brokers to hide under their desks. They want them to get on the phone and say the bad news. UBS determined the markdowns in part based on what story they could persuade the brokers to tell that wouldn't make the clients go completely ballistic.
At this point, it's all about "proactive damage control."
You and us.
rich |
03.28.08 - 6:11 pm | #
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Anonymous writes:
The Bush administration announced Friday that it intends to name two securities lawyers to fill Democratic vacancies on the five- member Securities and Exchange Commission.
By law, no more than three SEC commissioners may be of the same party as the president. The SEC now has no Democratic members as Campos left in September and Nazareth stepped down this year. Their departure left the commission in the hands of three Republicans, SEC Chairman Christopher Cox and Commissioners Paul Atkins and Kathleen Casey, and congressional Democrats have urged Cox to avoid controversial rulemaking until political balance is restored.
WASHINGTON (AP) — The White House named William E. Kovacic as the next chairman of the Federal Trade Commission, to succeed Deborah Platt Majoras when she resigns at the end of the month.
Mr. Kovacic has served as one of the agency’s five commissioners since January 2006. He will be one of two remaining Republican commissioners after Ms. Majoras leaves.
See also: Bear Stearns antitrust abuse and bogus Senate hearing next week
Anonymous |
03.28.08 - 6:11 pm | #
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riddler writes:
>> crispy&cole wrote:
>> 1st qtr house cleaning. They are going to write down up to $11 billion...I love Fridays
I obviously flunked mind-reading 101. What is the antecedent of 'they' ?
riddler |
03.28.08 - 6:11 pm | #
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barely writes:
My MIL has a bunch of $$$$$$ in a UBS brokerage acct. Her broker sounds like a real crook. She told me he *said* he placed her money in very low risk investments. She puts up 80 cents and the fund returns 1.00 in a year.
I told her that is a 25% yield speculative grade investment. How can she convince herself that this investment is low risk with those returns?
Does anyone know the names of these funds that will be getting a haircut? I can't tell which funds contain these securities.
barely |
03.28.08 - 6:12 pm | #
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4822 writes:
http://www.spiegel.de/international/business/
0,1518,543932,00.html
German Banks Could Hemorrhage 70 Billion Euros
The fallout in Germany from exposure to America's subprime crisis may turn out to be far bigger than previously feared. One major newspaper is putting estimated losses at a whopping 70 billion euros, while a prominent politician warns that the US recession has already arrived in Germany.
German banking executives fear the current financial crisis is quickly shaping up to be the worst since 1929. In its Friday edition, mass-circulation daily Bild newspaper cites banking insiders who predict that total losses at German banks from the American subprime mortgage loan crisis could hit the €70-billion ($111 billion) mark.
4822 |
03.28.08 - 6:14 pm | #
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Anonymous writes:
Standard & Poor's Ratings Services cut Financial Guaranty Insurance Co. to junk, saying the company "has failed to implement a strategic plan to re-establish itself as a viable operating entity."
S&P said the underlying rating of bonds ensured by FGIC may well be stronger than those of the insurer after this downgrade -- basically saying FGIC's insurance is worthless.
The move follows a cut to junk status by Fitch Ratings Wednesday.
Anonymous |
03.28.08 - 6:14 pm | #
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Hazard writes:
barely, do you like your MIL? Your actions depend upon your answer to the question.
Hazard |
03.28.08 - 6:14 pm | #
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barely writes:
"barely, do you like your MIL? Your actions depend upon your answer to the question"
No, I don't like her. I surely don't want her to become destitute and camp out on my doorstep, or worse, in the extra room. I advised her in Dec to jerk every dime out of that brokerage account. Of course she let her broker talk her out of it.
barely |
03.28.08 - 6:18 pm | #
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Kolohe writes:
Generic question:
If there is a financial term I am unfamiliar with (say for example, auction rate securities) and the Ubernerd doesn't cover it (yet?)(:)), is the Wikipedia article for this concept a decent primer?
Kolohe |
03.28.08 - 6:20 pm | #
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Topher writes:
barely, get the room ready!
Topher |
03.28.08 - 6:20 pm | #
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ghostwriter writes:
And Larry Kudlow just tightened his cilice a notch. Hurts so good, eh, Larry.
ghostwriter |
03.28.08 - 6:23 pm | #
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crispy&cole writes:
riddler - UBS (I was adding to the UBS pile on)
crispy&cole |
Homepage |
03.28.08 - 6:23 pm | #
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barkingtribe writes:
ARS + Fed = TAF
barkingtribe |
Homepage |
03.28.08 - 6:25 pm | #
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Anonymous writes:
Kolohe
Try evergreen
Anonymous |
03.28.08 - 6:26 pm | #
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REBear writes:
Thanks kicker. You are awesome!
REBear |
03.28.08 - 6:26 pm | #
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Kicker writes:
If my Fidelity MM breaks the buck the four horsemen cannot be far behind.
FCASH is considered "cash for the purpose of, or as a result of, securities transactions." It's covered by the SIPC (for what that's worth").
Other Fidelity MM funds hold no other guarantee than a "cross-my-heart-hope-to-die" from Fidelity.
Of course, look at the returns on Fidelities ultra-short-term bond fund:
http://finance.yahoo.com/q/bc?s=...bc?s=FUSFX&
t=5y
A 15% loss in securities in a fund with an average maturitiy of less than 2 years. I'm guessing that 15% of the paper they are holding didn't default. It's a run.
My feeling is that there really isn't much of a difference between FUSFX and Fidelities other MM funds other than faith. I don't know how long that faith will hold.
And the truth is, MM funds have gotten so big that there is no where for that money to "run" to. All of it *can't* be converted to in-the-bank cash. You know, the kind you need to pay taxes with, etc. The only kind other banks will accept at face value.
My guess is that a run on a Fidelity fund is a long shot. But, it wouldn't have to start with Fidelity would it? Just a couple small MM funds popping here and there to get the ball rolling.
