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I don't have a quarrel with your post. I just don't think it goes far enough.
Take federal deposit insurance. On the face of it, it's a "more or less equally vulnerable" kind of program. But it's not really - not when the federal budget is in deficit AND the premiums paid for the insurance do not accurately reflect the cost. Under those conditions, it is only fair to current depositors - but it is grossly unfair to future depositors who will pick up the tab without enjoying the benefits.
Which is a long-winded way of saying anybody with a FDIC-insured savings account has benefited from the conditions that are causing this crash.
What about housing? If the execs of these companies should have compensation clawback for creating easy credit, shouldn't homeowners who sold at the inflated prices of '03, '04, '05 also have a clawback on their profits since they directly profited from the exact same easy lending? The cumulative effects of that is much much greater than the cumulative exec bonuses.
It's easy to scapegoat those who benefited "even more", but this strikes me as an example of the old Bernard Shaw joke about the million dollar prostiture - the difference is in degree, not kind. In a credit-fueled binge, we're pretty much all guilty.
Until Americans and the US federal gov't can stop living beyond their means - none of the proposed fixes will accomplish much of anything beyond dealing the day of reckoning by a week or a day or a year.
While the exact implications of the test results are not clear, Mr Brin said it meant his chances of developing the disease, compared with the average person, were 'somewhere between 20 per cent to 80 per cent depending on the study and how you measure.'
This sentence doesn't make much sense are written. I'm pretty sure he's not trying to say his risk is only 20-80% of the "normal" risk but is he saying he has a 20-80% increased chance, or 20-80% chance? My limited reading of the lit suggests the former.
Well people in mostly-urban Seattle are generally going to be a lot closer to 911 care than someone in mostly-rural Alabama.
Did you check the math? The guy is off by a factor of 1000. EOM.
A new Morgan rises from the midlands to save us all! All hail the Bank of Buffman!
Or is it Berkman Hathasack?
You might want to double check that math and repost. And you should post a link to the original author so we can mock him mercilessly.
Baseball is as much about stories as it is about stats. Based on that, I give it to Shilling, who has both great numbers and great stories.
1. The Bloody Sock
2. Pitching 3 WS starts on, like, 8 minutes rest against the Yankee juggernaut
3. The Head in the Towel as Wild Thing sinks the dream again and again
Poor Kaufax - barely .500 record with an ERA under 1 - yikes!
And poor Pedro - one bad decision by Grady Little and he might well have had 3 more victories and more than one WS ring.
LOL! Nice to see the market gyrations haven't quite killed everyones sense of humor. :)
We must think alike.
Damn. Does that frighten you as much as it frightens me?
:) :) :)
Makes no sense to me to be paying for someone else's speculative folly --
Anybody who has ever had an FDIC-insured savings account or a conforming 30 year mortgage has benefited from the "speculative folly".
Ain't NOTHING gonna get fixed until that point sinks in with Joe Six Pack...
There have been a lot of stupid ideas floated lately, but that ban on shorting has to be the stupidest. Whatever, it's done, market tanked even without short participation - gee, what a shock.
Meanwhile Buffet plays at being Morgan and Saves the Day by buying Goldman.
Buffman?
Weeee....
So long as people have faith in T-bills
That's the one catch. A lot of foreign holdings would get wiped out this way, and it is likely to be an immediate impact felt at the next Treasury auction, because the current government simply cannot run without foreign funding. It basically means high probability of a cold-turkey balanced budget.
I'm ok with all this. It would be ugly and there would be a lot of pain and screaming, but in all honesty I don't there is any choice as far as that goes. The only options are really do we dig a deeper hole now and go through the pain later anyway, or do we just get it over with now and move forward before China really does become an economic giant? And as you point out - crisis is the crucible where new opportunities are born!
That's how I see it, anyway. And thanks for the polite discourse!
Most of the $8T deposits are individual savings. They have no reason to run on the bank, with FDIC insurance.
Banks will fail. This is not stoppable. There is only $50B in the FDIC kitty. You can bet your bottom dollar that mismatch will be trumpeted all over Main Street. I can tell you with *certainty* that the runs have already started. That run to T-bills last week was exactly that - a whole lot of high net worth people yanking funds and parking them in the safest short-term thing they could find. That's not a guess - it's first-hand knowledge.
