Friday, December 12, 2008

Kill the Credit Default Swaps Market

As usual, the Financial Times leads the way in both news and good analysis. Here is the link to an article that I read this morning at around 3AM ET in Tuesday's paper edition:

http://www.ft.com/cms/s/0/8979777c-c591-11dd-b516-000077b07658.html

The title and author are "Put the credit default swaps market out of its misery" by John Dizard. Read it.

The ludicrous commentary on Babblevision and in some financial press about the price of insuring US government debt show how phony that credit default swap market is. Hundreds of billions of $$$ in real cash are being invested in US government bills, notes and bonds at all time record low rates, yet the pundits point to that phony credit defaults swap spread. How stupid !

Who is going to pay that CDS off if the US defaults ? One of the banks who trade it ? How is the counterparty risk distinguished from the credit risk on the named credit ? Those contracts are really betting parlor slips for Wall Street bucket shops. It's time to put those shops out of business.

Events

The US Senate killed the auto industry bridge loan. News reports says the reason was the UAW's refusal for accept immediate wage cuts to the level of its US Japanese competitors. Tough to argue with that demand as a starter. So the last hope to avoid major disruption is a large, $100 billion or more debtor-in-possession financing. Whether DC ruling classes can find the wisdom in doing that is debatable. The battle in DC seems mostly posturing now.

Concern about this is why I have deferred implementing the new "fund" for which I am researching stocks. I was burned in September by thinking the Congress would do the right thing, but it didn't ans the ensuing panic has been quite bad. So we might see a repeat of that mess in the real economy now.

The big problem with a GM bankruptcy is that it will not pay its suppliers, and likely thousands of those businesses in the supply chain will in turn have to file bankruptcy. After that, we'll have a food fight from one bankruptcy court to another. Ugh ....

Markets

Futures are down substantially early morning. Alpha Fund has a lot of cash.

I HATE WINDOWS !!!!!!!!!!!!!!!!!!
VISTA ABSOLUTELY SUCKS !!!!!!!!!!!!!!!!!!!!!!
I JUST LOST 10 MINUTES OF WRITING WHEN THIS PIECE OF SH*T OPERATING SYSTEM "RESTARTED" AUTOMATICALLY TO "UPDATE"
YES, I TOLD IT TO "POSTPONE" BUT IT DID NOT.
I WILL NEVER, EVER BUY ANOTHER COMPUTER USING WINDOWS !!!!!!!

My list of stocks to consider that "could" return 5 or 10x over two years numbers about 70. I'll trim it some today. Many good names appear - it seems one can get some quality in this risky venture.

PS: I never heard of Madoff, but this is just another bit of evidence that one should not trust a hedge fund. Ever. They are just bombs awaiting detonation in one manner or another.

PPS: The Madoff fraud suports my suggestion that all hedge funds over $100 million be subject to the Investment Company Act.

Word of the Day

"Rallentando" - adverb, adjective & noun [$10] musical
Rallentando means (adv. & adj.) with a gradual decrease in speed; (noun) a passage to be performed in this way.
Sentence: The US Senate, misnamed as the "World's Greatest Deliberative Body", has through its inaction sentenced the US economy to endure long rallentando movement in economic activity.

55 comments:

mfl59 said...

cue up the Phil Labeau tears....

"its not fair"

grow up son....

Bunkerman said...

anger relieves stress.

Spin-em said...

OK...here's the deal....get up every morning..go to your pain in the balls job.. "put your money to work"...by stashing your money away every month...then...when your old...and before ya start taking it out...we're going nip 40% off the top...Ya like apples???...Well how ya like dem apples MF'r??.....what a crock of shittttt(Col Frank Slade ret)

maverick said...

UAW death please

mfl59 said...

as can anyone diagnose the following internet issue?

certain sites, such as this one, are accessible....but sites like yahoo, google, etc, are not....if a router was installed last night but then uninstalled, might this have something to do with this? thanks men...non posters feel free to help...

mern said...

But later Thursday, Owens told The Dallas Morning News: "I'm not jealous of Witten. I'm not jealous of nobody. I can take the approach that I got paid, so screw everything, but that's not me.


what happened to the tears and "thats my quarterback!"

cowgirlz r DONE!

jerry jones put those freaks together and thought wade phillips cud manage it.

thats like thinking fat andy can lose wieght.

mern said...

"But, yeah, that's kind of what we believed and I think we're always going to believe that until they prove us wrong," Hamels said. "For the past two years they've been choke artists."

rofl

thems fighting words. next spring, first series between those two, gonna need a steel cage.

Spin-em said...

update your java???

mfl59 said...

comcast...is....well....not helpful...lol

Spin-em said...

whats the message that comes up when you goto those sites mike?

mfl59 said...