Kicker |
03.28.08 - 6:29 pm | #
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Average Joe writes:
http://online.wsj.com/article/
SB...6977964203.html
Awesome article in the WSJ that I'm sure most of you have heard about, the "lost decade" referring to the poor performance of the stock market over the last 10 years.
This is what I have been posting about for weeks now, just more clear and intelligent :)
A must read for whomever hasn't read it.
Denninger also spoke about this and the damage from dollar-cost-averaging in the bubbles and how it destroys your returns.
One thing not directly mentioned is the added pain of a generation (boomer) of simultaneous and dissapointed sellers that never existed before.
Average Joe |
03.28.08 - 6:29 pm | #
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Anonymous writes:
At the start of WWI, the United States faced a significant housing shortage. Public officials feared the spread of disease--and even communism--in the nation's cramped urban centers where vacancy rates held near zero and families often "doubled up" in single housing units. Hoping to spark a burst of new construction, New York Senator William Calder called for the creation of eleven regional Federal Building Loan Banks that would serve as a new source of funds for mortgage lenders. The proposal was controversial, however. Opponents disliked the fact that the Federal Building Loan Banks would have the authority to issue tax-free, mortgage-backed bonds, and many claimed that the private market would solve the housing shortage on its own. Proponents of the bill, meanwhile, believed that it was necessary to stave off a potentially disastrous and protracted housing shortage, and they cited the long-successful mortgage bond markets in France and Germany as evidence that their plan could succeed. Federal lawmakers had to assess the arguments on both sides and render a decision.
Anonymous |
03.28.08 - 6:31 pm | #
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barely writes:
Not a single farking peep about this on the UBS site. Cowards.
barely |
03.28.08 - 6:32 pm | #
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Octavio Richetta writes:
barley, me tink you MIL in lova wit her broker. don't leta her in your home; she may have pregnancies!
Octavio Richetta |
03.28.08 - 6:32 pm | #
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barely writes:
I think the spreads might widen a little on Monday as the next phase of the leverage unwind - bank runs - hits. Get ready for treasuries to jump some more.
barely |
03.28.08 - 6:35 pm | #
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Anonymous writes:
Investors pumped money into money market funds in the latest week, prizing flexibility above all else in the current financial turmoil, data from Boston-based fund tracker EPFR Global showed on Friday.
In the week ended March 26, a hefty $17.3 billion flowed into money market funds, while traditional safe-havens such as global bond funds had outflows of cash. Stock funds in general also lost cash to redemptions.
Money market funds have taken in a net $250 billion since August of 2007, Cameron Brandt, global markets analyst at EPFR, told Reuters in a telephone interview.
"The move in the first quarter into money market funds wasn't the usual flight to safety. The global bond funds had money come out of them, which is unusual in a period of heightened risk aversion," he said.
"The reason seems to be that there is a feeling the assets they have don't match up with the inflation people are expecting over a five-year window," Brandt said.
Anonymous |
03.28.08 - 6:35 pm | #
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Octavio Richetta writes:
In the week ended March 26, a hefty $17.3 billion flowed into money market funds, while traditional safe-havens such as global bond funds had outflows of cash. Stock funds in general also lost cash to redemptions.
It is a good thing our beloved FED has things under control:-)
Octavio Richetta |
03.28.08 - 6:37 pm | #
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anon writes:
Octavio Richetta
Nice to see you here. Is NR quiet tonight?
anon |
03.28.08 - 6:39 pm | #
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Anonymous writes:
In the first quarter of 2008, more cash flowed out of equity funds than flowed in during the first quarters of 2007 and 2006 combined.
In equity markets, EPFR data showed a net outflow of $97.9 billion in this year's first quarter. In the first quarter of 2007, net inflows totaled $18.9 billion and they were $48.9 billion in the first quarter of 2006.
All major geographic regions had outflows of cash in the latest week except for Global Emerging Market Funds, which took in $199.2 million.
One analyst expressed alarm that local currency bond fund inflows slowed from $253.4 million in the prior week.
David Spegel, global head of emerging market strategy at ING in New York, said the size of local currency fund net inflow was "troubling."
"Local currency flows have provided the main support for emerging market debt vehicles in recent months, which would otherwise have recorded net outflows from the asset class," he said. (Reporting by Daniel Bases; Editing by Dan Grebler)
Anonymous |
03.28.08 - 6:41 pm | #
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O-Joe writes:
That's why you should invest into the stock market... at least next week.
You should also think about getting long silver IMO. I will probably go long Monday/Tuesday, but boy is this a volatile market.
O-Joe
O-Joe |
03.28.08 - 6:44 pm | #
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Octavio Richetta writes:
ANON, just touring a bit. NR has been a bit religious today...
Octavio Richetta |
03.28.08 - 6:44 pm | #
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anon writes:
Paulson Says Stimulus Plan to Create 600,000 Jobs
http://www.cnbc.com/id/23842050
My stimulus check is going to pay off my heloc. This guy is on crack.
Although he didnt say where these jobs would be created, China perhaps, for sure not here. Welcome to Rome. The horror of it all
anon |
03.28.08 - 6:44 pm | #
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O-Joe writes:
Wanted to say: in the stock market you don't have to worry about marked to market. It happens instantaniously.
O-Joe
O-Joe |
03.28.08 - 6:44 pm | #
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Bill writes:
ShortCourage, or anyone else:
What instruments or methods would you recommend that would pay off nicely if deflation sets in? I'm thinking some sort of option - I'm not concerned about losing most or all of my principal if won't don't have deflation.
Bill |
03.28.08 - 6:45 pm | #
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anon writes:
O-Joe
the way it has been manipulated lately my cohorts are calling it the shlock market.
anon |
03.28.08 - 6:46 pm | #
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Kicker writes:
In the week ended March 26, a hefty $17.3 billion flowed into money market funds, while traditional safe-havens such as global bond funds had outflows of cash. Stock funds in general also lost cash to redemptions.
And all those companies using the global bond markets for funding are just going to roll up and die?
Nope! A wave of the magic wand and it becomes commercial paper! Coming soon to a MM fund near you!