All your plan accomplishes is shuffling where a trillion or so dollars gets applied - it's still a bailout, it's still printing of mass quantities of paper currency.
That said, frankly speaking, as I've said before, it's as good a plan as any, because all the plans will fail in roughly the same way if the federal spending binge isn't dealt with. And that won't happen until American voters are willing to actually vote for someone who tells them the truth, instead of voting for candidates who tell them what they want to hear. Voters are real good at claiming they want "honesty" and "transparency" - but still being frank - it's been a hell of a long time since they actually voted that way.
Hint (though I suspect you already know this) - that's neither McCain nor Obama.
I suspect there's other strategic changes to the platform in the pipe that it may conflict with.
We justifiable roast Microsoft when they pull s**t like that.
I'm just saying...
Bud, it's up fifty cents from our last conversation. It seems we have much different definitions of "massive profits". :)
Anyway, I wished you luck then, I wish you luck now. It's a high risk play, which is why I was drawn to both Fannie and AIG, they both worked out, which is unusual, and if you squeeze max value out of this then kudos to you.
Reopened XLF long yesterday, so I could use a little luck too. :)
I'm confused - they don't bypass the API - they just put a wrapper around it. Why is Apple banning this?
It will become an issue as soon as there's an alternate platform to develop for.
Been keeping notes on my iPhone app usage, the apps that really get heavy use are:
SMS - this is brilliantly implemented
Bloomberg
MLB at Bat
Facebook
Maps
Kids play a buch of games. Tried a lot of other apps - most of them are (frankly) crap.
Nothing in that list tied to iPhone OS or hardware, all eminently doable on Android.
Thanks! As you may recall I was also in for a dead cat bounce. Also in AIG.
Now the question is - have you sold and booked the small profits?
Apple has sold a whopping 5 million iPhone 3G's on the quarter.
Will be interesting to see how many of those replaced iPod sales. I know in our family it's been 2 iPhones instead of two new iPods, I'm guessing that has played out in a lot of places.
FDIC has roughly $50B sitting around for deposit insurance - there are ~$8T in deposits. A LOT of banks will go under if there is no bailout plan.
Put another way - either we bail out the banks to the tune of somewhere near a trillion dollars now, or we skip that step and do a similar size bailout of FDIC when it goes under in 2 weeks, or the bailout can be skipped altogether and deposits of approximately equal value to the bailouts will disappear without a trace.
No pleasant choices here.
A big reason why the "Main Street" Americans have to live a debt-fueld existence is because all the bad money created by fiat on leveraged debt is driving prices for basic living necessities...
The only way that can happen is if borrowers choose to borrow.
Look at how much money we have just saved from the deficeit by not going through with this massive bailout...
If there is no bailout, a couple of trillion in "Main Street" deposits will go to zero and the federal government will be forced to either jack interest rates sky high to maintain deficit spending or go on an immediate cold-turkey balanced budget diet. I'm not saying that is necessarily a bad thing in the long run - but in the short run there would be extreme economic pain and people should think very very carefully what it means for life in the US of A in such a situation.
Bottom line: nothing that is done here is going to make much difference unless the federal gov't - and by extension "Main Street" Americans - stop living a debt-fueled existence.
The Union will dissolve before Fenway is closed.
A "pretend" Jim Rogers play could be put together with DBO (Crude), DBA (Sugar, cotton etc) and DBB (copper zinc etc). In case anyone is tired of watching AAPL go down $10 a day.
There's no way to know. Because let's be frank - if they were to announce such a plan who in their right mind would not instantly go delinquent on their mortgage? Impossible to answer without having actual plan details.
If you figure average delinquency is (or will be) $50k, that 700B only covers 14M houses. 10% of that is 1.4M houses. The suggestion does sound...suspect.
ETA: Dow now below Thursday's close. One half of the miracle rally wiped off the books.
Clemens, Roger 34 199 12-8 3.75 1
I've lost track - does that one now get the Bonds Asterik?
Back month is ~$110. Right now - things could change - but right now it just looks like a blip from front-month squeeze.