John Bogle...lol...Bud your boy is comical...

Bunkerman said...

wierd, mfl.

maybe an Internet pathway has problems.

mern said...

what BUSH said

"One of the most striking aspects of being president is the power of prayer in my life. I feel it," Bush said. "Some days are happy. Some days are not so happy. But every day is joyous."


what BUSH meant to say

"one of the most striking aspects of being president is the power of cocaine in my life. i feel like smoking crack. some does r happy, those r the days i snort method and drink jack daniels. some days im too busy to get fucked up, and those are sad days. is it jan 20th yet? everyday will be joyous after that becuase ill be in a blackout until i die. seriously, john daly thinx he can party. hes a friggin amateur. i ran the country while i was more lit up than a christmas tree. RESPECT!"

mfl59 said...

this guy Gettlefinger....he really is a piece of work....

Spin-em said...

maybe Phil LaBeau could do a better job..what do ya think mike?

Frosty said...

Bunky or should I call you comrade...the basis of your investment thesis is anchored in bail outs...I sir will be flying my american flag half mast...a lil piece of me just died today.

Bunkerman said...

Oh, frosty, just call me TR.

The LEH BK sured worked well, didn't it.

Why let a train wreck happen ?

Slow it down, do an orderly BK with a lot of DIP financing and restructure the industry.

Bud said...

i'd luv to see that eagles/cowboys game week 17 be a winner take all playoff game


i'll be rootin for donny.......and btw.....andy reid is an excellent coach.....if the eagles can him....it will take him 4 seconds to get 5 offers

Bud said...

i can't stand john bogle.....i immeadiately change the channel.......i can't listen to him even for a sec

john bogle = Bman's inspiration ???


long only investing indeed

Spin-em said...

I agree Andy has done a fine job...

Spin-em said...

Id rather play the Eagles any day than the boys or the cats

mern said...

andy was a great coach.

so was landry, chuck knoll, shula.


but the game evolves and they didnt, so they became just average coaches and got canned or retired.

andy was innovative now he is just way too predictable. the nfl has changed, the west coast model is antiquated, and andy refuses to accept it.

parcells still gets the game, thats why he bounced when he saw jerry jones didnt care about the looker room and filled it my ego maniacs.

andy can manage his family.

he cant manage his health.

what chance does he have of managing a locker room of 53 roid out freaks.

one long time eagle was quoted about andy "gut check meeting". "anyone thats been here more than 2 years basically tunes andy out during his motivational speeches becuase we already know what he is gonna say. he says the samething everytime"

he has lost that locker room.

and he is a mormon! which means he is an idiot!

i said that out loud at the bar sunday and someone got right in my face.

"IM a mormon, am i stupid?" and he was a big boy looking to kick my ass.

with no hesitation my drunk ass said "yep if u r a mormon, u r dumb!"

"what makes me so dumb, asshole?"

"well u believe in the book of john, which makes u stupid!"

"its not the book of john, its the book of joe!"

"um u r wrong!"

"r u sure?"

"ive got 200 bucks in my wallet that says its the book of john"

whipped out the money and put it on his table.

he rolled his eyes

"ok, im not a mormon, but u shud keep religious opinions to yourself!"

"so ill take that, u wont bet me!"

he paid his billed, left with saying anything, and nudged me as he left. he wanted to kill me.

about 10 people were listening and simply dying becuase im 5'8, 155. this guy was over 6 foot and over 200 lbs.

im due for an azz kicking!

lol

Frosty said...

Mrs B I added PG MO PEP GIS in long term accounts today...I know comrade TR is waiting for a bail out...we'll keep this between us...Mrs B is the best.

May be my last post today...still in the woodlands, but think a mountain lyon is stalking me.

Spin-em said...

they need a coach to motivate them???..lmaooo ask that player if he heard...."No one....and I mean no one...comes into our house and pushes us around"
or has he heard that before???

Hiyooooooooooooo

Spin-em said...

if were playin cowboys....ya shoulda gotten up...lifted the front of your black hat and said...If-n yer itchin ta fight..ya better git swingin...cuz my beerz a gittin warm.......

Spin-em said...

FXE > 134.21...long oils,stuff
FXE < 132.34yesterdays low....bearish

Bud said...

what stuff ??

is that FXE formula yours ?? or you get it from somewhere

Bud said...

uh....Bman.....madoff was not a hedge fund......and it doesn't matter if he was anyway

he was a crook......plain and simple


should we ban cars because drunk drivers get behind the wheel and kill people ???

Bunkerman said...

Mrs. B bought some more Harvard muni bonds y'day - not a lot.

