Monday, February 9, 2009

Mind Numbing Complexity

Over the weekend I pulled a description of the CMBX index and its associated derivatives from the Internet. "CMBX" stands for commercial mortgage backed securities index. Although I am no novice to structured securities, I was quite surprised at the mind-numbing complexity. The list of parties and acronyms runs on and on: CDS, PAUG, Floating Rate Payer, Fixed Rate Payer, Total Return Swap, Synthetic CMBS ...

"As in the CDX and ABX indices, all administrative issues for the CMBX are handled by Markit(R), who publishes various information including index comparison and price data."

So the black box is run by another black box. No one really knows what's going on.

Who in their rational mind plays in this game ? Like the ultra short ETFs, these are simply trader vehicles to gamble and loot money from the customers, who are fooled à la Madoff into thinking they are part of a great money machine.

The entire financial intermediary industry (banks, insurance companies, pension funds, investment banks, investment companies, mutual funds, etc.) should be prohibited from participating. Warren Buffet was right - these are weapons of mass destruction being handled by testosterone-laden jocks on trading floors. Get rid of it all.

The Solution to the Problem of the Banks


Providing structures for the banks to make profits will attract private capital and the banking sector will be revitalized. Perhaps Geitner's ideas about guarantees could work, if banks or private capital can borrow from the Fed at around 0% and buy the "toxic" assets with some kind of wrap guarantee from the Treasury. That would get them out of the system, as the Brady Bonds did in the early 1980s for Third World loans in default.


I see Lloyd Blankfein, head of the super beefer Goldman Sachs, reads this blog. From his writings in FT today: "In this vein, all pools of capital that depend on the smooth functioning of the financial system and are large enough to be a burden on it in a crisis should be subject to some degree of regulation."

That means hedge funds.

Word of the Day

"Baneful" - adjective [$10] from the file
Baneful means 1. poisonous; 2. productive of destruction or woe.
Sentence: Baneful financial product derivatives have contributed immensely to the credit market turmoil as too much money became tied to them.

Le Mot du Jour

"Envenimer" - verb; regular 'er' conjugation.
Envenimer means (transitive) to make septic, to poison, to inflame, to aggravate.
La Phrase: Les produits dérivés enveniment les établissements financiers.
Sentence: Derivatives poison financial institutions.


Bud said...

'super beefer'


PS......fine piece by blankfein

Bud said...

Bman are you ok with just 'short'
etf's ?? surely you can't be against someone who wants to play the market short

Bud said...

agreed..........all these products with the fancy letters were nuthin more than gambling vehicles .............the goals were to simply enlarge the bonus pool

'hogs at the trough'

Bud said...

everyone knows what a fraud and a phony i think Arod .......but he has been wronged here

this is absolutely outrageous how the so called random and secret drig test results have been made public........and why only Arod's name be outed ....what about the other 103 ??

a clear violation of the 4th amendment.....'illegal search and seizure'........what right did the US govt have in seizing these drug test......none

the prosecution against barry bonds is wrong will be against that other big phony....roger clemens

PS......thomas jefferson rolling over in his grave

Bud said...

as far as Arod testing positive.......uhhh......what's the news here

EVERY PLAYER in the nfl and mlb started juicing around the late 90s.....every one of them

ortiz garciapparra jeter pujols .....all the relief pitchers.....all the power pitchers.....all of them

and i have no problem with ballplayers's one is forced to watch a ball don't like it....don't watch it

PS....integrity of the game ??? LMAOOOOOOOOOOOOOOOO

babe ruth and ted williams played in an all white christian ( KKK ) come their numbers have 'integrity'

Bunkerman said...

Any ETF should be suitable to an "INVESTOR" to hold more than a few days. If the short ETF is truly a short ETF, then fine.

BUT if it's just a fraud designed to match daily moves - as many are - then I don't like them and want them evicersated.

I suspect a S&P short etf can be real - maybe a Nazz one - those can be geared to futures.

I'd prefer one just borrow the true long ETFs that actually hold stocks.

Bud said...

amazing how the US government is about to commit highway robbery in broad daylight.......this stupid 'stimulus' bill

and no one in the media ( except wsj and sean hannity ) are raising questions...........the mainstream media totally in the tank for obama

PS....thomas jefferson rolling over in his grave

Bunkerman said...

uh Ted Williams played the entire 1950s - baseball was integrated then.

Babe got his numbers on beer & hot dogs - and everyone says he was a really nice man to everyone.

mern said...

agreed the prosecution is totally violating these sleaze bags rights. they wont go to jail.

and at this point who cares. strip them of their stats, never let them into the HOF. end of story.

sorry guys but i dont think im single anymore.

im deep into the soup.