Watching XLF and SKF - SKF is the inverse ETF for XLF - yet BOTH are red. People in ETFs need to be careful - a number of them have been turned into defacto closed-end funds do to the shorting restrictions put in place. This does not affect only "bear" ETFs.
Here's the Dodd plan, for anyone interested.
http://www.politico.com/static/PPM41_ayo08b28.html
If nothing else, maybe a distraction on an otherwise bad day (so far) for AAPL.
Apple has a credit card business - they should have themselves put on the no-short list.
I am more and more convinced that many key decision makers don't really know very much about the things they have to make important decisions on.
That seems to be frighteningly true. Note this issue didn't happen with the UK and German short-selling bans - at least their regulators seem to have some minimal understanding of market mechanics.
As promised...
"In the Order we included an exception until 11:59 p.m. on September 19, 2008 for
any person that is a market maker that effects a short sale as part of bona fide market
making and hedging activity related directly to bona fide market making in derivatives on the publicly traded securities of any Included Financial Firm. We are amending the
exception so that it continues for the duration of the Order. In addition, we are clarifying that the exception applies to all market makers, including over-the-counter market makers, and that it applies to bona fide market making and hedging activity related directly to bona fide market making in exchange traded funds and exchange traded notes of which Covered Securities are a component. "
I presume you feel the same way about bankruptcy of the lenders, and any collateral damage (like AIG) that has happened or would happen "naturally" as the result?
Absolutely! The US has already lost two central banks in history - and survived. In the early 1900s virtually ALL of Wall Street went completely bankrupt - and the country thrived. In the mid-60s, the entire Japanese banking sector went bankrupt - and the country thrived.
Paulson can roll the "systemic risk" into a tight wad and shove it where the sun don't shine - NONE of this makes any sense.
It appeared on several sites over the weekend - I think attribution is already lost.
I didn't make myself clear - the way to deal with the moral hazard is to ALLOW foreclosure on borrowers who over-extended or misjudged the market. If you don't deal with the demand side, all other actions will become meaningless.
And let's be blunt - the political reality is that any "disincentive" placed in the future has a very high probability of being cancelled out by future acts of congress in a chase for election votes.
No - foreclosures must be allowed to happen naturally.
IMO etc.
...maintains moral hazard all around.
Homeowners must be allowed to fail when over-borrowing or over-paying , or the moral hazard remains in full force. Going after "lenders" and bailing out "borrowers" is analagous is like the War on Drugs going after dealers instead of doing something about the demand side of the equation - and we all know how well that went.
Roubini's suggestion sounds more like a populist stance aimed at garnering a post-election federal appointment than something grounded in good economics.
Does that mean we adopt the French health care system?
Red wine, good bread and smelly cheese cure everything. :)
GS and MS are gonna go shopping for banks-on-sale... WaMu anyone?
At the rate things are moving, probably by tomorrow morning, lol.
Thought this was funny..."It sounds like France to me..."
http://www.bloomberg.com/apps/news?pid=20601109&sid=aAYOuAqlebF8&refer=home
PS I don't trust that Goldman leverage number at all. Not that we'll ever know...
Gimmee a "D"...gimmee an "E"....gimmee an "L"...
Ah, hell with it.
"Deleverage".
A long, long time ago...
I can still remember
How that music used to make me smile.
And I knew if I had my chance
That I could make those people dance
And, maybe, they’d be happy for a while.
But [September] made me shiver
With every paper I’d deliver.
Bad news on the doorstep;
I couldn’t take one more step.
I can’t remember if I cried
When I read about his widowed bride,
But something touched me deep inside
The day the music died.
So bye-bye, miss american pie.
Drove my chevy to the levee,
But the levee was dry.
And them good old boys were drinkin’ whiskey and rye
Singin’, "this’ll be the day that I die.
"this’ll be the day that I die."
ETA: Best comment I've seen on this news..."I'm bullish! Until 9:40AM."
Shorting is an example of asymmetrical risk/reward structures.
So is "longing".
Another state-led witch hunt. Do these things EVER end up well?
Sept. 20 (Bloomberg) -- The U.S. Securities and Exchange Commission, seeking to jumpstart a hunt for suspected manipulation of financial stocks, will require hedge fund managers, brokerages and institutional investors to describe under oath their bets on the firms.