I suppose I should not be surprised that nothing is happening. It's Wednesday, after all. Nothing in the news sparks my brain to spew forth some paragraphs of articulate opinion. And I have no pre-prepared post. Sighhhh.
AAPL had good earnings. That's a long term winner in the Sky Fund that has more to go for awhile, but be aware that it often sells off after earnings.
The moral decrepitude of Wall Street is getting sickening, as I hear so many persons there defending Goldman's practices.
Word of the Day
"Misprize" - verb, transitive [$10] literary
Misprize means to despise, score, fail to appreciate.
Sentence: (A) [Shakespeare, As You Like It, Act I, scene II] "Your reputation shall not be misprized." (B) No one but a Financial Viking or one of their symbiotic parasites (or a wannabe) could not mizprize the amorality of proprietary activities of Wall Street. They don't work for customers, they work against them.
Showing posts with label Wall Street. Show all posts
Showing posts with label Wall Street. Show all posts
Wednesday, April 21, 2010
Monday, April 19, 2010
Financial Vikings
Friday began what I hope is an historical example of "The Truth Shall Set You Free" [John 8:32]. Finally some group in the regulatory swamp in DC finally did their job and investigated some of the failed transactions that helped create the Panic of 2008. The SEC charged Goldman, Sachs - a leading Financial Viking - of misleading investors, and hiding the true nature of a transaction it created.
What is a Financial Viking ? The analogy to the Vikings of old fits rather well. The Vikings who invaded Europe after 800AD and continued for about 200 years were ruthless plunderers who took whatever they could, burned monasteries and towns, and killed anyone in their way. Then later they settled in conquered lands and set up aristocratic feudal states. William the Bastard - Duke of Normandy - later William the Conqueror and then William I, first King of England, was a descendent of the leader of a Viking band.
A financial viking is a firm (Wall Street or beefer) who trashes, loots and plunders anyone it or he can in financial trades in any manner possible. They use their great wealth and power to ... get more. They lure sleepy institutions into dumb trades: heck, internally they call them the "dumb money". They don't care if that leads to job losses or the bankruptcies of innocent people. They hide behind phalanxes of well-paid lawyers and boilerplate risk language.
Financial Vikings shorted huge amounts of stocks while buying credit default swaps on those firms. They were trying to cause defaults by spreading fear and panic. And like the Vikings of old, they operate in loose bands. One would blow the horn to attack (likely using unrecorded instant message systems), and the others would start to hammer the stock and swaps.
And they created artful lures to get more from the "dumb money". The transaction created by Goldman Sach at the heart of the SEC charges is well described in this link -> http://www.reuters.com/article/idUSTRE63F5CZ20100416
I have seen the Goldman Sachs "pitchbook" for the Abacus 2007-AC1 offering. This "document" is grossly misleading. The pitch goes to great lengths creating a sham that ACA was the creator of the offering, managing it, and structuring it. GS is portrayed as simply the initial buyer of the securities. The core role of Paulson is not mentioned. The entire transaction was a lure - a trap - for "dumb money" to enter the lair of Paulson & Co. Dracula had to lure his victims to his clutches: "Enter freely and of your own free will" [Dracula, by Bram Stoker, Chapter 2, page 2. And the Financial Vikings had to do that to continue to drink the blood of the dumb money.
I hope that the Department of Justice and the New York State authorities investigate this as conspiracy to defraud investors, and include Paulson & Co. in that. That firm is a quintessential Financial Viking. Sure, he saw a problem - a fire starting in residential mortgages. He proceeded to throw gasoline on and spread the fire everywhere to burn as much of the forest as possible .. for his own gain.
More
Friday's Wall Street Journal describes the new headquarters of Goldman Sachs. That building is so representative of that firm. The aristocracy of the "partners" have palatial offices. The rest of the vassals and serfs get demeaning and uncomfortable desks and cubicles. Sure, they might be well paid. But they have to kiss the books of their Lords, the "partners", every day before being sent out to loot the public and "dumb money". Goldman Sachs is a band of Financial Vikings trying to create an aristocracy of the rich & powerful in the US and the World. Until recently their "partners" were part of what seemed like an exchange program for the ruling classes, going on to high offices in the US government. That all has to change.
Financial regulatory reform must put all Financial Vikings and their weapons (derivatives, etc.) under chains and locks.
And More
Goldman, Sachs hid the fact of the SEC investigation [ the "Wells Notice"] from the public. Amazingly brazen !
Word of the Day
"Misprision" - noun [$10] [pronounced mis 'prizh un] from Shakespeares's "As You Like It".
Misprision means (I) (Law) 1. the deliberate concealment of one's knowledge of a crime, treason [misprision of a felony, treason]; 2. a wrong act or omission; 3. neglect in preventing or reporting a crime; 4. maladministration of public office. (II) 1. a misreading, misunderstanding, etc.; 2. (usu. foll. by 'of') a failure to appreciate the value of a thing; 3. (archaic) contempt (see related verb 'misprize')
Sentence: How many people in the financial community - lawyers, compliance, management, on and on - are guilty of misprision ? The numbers are likely countless: well-paid enablers of the looting.
What is a Financial Viking ? The analogy to the Vikings of old fits rather well. The Vikings who invaded Europe after 800AD and continued for about 200 years were ruthless plunderers who took whatever they could, burned monasteries and towns, and killed anyone in their way. Then later they settled in conquered lands and set up aristocratic feudal states. William the Bastard - Duke of Normandy - later William the Conqueror and then William I, first King of England, was a descendent of the leader of a Viking band.