2 kids check (1 named casey after casey jones)
1 completely insane loveable chix, check. god bless she gets anxiety attacks too.
she has a 1 yr old corgi, named corgi.
plus a free ride to college on a schloraship, and in MENCA.

gud job too. shes not as hot as cindy but cute. im sick of the totally hot, just into the lifestyle thing. maybe im maturing...... or maybe i just dont care anymore! its not a problem of motivation, i just dont care anymore. (name that movie?)

so thats 2 kids, 3 dogs, and 2 pill popping freaks, just trying to make sense of this crazy mixed up world.

have not put the house up yet, but i may not. these short sales and foreclosures need to come down to a dull roar.

mern said...

4 dogs, rather.

um bud, wasnt babe well u know, part spear chucker?

i dont think the babe wud have cared who he played against.

afraud, big head and rocket cheated, knew it, lied, etc. different story.

shud they go to jail...... probably, but there are bigger fish to fry.

Bud said...

congrats mern

is this the girl who's name you cud not remember last week ??

mern said...

no that was the chix from jamaica.

this one lives 10 minutes from here and we have been seeing each other for a month.

she is closed. i just dont know yet.

a lot of moving parts there. plus she doesnt want anymore kids.

so that wud mean no little merns, which may not be a bad thing.

she sends me 80 texted messages a day.

if we blow up its becuase she is putting the full court press on, and i cant deal with it.

Spin-em said...

Joe Torre (as Col. Jessup): Son, we live in a world that has walls, and those walls have to be guarded by men with gloves and bats. Whose gonna do it? You? You, Lt. Hamels ? I have more responsibility here than you could possibly fathom. You weep for Arod, and you curse the Yankees. You have that luxury. You have the luxury of not knowing what I know. That Aroid's death, while tragic, probably saved lives. And that my existence, while grotesque and incomprehensible to you, saves lives. I know deep down in places you dont talk about at parties, you don't want me on that wall, you need me on that wall. We use words like honor, code, loyalty. We use these words as the backbone of a life spent defending something. You use them as a punchline. I have neither the time nor the inclination to explain myself to men who rises and sleeps under the blanket of the very freedom to play baseball that I provide, then question the manner in which I provide it. I prefer you said thank you, and went on your way, Otherwise, I suggest you pick up a ball and bat, and stand to postout on that field. Either.. way....I don't give a damn what you think you are entitled to!

Bud said...

spin........early mvp leader


mfl59 said...

I really dont think A Rod took steroids....his physique is soft and bloated....he is a pussy....

Spin-em said...

merny's in luv......and bangin jamaica girl???

"Come to Jamaica and you'll feel al-----right"...

Spin-em said...

Id pick on a Met if I could think of one.....

Bud said...

where Arod again proved himself to be a total fraud and phony........was the 60minutes interview

he knew he was a steroid user.........and he knowingly went on that show and lied......he knew katie couric was gonna ask him that question

but he decided that the show would promote him to a bigger audience......and he flat out lied

PS.....congrats spin.....yankees have locked up Arod for another 9 years at 270m

Bud said...

you right mfl.....he is a pussy


mfl59 said...

George sits in a booth. Opposite him are two guys from the Mets.

MINKLER: George, we'll be blunt. The Mets need somebody to head up scouting, and
we think that someone might be you.

GEORGE: (surprise) Head of scouting?

MOONEY: Interested?

GEORGE: (playing it cool) I'm still here.

MINKLER: Now, unfortunately, league rules prevent us from making you an offer
while you're still under contract.

Spin-em said...

. "You tell that son of a bitch that no Yankee is ever coming to Houston, not as long as you bastards are running things! ...

Spin-em said...
This comment has been removed by the author.
mfl59 said...


MVP indeed

mern said...

Cushman: Why don't you tell me about some of your previous job experience?
George Costanza: Alrighty. My last job was in publishing. I got fired for having sex in my office with the cleaning woman.
Cushman: Go on.
George Costanza: All right. Before that, I was in real estate. I quit because the boss wouldn't let me use his private bathroom. That was it.
Cushman: Do you talk to everybody like this?
George Costanza: Of course.
Cushman: My niece told me you were different.
George Costanza: I am different, yeah.

Cushman: I gotta tell you, you are the complete opposite of every applicant we've seen. Mr. Steinbrenner, sir. There's someone here I'd like you to meet. This is Mr. Costanza. He is one of the applicants.
George Steinbrenner: Nice to meet you.
George Costanza: Well, I wish I could say the same, but I must say, with all due respect, I find it very hard to see the logic behind some of the moves you have made with this fine organization. In the past twenty years, you have caused myself, and the city of New York, a good deal of distress as we have watched you take our beloved Yankees and reduced them to a laughing stock, all for the glorification of your massive ego.
George Steinbrenner: Hire this man!

Spin-em said...


Bunkerman said...


Bud said...

why do you guys 'delete comments' ?? it's so ridiculous.....this is a free and uncensored place

are y'all scared of me ?? remember .........we in cyberspace.......i can't touch you....or can i??