All the debt from busted SIVs and the ABCP market had to go somewhere.
If this is a liquidity crisis, then no problem. But if it's a solvency crisis somebody is going to have to take the loss.
Right now, it seems like Wall Street is playing a demented version of hide the button with investors.
Kicker |
03.28.08 - 6:46 pm | #
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Anonymous writes:
Fund of funds survey: More volatility to come
Meanwhile, 80% of managers said they were pulling in their horns in the UK with a lower than usual risk exposure, while 20% said it was business as usual.
None were extending their positions, which made the UK the most negative region for the managers.
Anonymous |
03.28.08 - 6:47 pm | #
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Octavio Richetta writes:
"Wanted to say: in the stock market you don't have to worry about marked to market. It happens instantaneously."
Quote of the day! Good argument for brokers out there lurking. They may argue this is why the stock market is so safe!:-)
Well, as long as they don't halt trading, it is about as liquid as you can get. At least you can get out at some price as long as it is open.
Octavio Richetta |
03.28.08 - 6:49 pm | #
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rob writes:
http://www.bloomberg.com/avp/
avp....HIEaqmSnuo.asf
rob |
03.28.08 - 6:49 pm | #
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Octavio Richetta writes:
rob, watz the link about? my video is down right now...
Octavio Richetta |
03.28.08 - 6:54 pm | #
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Sebastian writes:
ShortCourage said: "How many more examples of a deflationary spiral do we need before inflationists lose confidence in their predictions?"
As many quarters as go by without recession forecasts panning-out?
S.
Sebastian |
03.28.08 - 6:59 pm | #
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Octavio Richetta writes:
Ok rob,
Saw it this morning on bloomberg:
More cheery words on retail from Howard Davidowitz.
Davidowitz Says Stores Face `Apocalypse' With Consumers
http://www.bloomberg.com/avp/
avp....HIEaqmSnuo.asf
(posted at NR by KJF (not JFK)
Octavio Richetta |
03.28.08 - 7:04 pm | #
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Barley writes:
They are bigger than BSC but I would still expect a run to safety for some clients. I wonder what their internal estimates are??
Barley |
03.28.08 - 7:10 pm | #
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Jas Jain writes:
--
"the way it has been manipulated lately my cohorts are calling it the shlock market."
I coined the terms Scam Market and Scam Options in 1998 and Bankrupters and Fraudsters of New York City during 2002-03.
Scam Lovers (those who "invest" in Scams for long-term) are the easiest to identify born-and-bred American dopes out there. That is why I feel so sorry for Seb, a good man but victim of bullish propaganda. America is full of intellectual whores who make a good living with propaganda. CR is a good man too but he is a poor thinker.
When it comes to investments my middle name is “broken clock.” My unchanging advice since mid-1998 has been:
1. AVOID Scams
2. USTs
3. Gold
4. Swissie
I knew in 1998 that the world is dealing with the biggest legally sanctioned criminal gang in world history among corporate crooks of America. I feel vindicated.
Jas
Jas Jain |
03.28.08 - 7:15 pm | #
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Topher writes:
anon writes:
Paulson Says Stimulus Plan to Create 600,000 Jobs
http://www.cnbc.com/id/23842050
My stimulus check is going to pay off my heloc. This guy is on crack.
Although he didnt say where these jobs would be created, China perhaps, for sure not here. Welcome to Rome. The horror of it all
anon | 03.28.08 - 6:44 pm | #
-------------------------------------
Mine is going to the far east to pay for my fuel this summer going back and forth from my Condo in FL. Any left over is going to savings.
Topher |
03.28.08 - 7:16 pm | #
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crispy&cole writes:
Jas-
Everytime I read what you write, I am reminded of my favorite band - RATM.
crispy&cole |
Homepage |
03.28.08 - 7:16 pm | #
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Barley writes:
Exposure:
On 31 December 2007, UBS had ARC positions in its trading
inventory totaling USD 5.9 billion, of which USD 4.5 billion
related to student loans. USD 1.9 billion of the student
loans and USD 1.4 billion of the other ARCs are “monoline
wrapped” and are included in the indirect exposures to
monolines of USD 11 billion detailed above. There were no
material writedowns on ARCs securities up to the end of
2007.
On 31 December 2006, UBS had ARC positions totaling
USD 1.0 billion, of which USD 0.3 billion related to student
loans. USD 0.1 billion of the student loans and USD 0.7 billion
of the other ARCs were monoline wrapped.
Barley |
03.28.08 - 7:17 pm | #
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MD Owner writes:
FWIW, as an issuer I've been told the ARS market is dead and won't come back. The vast majority of these securities will be taken out over the next year by the issuers, we don't like what has happened any better than the investors. The problem is the monolines insurance is now basically or less than worthless for any investment grade issuer.
Why will they get taken out? Because we don't like paying the penalty rate when we can issue plan old 30 year bonds at a lower rate...
MD Owner |
03.28.08 - 7:17 pm | #
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FT Woods writes:
anon,
On your Paulson article...I thought that at least 170,000 jobs had to be added each month just to keep pace with population growth in the US.
Paulso said, These (tax rebate) checks should be a big part of adding 500,000 to 600,000 additional jobs this year.
Those numbers indicate job losses, no?
FT Woods |
03.28.08 - 7:19 pm | #
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Anonymous writes:
Is anyone else thinking that this might be a benefit to ARS holders at UBS who want to do charity/estate/tax planning?
If you assume that the market is never coming back for these securities, that they remain illiquid - but that they continue to pay... then you could use the valuation haircut from USB to take a loss on a disposition.
So, since you can't sell them - what about gifting them to children and charities? You can now give 20% more of the ARSs to children without paying any taxes on them, and take loss at the same time. Ditto for charitable contributions.
Anonymous |
03.28.08 - 7:20 pm | #
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Tom writes:
My understanding is that UBS starting doing this over a month ago. (Being a UBS client,...)