Bud said...

well after reading the ft for about 3 months now - on the Bman's reccomendation - it is not as good as the wsj

and the opinion page is loaded with socialist lefty writers

mfl59 said...

I guess she couldn't find an allocation on Rutgers bonds, or?

Bunkerman said...

I think WSJ has gone far down since ten years ago.

I don't read the FT opinion pages. But it seems to me its news coverage is better than WSJ. Not as broad, but better.

WSJ has way too many of thsoe junky "personal interest" oriented stories.

mern said...

buds xmas wish list

1. reagans biography

2. 3 bibles. 1 for the bathroom, 1 for the bedroom and 1 for his back pocket.

3. a rush limbaugh fat head poster

4. ann coulters used panties, preferably with some of bill mahers jizz still on the them.

5. sarah palins last toe nail clippings.

Spin-em said...

"I guess she couldn't find an allocation on Rutgers bonds, or?"


loooooooooooooool..oh maaan....MVP,MVP

Spin-em said...

3. a rush limbaugh fat head poster

looooooool.....

Bud said...

that is a very good xmas list........except i'd rather get a sean hannitty fathead.....that's my boy

anne coulter is hot !!!!.......well....not really......she's more of a skank

mern said...

agreed bud.

anyone who has had a pickle tickle from maher, is a skank.

i like maher, but he is a total minbo.

mfl59 said...

very tough choice on this week's MVP award....voters please turn in your ballots...

Spin-em said...

mfl MVP

Bud said...

i think i'll have to vote for mern.......a very strong friday



PS.....what does being a mormon have to do with bein a good football coach ???

Frosty said...

Jeez Bud ... on a big rally, investors might leave the money in the fund, so managers have a chance to stay in business.

If the rally collapses, the investors lose more, fund closes anyway.

I suppose you don't play chess.




The great state of south alaska casts one vote for the next SEC chair...comrade Bunky.

mfl59 said...

nice trades by AIG

i doubt they were done by any iowa state grads......more likely harvard and mit magna cum laude's


If that's not a heater right at someone's head, nothing is...

Bud gets my vote...

mern said...

imvvho, u need to have a high iq to be a gud football coach.

if u believe john smith was a prophet, your IQ cant be higher than forest gump.

remember his was 75, and sally field had to pin her knees back like bugs bunny to get lil forest into a regular elementary school.

i wonder where steve young thinx about john smith? he is mormon, and is definitely smart.

so u manage 17 bil and lose 50?

PASS THE BUTTER!

i seriously wonder if 50 bil is really missing? if true...........well just when u think you have seen it all.

best christmas ever?

imo, badder santa, unrated version!

Bud said...

high iq ???


tony dungy and lovey smith were in the superbowl .........and they're ....uh ....well....bootlips

mern said...

bud u remind of the chappelle character tyrone biggums.

remember that one?

he was the blind, black, white superminist.

no one told him he was black. but then he took his hood off at a KKK rally and people heads exploded.

they then informed him he was actually, in fact black.

so he divorced his wife.

they asked him y? he said 'becuase she was a nga lover"

when u look in the mirror have u ever noticed, well, that u r BLACK!

mern said...

i hate the bucs, but seriously have a lot of respect for dungy.

the bucs absolutely suxed forever before he turned that team around.

u really think he is an idiot?

he is a bible thumper so i can be flipped on the subject.

id like to see the eagles bring Bud grant back!

Bunkerman said...

Mrs. B buying more muni bonds - now Boston University for 6.7%

Some one of the dumb rich must be getting creamed in hedge funds, dumping municipals at foolish prices.

Bud said...

i'd like to rescind my mvp vote.....and give it to jim

i can't believe i didn't think of him before..........what an incredible week.....winner after winner.......i gonna be able to go to the movies tomorrow nite.....and buy the fullsize popcorn now......and the kingsize $5 kitkat


thanks jim !!!!!!

Spin-em said...

andy was a great coach.

so was landry, chuck knoll, shula.


but the game evolves and they didnt, so they became just average coaches and got canned or retired.




id like to see the eagles bring Bud grant back!








huhhhh???..lol

Frosty said...

Thanks for havimg us Bunky...Mrs B, always a pleasure...your the best.

Bunkerman said...

Nearly time for the martini & circus dog party.

enjoy the weekend.

mern said...

geesh spin, i know its the bottom of the ninth, and bud called this game on monday in the 5th. so u r obviously tired.

but u just swung at my vaseline, slider, that landed 14 feet in front of the plate and u still went after it.

my vote for MVP is ED WERDER!

keeping stiring that pot baby!

mern said...

obviously i want rich kotite back!

Spin-em said...

looooool yeah..your minds gone and its my fault???.....pffftttt

Spin-em said...

you have a good weekender merny