Bunkerman said...

btw, I don't delete any comments.

Bud said...

i know it's not you's one of the other guys.......they actin like Arod.......y' a pussy

mern said...

im with bud. let the salacious posts fly.

whether or not i check myself out is not dependent on this board.


Spin-em said...
This comment has been removed by the author.
Spin-em said...
This comment has been removed by the author.
Bunkerman said...

I liked that new name: Aroid


Bunkerman said...

well, self-control is a virtue recognized by the Greeks - temperance - so that type of deletion is certainly virtuous.


mfl59 said...

I'd like to submit my MVP vote for the week....Spin

Bunkerman, if you were in Geitner's shoes, what would you advise on this stimulus plan? Why do the politicians think FDR saved Americawith his New Deal?

Spin-em said...

loool I do too... he better wear ear plugs cuz he's going to hear it every at bat....and he should

Bud said...

'cut hard and cut deep'


uhh spin.......nuthin cuts me.........frosty on the other hand.......well......let me remind you

Exhibit A : bob cried like a bitch when i insulted his stupid spreadsheet

Bunkerman said...

Geitner is doing "Son of TARP", not the stimulus.

I've written before what I wanted to see in a stimulus plan: $1 trillion over two years of real spending on good projects that need doing.

For son of Tarp, I sugget putting the last $350 million into equity in an entity and getting the Fed to leverage it about 6 to one at 0%.

Then hire a few managers and start bidding for "toxic" assets or whole loans or whatever is need to be bought.

If private capital will go along, great.

That could buy up $2 trillion and clean the slate.

With 0% from the Fed, the entity would likely make a fortune.

Bud said...

Arod with peter gammons tonite ............let the comedy begin


Bud said...

i will make this promise............if Arod admits tonite that he took steroids to help him hit home runs and play better and make more money.....

and admits he lied to katie couric

he will show to me at least that he has guts...............and i will never bash him again

mfl59 said...

I find it hard to believe that anyone, regardless of what team they root for, can honstly say "Yes, I really like Arod"...the guy is such a clown....

mfl59 said...

there is a better chance that "jim" goes back to black and white tv's in his mansion Bud....never ever ever ever

Bud said...

i agree mfl.....less than 1% chance...........that's why i feel supremely confident i'll be bashing A-fraud alot this season

PS......ENER...thanks joe torre jr!!!!

mfl59 said...


ARod admits using steroids...


Spin-em said...
This comment has been removed by the author.
Bud said...

oh no !!!!!

i'm in big trouble


Spin-em said...
This comment has been removed by the author.
Bud said...

suck it bud !!!!

that was a 'deep cut' ?? that was your best shot ?? you had to delete that???


Spin-em said...

no.I just like deleting now

mern said...

CNN) — In the ongoing battle between a pack of particularly ambitious raccoons and the White House groundskeepers, the raccoons appear to be winning.

man this piece of "news" vanished quicker than a virgin on prom nite, on

i wonder y?

man was that headline FUNNY!

Bud said...

i'll keep my word..............but.......did A-fraud really fulfill my conditions

he sorta admitted he was juiced...........but he didn't admit he lied to katie couric

what say you mfl..........are you gonna be alone bashin A-fraud this season ???

mfl59 said...

Delete the post Bud....and let's get on with the bashing...


mern said...

George's Credo "It's not a lie if you believe it."

"Why did it all turn out like this for me? I had so much promise. I was personable. I was bright. Oh, maybe not academically speaking, but I was perceptive. I always know when someone's uncomfortable at a party. It all became very clear to me sitting out there today, that every decision I've ever made in my entire life has been wrong. My life is the complete opposite of everything I want it to be. Every instinct I have in every aspect of life, be it something to wear, something to eat... It's often wrong."
- George, in "The Opposite"
Bald men with no job and no money who live with their parents don't approach strange women."
- George, in "The Opposite"

"A job with the New York Yankees! This has been the dream of my life ever since I was a child, and it's all happening because I'm completely ignoring every urge towards common sense and good judgement I've ever had. This is no longer just some crazy notion, Elaine, Jerry. This is my religion."
- George in "The Opposite"

Bunkerman said...

bleep the "vow" - bash him.

A-roid lolol

(and I root for the Yankes except agaisnt Cleveland.)

Spin-em said...

you couldnt do it anyway cuz youre such a pill poppin pussy so blast away.....


mern said...

the indians wud have a chance if lebron pitched every 5th game and played center field the other 4.

with no juice, id bet. he wud pitch 200 innings, win 20 games have an era under 2.50 hit 50 dingers, bat over 300 and hit over 125 rbi's.

it amuses me that people say jordan was better at age 24, than this kid.

when jordan was 24 i dont think the bulls got out of the first round of the playoffs.

lebron made it when he was 22 with no support.