Tom |
03.28.08 - 7:21 pm | #
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crispy&cole writes:
Job Market 2009 - LMFAO!!!!:
http://www.youtube.com/watch?v=O...h?
v=O2uErWWwQTo
crispy&cole |
Homepage |
03.28.08 - 7:21 pm | #
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183@620 writes:
Octavio, take your pick:
http://www.bloomberg.com/news/av/
*
183@620 |
03.28.08 - 7:26 pm | #
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Bill writes:
I think MD Owner is right. The majority of these securities will be bought out over the next months. Port Authority is not going to pay 20% forever (I think they only had to pay that for a week, actually)
And while illiquidity has a cost, I still don't understand how UBS could make this markdown. There is no market price. If they are making margin calls based on this write-down, they'll get sued for that too.
Bill |
03.28.08 - 7:32 pm | #
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Bernanke writes:
I think I'll retire next week, spend more time with the family.
Bernanke |
03.28.08 - 7:34 pm | #
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Owner Earnings writes:
All auction rate securities that do not have a penalty rate should be revalued.
Owner Earnings |
03.28.08 - 7:41 pm | #
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Jas Jain writes:
--
"Everytime I read what you write, I am reminded of my favorite band - RATM."
I am ignorant of bands, so please enlighten me as to what RATM really means. Thanks.
My goal has been to warn people of financial Nazis in America, whom I consider worse than the German Nazis. I realize that this truth offends lot of born-and-bred America dopes, but only history will shed light on the evildoing of America's financial Crooks.
Evil occurs in many forms and in America it has taken the financial form. We have been living in an Era of Evildoers as top leaders. You will see it more clearly what I mean in another 2-3 years.
Jas
Jas Jain |
03.28.08 - 7:41 pm | #
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Bernake's Family writes:
Uh.....help!
Bernake's Family |
03.28.08 - 7:42 pm | #
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MD Owner writes:
True, there is no market price. However, par was based on a AAA insurance policy. If the insurer gets downgraded to BBB or whatever then the value has dropped, either to BBB or the rating of the underlying issuer - if they have a rating. In many cases there is no underlying rating since the insurance was so cheap in the past it wasn't even worth getting a rating if the insurer looked at your books and was OK with it.
If I was sitting on a pile of these I'd take a look at the issuer and be very careful, it could be pretty dumb to sell out at less than par if they'll be refunded in the next year or so - don't panic.
MD Owner |
03.28.08 - 7:42 pm | #
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Nemo writes:
Re: mark to market
Do not miss Floyd Norris's blog today: If Market Prices Are Too Low, Ignore Them
Nemo |
Homepage |
03.28.08 - 7:46 pm | #
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Scratchy writes:
"Evil occurs in many forms and in America it has taken the financial form. We have been living in an Era of Evildoers as top leaders. You will see it more clearly what I mean in another 2-3 years."
That is the truth - the Kleptocrats have fouled their nests, but we've all been hearing the sound of the real solution for quite a while now. Socialization of losses. That's where this is going, and that's Iron Clad. The thieves in charge will not allow their class to go down, the peasants will pay.
Count on it.
Scratchy |
03.28.08 - 7:56 pm | #
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Lee Gill MD writes:
Markdowns of "cash" equivalents - which is what these things were sold as...AAA and as safe as treasuries...will WAKE UP MOM & POP INVESTOR BIG TIME...
Wall Street's best kept secret of calamity in the credit markets is over.....I smell panic on Main Street.
Lee Gill MD |
03.28.08 - 7:57 pm | #
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Alec writes:
So is this an accounting dodge for UBS while they play chicken w/ clients?
I'm sure it's in the "sign your $$$ away to arbitration" agreements that they can do this.
stop taking paper to auction (where it's written down to Level II) and instead hold at lvl III and write down a little down & hold to term, hoping for recovery.
As if anybody with half a brain didn't know that the markets are a mug's game, ad even knowing that doesn't really help.
* So O-joe, you enjoy playing this market? You might enjoy juggling chainsaws, it's safer.
Alec |
03.28.08 - 8:01 pm | #
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Misean writes:
crispy&cole,
Little background posting music.
http://www.youtube.com/watch?v=J...h?
v=Jz8wU9DdbqU
Cheers,
Misean |
03.28.08 - 8:11 pm | #
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REBear writes:
Let's say an IB wants to short the ARS market. Will they be able to do it?
REBear |
03.28.08 - 8:14 pm | #
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Misean writes:
Jas,
RATM: Rage Against The Machine.
See my previous link. At leasat you'll like the video, methinks.
Cheers,
Misean |
03.28.08 - 8:17 pm | #
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119@712 writes:
I think we can plan on 800 visitors on Sunday night.
119@712 |
03.28.08 - 8:17 pm | #
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Jas Jain writes:
--
"So O-joe, you enjoy playing this market? You might enjoy juggling chainsaws, it's safer."
Alec,
I don't think so. Scam Lovers are the stupidest risk takers out there (I said so in 1999!). They suspend the present reality and live in a world of make-believe.
What sort of person would have any faith in corporate cooks of America? Someone addicted to Scams. People don’t understand the addiction part. Justifications for this addiction abound and are offered every day on CNBC and the like.
Jas
Jas Jain |
03.28.08 - 8:19 pm | #
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Jas Jain writes:
--
Crispy and Misean,
Thanks. BTW, I am ignorant about lot of things.
Jas
Jas Jain |
03.28.08 - 8:21 pm | #
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rob writes:
I dont understand. Does this mean that all municipal bondholders are in trouble?
rob |
03.28.08 - 8:27 pm | #
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deborah writes:
My credit union, Vancity, is bailing out investors in frozen asset backed commercial paper ABCP.
deborah |
03.28.08 - 8:32 pm | #
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Jas Jain writes:
--
"Does this mean that all municipal bondholders are in trouble?"
It is a Russian roulette as to which onse are and which ones aren't.
Avoid all Scams, aka stocks. And avoid all munis.
Why take the risk?
The challenge is: Preservation of the savings and its purchasing power.
Only addicted dopes look to Scams and munis for higher returns.
Jas
Jas Jain |
03.28.08 - 8:33 pm | #
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rob writes:
Jas Jain
It is a Russian roulette as to which onse are and which ones aren't.
I dont understand my highly conservative mutual fundin my 401k is invested solely in munis. AM I in deep doo.
rob |
03.28.08 - 8:35 pm | #
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AllenM writes:
Well, Jas, are you ready to concede we are going to have inflation?
It is the only solution left to the Feds- after all they can provide more money to state and local governments, and *save* the liquidity collapse.
Bernanke promised he would use helicopters if necessary- that doesn't mean there won't be huge losses as market whipsaw *everyone*.
It seems that a lot of the masters of the universe that you spend sooo much time vilifying are a lot poorer, with more to come.
There is a lot more risk than it appears in this unwind.
Someday this war's gonna end...
AllenM |
03.28.08 - 8:38 pm | #
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Fair Economist writes:
rob: No, only those that hold auction rate security munis. There were several hundred billion worth, however. If the issuer is sound, the principal will be recovered in a few months when the issuer floats a standard bond to replace it (since it looks like ARSs are going to be dead now). However, if the issuer is dodgy they may not be able to and those bondholders are in deep bovine-processed hay.
Fair Economist |
03.28.08 - 8:38 pm | #
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jd writes:
Fair Economist
does a conservative life insurance company hold municipal bonds or auction rate securities or auction rate munis.
jd |
03.28.08 - 8:41 pm | #
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Odysseus writes:
Jas:
RATM is Rage Against The Machine.
http://en.wikipedia.org/wiki/
Rag...nst_the_Machine
Integral to their identity as a band, Rage Against the Machine voice revolutionary viewpoints highly critical of the domestic and foreign policies of the U.S. government. Throughout its existence, RATM and its individual members participated in political protests and other activism to advocate these beliefs. The band primarily saw its music as a vehicle for social activism; de la Rocha explained that "I'm interested in spreading those ideas through art, because music has the power to cross borders, to break military sieges and to establish real dialogue."
Odysseus |
03.28.08 - 8:41 pm | #
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plschwartz writes:
May I remind you that UBS is not an American bank it is Swiss.
Maybe just maybe either the banking laws of Switzerland would require such notification
or
the automatic practice of covering and lying that we have come to expect in this US of A is not the norm in "old europe"
plschwartz |
03.28.08 - 8:44 pm | #
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Misean writes:
AllenM,
The only way the Fed can inflate neutrally (i.e. not cause FCB and others outside US to dump US paper) is to get institutions to issue credit. They aren't.
If the Fed increase the balance sheet, i.e. monetizes treasuries, dollar rout results.
That's why the Fed has been playing footsie with it's balance sheet. M1 is fairly stable, which is the only thing the Fed directly impacts in soma toma ops. Those are published.
SOMA and TOMA are the most powerful Fed operations in the world, and can blow your head clean off. Thing is, in all the excitement I can't remember if I fired 5 or 6. So you gotta ask yourself, do you feel lucky?
Well do ya punk?!
Cheers,
Misean |
03.28.08 - 8:45 pm | #
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zinc writes:
The single greatest terrorist threat to the United States of America is the sitting government.
zinc |
03.28.08 - 8:48 pm | #
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AllenM writes:
Misean,
I fully expect to see back door monetization through larger federal deficits. Large aid to state governments comes to mind as the easiest way to start stimulation along with large infrastructure *investment*.
Remember all federal spending above even is essentially inflationary too, especially as we increase the available supply of treasuries and agency debt.
I no longer think that Fannie and Freddie will essentially be allowed to fail, de facto, but papered over with more and more money from Uncle Sugar.
Right now, DC is essentially watching the election crap and sitting on their hands. When the election is decided, the money machine will turn on.
They have already essentially abandoned anything beyond lip service for the dollar.
There is nothing beyond temporary islands of stability for the dollar for the next decade, and maybe beyond until we satisfy the baby boomer bust.
Someday this war's gonna end....
AllenM |
03.28.08 - 8:51 pm | #
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4runner writes:
I'm confused as to UBS' motivation. Any ideas?
Is it correct to assume that UBS simply doesn't want their account holders borrowing against the ARS in their accounts?
4runner |
03.28.08 - 8:51 pm | #
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BigDaddy63 writes:
Couple of observations:
When I was managing money, I had multiple clients and millions of $$$ in the Nuveen weekly floaters. The short story we were told by Nuveen was that I believe for every $1 invested, there was like $3 in collateral to back it and they were all rated AAA. In the years I used them, I never ran into a no bid or liquidity problem. Now granted, this was years ago. As a money manager, I made next to zero on the trades.. I think maybe an 1/8 of 1%??? So, I didn't do it for the money. I honestly thought it was a good deal for the client- they got a good tax free yield on what was considered a safe investment.
Now, flash forward to today. The second that there was any news of problems with them, I would have pulled every penny out of these- period. IMHO it's criminal that the money is frozen and now the client's are going to lose up to 20%. Trust me when I tell you 99.999% of these clients owning these ARS were not told of any risk or that they could lose 20%. No way. The risks are no way in line with the reward. Getting maybe 2% over MM rates but losing 20%???? 10 to 1 downside risk in a MM alternative?
This could have serious implications for all of these leveraged funds, the mutual fund industry, and the overall market.
The lawsuits will fly, and I highly doubt anyone will put their $$$ in these now.
This entire fiasco reminds me of 1994 when the CMO market blew up. The problem is the average investor will end up getting screwed out of millions, and the firms that made millions and millions while screwing the public may pay some token fines or get a slap on the wrist. When will the public learn Wall Street is in business for the rich and powerful, and not for the average person. In 20+ years of managing money and investing, I have never seen a market so manipulated, controlled, and full of fraud and deception as what we have today. It is shameless. I'm 80% cash 10% in commodities and 10% short. And when I say cash, I mean that, cash under the FDIC limit or Vanguard Prime rate MM. I have never been as nervous about a complete collapse of the entire financial system as I am now.
BigDaddy63 |
03.28.08 - 8:55 pm | #
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austin Powers on writes:
183@620,
I'm familiar with your address!
austin Powers on |
03.28.08 - 8:57 pm | #
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Misean writes:
AllenM,
I respect you and your knowledge, but on this point you are wrong.
The Fed DOES NOT PRINT MONEY. It issues credit.
"Remember all federal spending above even is essentially inflationary too, especially as we increase the available supply of treasuries and agency debt."
It is. But surely you'r not arguing the Fed purchases 100% or even 50% of this? Because that is FALSE! Otherwise the Fed would have FAR more than $800B in treasuries. Others buy them. If the Fed came in and MONETIZED them by being the sole, or close to sole buyer, US paper would be dumped. The Fed, does NOT want this.
"I no longer think that Fannie and Freddie will essentially be allowed to fail, de facto, but papered over with more and more money from Uncle Sugar."
So long as Uncle Stoopid can sell Treasuries without the Fed monetizing them...you have a point. But I doubt that will be the case.
"Right now, DC is essentially watching the election crap and sitting on their hands. When the election is decided, the money machine will turn on."
There is no money machine. The Fed sells credit. (emphasize that by saying PERIOD). The Fed issues credit. They have to monetize debt to get your result.
"They have already essentially abandoned anything beyond lip service for the dollar."
As much as I'd like to agree, they haven't. They have sterilized every weird thing Bernutty has done since August. The dollar is dropping because of these things, but, that's a confidence and interest rate issue. They don't mind a gradual decline in the dollar. They do not want a route.
"There is nothing beyond temporary islands of stability for the dollar for the next decade, and maybe beyond until we satisfy the baby boomer bust."
I agree 100%.
Cheers,
Misean |
03.28.08 - 9:02 pm | #
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Jas Jain writes:
--
"I dont understand my highly conservative mutual fundin my 401k is invested solely in munis. AM I in deep doo."
Rob,
I could be, I am afraid to like in the pile of goo. That is why I avoid slime and advice so.
Jas
Jas Jain |
03.28.08 - 9:04 pm | #
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Tom Bergman writes:
Didn't 3M and a lot of other large companies have their "cash" in ARS?
I recall reading that they were forced to move them off the cash line of their balance sheet. Now they will have to write them down...just like financials.
Will they be getting a bailed out too?
Tom Bergman |
Homepage |
03.28.08 - 9:12 pm | #
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AllenM writes:
Misean, deficit spending.
It is nearly preposterous that treasuries yield soooo little given how fast they are multiplying out their.
Everybody concentrates on the Fed and ignores the cash recycled into more and more t bills and bonds through the Treasury.
Consider this. The Fed deficit spends by $500 billion this year. The treasury promptly prints another $500 billion of fed debt and sells it for cash which they then spend. All the machinations with the social security trust fund, and other accounting conveniences just fail to watch the prime motivator of inflation. Why do you think Greenspan was sooo concerned when the Fed gov't actually was retiring debt? That was deflationary!
That is our true source of inflation. The Fed is a convenience for the banks to turn that debt which is our true money into convenient units, like FRNs. That and bail out the banks when they blow out their liquidity by lending long and borrowing short.
That overflow of federal debt, with more and more and more to come is what has been causing the dollar to fall, nobody else dares print so much so fast. Except Zimbabwe.
Someday this war's gonna end...
AllenM |
03.28.08 - 9:13 pm | #
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Jas Jain writes:
--
“Well, Jas, are you ready to concede we are going to have inflation?”
Let us examine my UST positions (I am always net long):
Safety:
Lots of short-term Bills (I think 8)
STRIP maturing in 2017 (up 125% since I bought in Aug’97)
Speculative:
Short Sep 135 calls on Bonds
Short Dec 100 Puts on Bonds
Short Jun122 Calls on 10-year Notes
Short Jun 112 and 114 puts on 10-year Notes.
Combined, THEY ARE WITHIN 1% OF ALL-TIME HIGH TODAY AND UP 3-4% FOR THE MONTH! I am ecstatic with 3% gain for a month in my UST positions. Actually, I am happy with a 1% gain. Most of the gain comes from speculative positions and I am betting that 10-year would remain within 3-4% for the next two months. Later this year my target for 10-year is below 3% and next year below 2%.
No, AllenM, I still forecast deflation and I doubt anyone has better record at forecasting USTs than your humble commentator for the past 15 years, far superior to the Bond King Bill Gross. I am lucky, you know.
Jas
Jas Jain |
03.28.08 - 9:21 pm | #
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AllenM writes:
Ah Jas, you are perfectly positioned for an administration that does nothing.
Just wait a year...things will change drastically.
Mark my words. Drastically.
Someday this war's gonna end...
AllenM |
03.28.08 - 9:25 pm | #
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Jas Jain writes:
--
Holy Cow! I just heard Ralph Nader on Bloomberg using my exact words -- crooks and deceptors -- for the Fed and the bankers. "Who will keep this cycle of corporate fraud from repeating," asks Nader.
But what can American People do even if they agree with this? Vote for Nader? American People are politically impotent and they genuinely don’t know what they can do. So, please tell me more about the efficacy of American democracy.
Jas
Jas Jain |
03.28.08 - 9:32 pm | #
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Anonymous writes:
Watching you guys respond to JJ inevitably ruins the thread.
Please ignore him (or ban him) hint-hint.
Anonymous |
03.28.08 - 9:35 pm | #
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MD Owner writes:
As far as owners on muni's being in trouble or not it depends on what muni's you own. Some of the project based things supported only by the revenue stream could be a problem if the project fails, things like parking lots. But in general muni's are very safe, as an issuer we take our debt payments VERY seriously and it's only 5% of our revenue's to begin with. Not paying the debt just isn't an option that's ever mentioned - ever.
If we had ARS outstanding (which we don't, ours is all fixed) there would be nothing to worry about as far as getting the principal and interst as scheduled. But of course that schedule might be 20 years unless we called em in.
MD Owner |
03.28.08 - 9:35 pm | #
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Misean writes:
AllenM,
And I know we shall continue to disagree, and that's cool.
But:
"Consider this. The Fed deficit spends by $500 billion this year. The treasury promptly prints another $500 billion of fed debt and sells it for cash which they then spend."
If this was purchased with already circulating cash, it did not increase money supply. It just pulled money toward worthless gov't spending and away from productive endeavors. Unless the Fed increases it's balance sheet, M1 has not increased. M3 may, but that is just adding more layers on the inverted pyramid. It may cause prices to rise, but M1 is the base of the pyramid.
It's more complex, if you want a nice look at money supply go here.
http://www.mises.org/story/2926
Excerpt:
"The Potential for Deflation Today
In order to understand the potential for deflation today, in 1929, or at any other time, it is necessary to understand the concepts "standard money" and "fiduciary media." Standard money is money that is not a claim to anything beyond itself. It is money the receipt of which constitutes final payment. Under a gold standard, standard money is gold coin or bullion. Paper currency under a gold standard is not standard money. It is merely a claim to standard money, i.e., gold.
Since 1933, paper currency in the United States has been irredeemable. It has ceased to be a claim to anything beyond itself. Its receipt constitutes final payment. Thus, since 1933, the standard money of the United States has been irredeemable paper currency."
Now I'm a bettin' man, so let's just fling odds at each other. ;-)
Cheers,
Misean |
03.28.08 - 9:39 pm | #
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Damocles writes:
What's next? I'll tell you what COULD be next. UBS will be the first firm to "break the buck" on a money market fund if SIVs perform poorly. They won't care since they are getting ready to jettison the US Wealth Management business and a year from now it will be under another name, perhaps back to Paine Weber.
Damocles |
03.28.08 - 9:40 pm | #
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Jas Jain writes:
--
AllenM,
You underestimate my luck. Not that I have any horse in the race but with my luck McPain might win if that is what it would take for 10-year to yield 2.xx%.
What is the probability that the first black or first woman President would do anything bold or challenge the powerful?
ZERO. A big fat zero. They are the prototype of agents of the Crooks.
Jas
PS: Rob, sorry, in the posting little window I can’t edit properly. My last reply to you got screwed up. Please avoid risk unless you are a seasoned speculator.
Jas Jain |
03.28.08 - 9:47 pm | #
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calvert writes:
Is UBS' announcement equivalent to "breaking the buck"? If not, can someone explain the difference? Thanks.
calvert |
03.28.08 - 9:48 pm | #
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Jas Jain writes:
--
Anon,
Why are disgusting and intolerant Americans like you even bother to read blogs or any public forum? Narrow-minded mental punks like you can't deal with criticism, is that it? I know your problem. You are a sad case but you don’t know that. I feel sorry for you and some other losers here.
Jas
Jas Jain |
03.28.08 - 9:56 pm | #
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coolio writes:
Jas,
Curious why you say to avoid Munis?
High rated munis are some of the safest bonds in the world. I think less than 1/4 of 1% defaulted in the past 50 years. Rates paying close to 5% tax free. For someone in a high tax bracket, that equates to 7.25% taxable equivalent.
Do you know something we don't? If so, please share with the group sir.
coolio |
03.28.08 - 10:11 pm | #
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Misean writes:
Jas,
"Why are disgusting and intolerant Americans like you even bother to read blogs or any public forum?"
There you go again, man. Do you think anyone takes you seriously after blasts like that? Look man, I am far more in your camp than you think. But when you come out with blasts like that, it turns people off.
Go back and read AllenM's and my debate. No harsh words, positions laid out, information exchanged.
Did I change AllenM's opinion, probably not. Did other readers get to see a sane, well argued debate? Did I influence anyone to my position?
I don't know, but my guess is that it might at least have been read. Your burps of nastiness, probably not.
I'm trying, with great difficulty, to get you to understand that DEBATE only works when people LISTEN. You shut that off with above statements.
Look at it this way, and as a collegiate NBT debater I know of what I am speaking:
If I walk into a debate waving a gun and demand everyone agree with me, regardless of the points I make, I have lost. If I walk in, and calmly make my arguments and win some minds, even if I loose the round, I have won.
Honestly dude, you have some good points, but your piss and vinegar approach destroys your message.
Cheers,
Misean |
03.28.08 - 10:15 pm | #
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Jas Jain writes:
--
coolio,
I foresee and am predicting massive municipal defaults in the coming years. If you assume that the next few years are going to be like the last 60 years then you are free to ignore my advice.
MY ADVICE IS ALWAYS CONSERVATIVE AND IT HAS WORKED WELL SINCE I STARTED GIVING IT FOR THE PAST TEN YEARS.
Most people tend to be greedy and ignorant of the risk. I specialize in seeing the risk years ahead of time, at least 2-3 years ahead. Risk of high inflation, above 5% for more than a year, is very low, IMO. The reason being that the financial system will collapse faster under that scenario than the low inflation regime. Bernanke & Co are fighting future deflation (late 2008 early 2009) right now due to falling aggregate demand. Inflation rate should peak during 2008H1 and then fall sharply. Treasuries will soar and other investments, including commodities, will do poorly.
Jas
Jas Jain |
03.28.08 - 10:25 pm | #
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Barley writes:
Misean | 03.28.08 - 10:15 pm |
I thought we agreed to not feed the serpants...
Barley |
03.28.08 - 10:25 pm | #
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Misean writes:
Barley,
I think Jas and Seb aren't trolls. I may be wrong, but the Super Colander Tin Foil Hat doesn't flame out when I me their posts. Call me a softy for 1st ammendment stuff.
I'm open for a change of mind, as always.
Could have something to do with the Friday night 'tinis. It can't hurt much as I won't argue my point much, and my point wasn't directed to Jas's statements. Trolls want to inflame a board against what they say. They don't want to discuss how they say it.
:-)
Cheers,
Misean |
03.28.08 - 10:30 pm | #
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Jas Jain writes:
--
Misean,
I don't take kindly to bigots and intolerant people. I dish out some of their garbage back to them. I like to get even with few bozos like Anon so that they don't get free shots.
I take attempts at suppression of free speech seriously.
Jas
Jas Jain |
03.28.08 - 10:31 pm | #
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coolio writes:
Jas Jain writes:
--
"I dont understand my highly conservative mutual fundin my 401k is invested solely in munis. AM I in deep doo."
No you are not in deep doo doo, you are full of it.
Are you trying to tell us that there is a 401k plan out there that has munis inside the 401k? If so, this is news to me. No administrator or trustee in their right mind would have munis in a tax deferred acct. That just doesn't make sense.
Secondly is response earlier to munis not being safe, you are whacked. No matter how bad this credit cycle gets, and it will be one of the worst in history, I think defaults on G.O.'s will be minimal. The only risk you might incur is interest rate risk, but credit risk? Gimme a break.
Put down your mom's computer and go to bed. Don't most kids look at porn online or something?
coolio |
03.28.08 - 10:33 pm | #
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Yoringe writes:
have some background song too :-))
http://www.youtube.com/watch?v=4...h?
v=43VyrUFEyNo
Yoringe |
03.28.08 - 10:34 pm | #
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Jas Jain writes:
--
Barely,
Why do intolerant bigots like you want to get recruits here? I know the kind. We have known them thru history in America.
Jas
Jas Jain |
03.28.08 - 10:37 pm | #
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Misean writes:
Jas,
"I don't take kindly to bigots and intolerant people. I dish out some of their garbage back to them."
I tend to skip Anon's, so I am not sure what statement you are responding to. If it was as you characterize, cool.
I tend to quote what I am responding to, so as to make the argument clear. It's a copy and paste job. Doesn't hurt 'round here where threads get so friggin' long.
*Raises 'tini glass*
Cheers,
Misean |
03.28.08 - 10:37 pm | #
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Misean writes:
Jas,
Goddammit!
"Barely,
Why do intolerant bigots like you want to get recruits here? I know the kind. We have known them thru history in America."
Are you now attacking BARLEY (barely is a different poster dude)! Sheesh. Barley is not only a good egg, he brings quite a lot to the board.
Just because someone disagrees with you is not an indication of stupidity or anything else. Gary is a left wing nut ball (IMHO) but I could sit down and have a beer and a game of darts with him. Same with Seb.
You gotta get some perspective man.
Sheesh!
Cheers,
Misean |
03.28.08 - 10:42 pm | #
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HappyRenter writes:
At some firms they are doing internal crossing of ARS & ARP notes. 2% is the standard discount to get liquidity.
Many of these notes are being called @ par by thier issuers and re-financed into 15-30 year paper, which is really what they were except you could try to auction your note each week/month. In the next 6 months this product will probably not exist.
You didn't have to be rich or dumb to buy these as most had a $25K minimum. I know Jeremy "Stocks for the Long Run" Siegel bought some and was complaining about not being able to sell them from a lunch I attended last month that he spoke at.
HappyRenter |
03.28.08 - 10:42 pm | #
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Jas Jain writes:
--
OK folks,
Let us look at few posts here. There are people who are telling others, even demanding, that they ignore and not engage with certain posters. Do people here need guidance from others as to whom to respond to and when?
What kinds of people do that?
The kind that are the problem in America. They ARE ignorant and they WANT TO REMAIN ignorant AND they want company of others who share and support their ignorance, usually based on blind faith. People with blind faith are scared that their blind faith may be exposed or put into question.
The biggest problem for America IS – an abundance of ignorant people. It is a consequence of breeding dopes. That is why Crooks rule over Americans.
Misean, cheers!
Jas
Jas Jain |
03.28.08 - 10:52 pm | #
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Jas Jain writes:
--
coolio,
Please note that you were not respondong to my quote. And you have the galls to tell me what I should do.
Jas
Jas Jain |
03.28.08 - 10:55 pm | #
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Jas Jain writes:
--
Misean,
Sorry, it was Barley and not Barely.
Jas
Jas Jain |
03.28.08 - 10:57 pm | #
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Bartman writes:
CRead writes:
These are the safest investments available in my wife's 401K fund pool. Can someone tell me if they are really "safe"?
PRRXX and PRTXX
Thanks.
CRead | 03.28.08 - 6:00 pm |
CRead - PRRXX has "AAA" corporate bonds (3M,UBS,Citi,ABN Amro, Barclays), while PRTXX has US Treasuries- enought said - take the Treasuries!!! (not ever to be confused with "govt" funds with Fanny, Freddie, Muni garbage. Best wishes and becareful!!!
Bartman |
03.28.08 - 10:58 pm | #
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Jas Jain writes:
--
CNBC, and most people who are asked about US Treasuries on CNBC, have been trashing US Treasuries for the past several years – Buy Scams and stay away from Treasury bonds. I am short Scams, especially, Fraudentials, and am long US Treasury with leverage. Either I am wrong or CNBC pundits (Brian Westbury, in particular) are wrong
You can draw your own conclusions.
Jas
Jas Jain |
03.28.08 - 11:08 pm | #
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Anon writes:
Right now, it seems like Wall Street is playing a demented version of hide the button with investors.
Kicker | 03.28.08 - 6:46 pm | #
More likely, "Hide the sausage"
Anon |
03.28.08 - 11:12 pm | #
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Topher writes:
Jas Jain | 03.28.08
You sure have your panties in a wad tonight. It was amusing for a bit. Now I find it very obnoxious. It seems you had a bad day (maybe lost some money?). Who knows? Who cares, get over yourself!
Topher |
03.28.08 - 11:13 pm | #
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Barley writes:
The beauty of this level playing field is that there is an interchange of ideas and constructive thought. The downside is that it attracts myopic self important trolls that seem to have nothing intelligent to contribute but rather add some self important hogwash that is nothing but corrosive to the spirit of reasonable dialog.
Misean - glad you are back a bit. Sorry for all. So, we have another 100B in the pot for next months lending...who is one first?
Barley |
03.28.08 - 11:50 pm | |