A financial viking is a firm (Wall Street or beefer) who trashes, loots and plunders anyone it or he can in financial trades in any manner possible. They use their great wealth and power to ... get more. They lure sleepy institutions into dumb trades: heck, internally they call them the "dumb money". They don't care if that leads to job losses or the bankruptcies of innocent people. They hide behind phalanxes of well-paid lawyers and boilerplate risk language.
Financial Vikings shorted huge amounts of stocks while buying credit default swaps on those firms. They were trying to cause defaults by spreading fear and panic. And like the Vikings of old, they operate in loose bands. One would blow the horn to attack (likely using unrecorded instant message systems), and the others would start to hammer the stock and swaps.
And they created artful lures to get more from the "dumb money". The transaction created by Goldman Sach at the heart of the SEC charges is well described in this link -> http://www.reuters.com/article/idUSTRE63F5CZ20100416
I have seen the Goldman Sachs "pitchbook" for the Abacus 2007-AC1 offering. This "document" is grossly misleading. The pitch goes to great lengths creating a sham that ACA was the creator of the offering, managing it, and structuring it. GS is portrayed as simply the initial buyer of the securities. The core role of Paulson is not mentioned. The entire transaction was a lure - a trap - for "dumb money" to enter the lair of Paulson & Co. Dracula had to lure his victims to his clutches: "Enter freely and of your own free will" [Dracula, by Bram Stoker, Chapter 2, page 2. And the Financial Vikings had to do that to continue to drink the blood of the dumb money.
I hope that the Department of Justice and the New York State authorities investigate this as conspiracy to defraud investors, and include Paulson & Co. in that. That firm is a quintessential Financial Viking. Sure, he saw a problem - a fire starting in residential mortgages. He proceeded to throw gasoline on and spread the fire everywhere to burn as much of the forest as possible .. for his own gain.
More
Friday's Wall Street Journal describes the new headquarters of Goldman Sachs. That building is so representative of that firm. The aristocracy of the "partners" have palatial offices. The rest of the vassals and serfs get demeaning and uncomfortable desks and cubicles. Sure, they might be well paid. But they have to kiss the books of their Lords, the "partners", every day before being sent out to loot the public and "dumb money". Goldman Sachs is a band of Financial Vikings trying to create an aristocracy of the rich & powerful in the US and the World. Until recently their "partners" were part of what seemed like an exchange program for the ruling classes, going on to high offices in the US government. That all has to change.
Financial regulatory reform must put all Financial Vikings and their weapons (derivatives, etc.) under chains and locks.
And More
Goldman, Sachs hid the fact of the SEC investigation [ the "Wells Notice"] from the public. Amazingly brazen !
Word of the Day
"Misprision" - noun [$10] [pronounced mis 'prizh un] from Shakespeares's "As You Like It".
Misprision means (I) (Law) 1. the deliberate concealment of one's knowledge of a crime, treason [misprision of a felony, treason]; 2. a wrong act or omission; 3. neglect in preventing or reporting a crime; 4. maladministration of public office. (II) 1. a misreading, misunderstanding, etc.; 2. (usu. foll. by 'of') a failure to appreciate the value of a thing; 3. (archaic) contempt (see related verb 'misprize')
Sentence: How many people in the financial community - lawyers, compliance, management, on and on - are guilty of misprision ? The numbers are likely countless: well-paid enablers of the looting.
Thursday, February 25, 2010
Big Evil Funds - a reprise.
A "Best of Bunkerman" Post - the FIRST ONE !
Originally posted Sunday, January 14, 2007, this post explained the concept of the market actions explained by a bunch of animals nicknamed "beefers". My modification since then would be to include the piranhas, too - those beefers and beefer-like Wall Street financial institutions that feed on others in the markets, particularly their own customers. Goldman, Sachs is the Prince of Piranhas.
***Reprise begins***
Big Evil Funds
To understand stock and commodity markets, you need to know who are the important participants. Today the principal ones are index funds, hedge funds, Street proprietary trading funds, mutual funds, the active public, and the inactive public.
For fun and because the classification works in explaining market activity, I group hedge funds, active trading mutual funds and the Street proprietary trading operations together as the Big Evil Funds. Long Term Capital Management was one, as was Amaranth until they blew up; Janus of the 1990s was one, too. I'll going into the "evil" appellation later.
For now, imagine a large group of wild elephants at a water hole. They drink & drink & drain it, then they stop around in the mud for awhile to decide what direction to go to find another water hole. At some point they decide which way to go, and they are off in a stampede to another water hole. If they get there and it's small or dry, they stomp around more & then go off in another direction. You can see the metaphor at work.
The action in the stock & commodity markets since the first of the year is a fine example of the big evil funds at work. I call them "beefers" - derived from "Big Evil Funds" shortened to BEFunds, hence "beefer" - since "beefer" has humorous secondary meanings. Besides being a country term for cattle - hence the herd stampeding, etc. - see the Urban Dictionary for more.
Early in the year they rolled into tech stocks & out of energy. then after a few days - as they realize tech water hole was too small - they all barge out of tech & mill around. Some barge into retail, some back to energy. Always they are searching for more water. The press daily comes up with nonsense about the "market" thinking one thing and then another. Trying to put reasons on this action is silly - it's just beefers searching for a trend, milling around, stomping in the dust. Don't get confused by trying to rationalize this kind of action.
***reprise ends***
Markets
A bounce. I did nothing. The Green-Red rule came close to being triggered, but not. It's not a bright line rule. The the markets slightly trigger it, but look sluggish at the time, I let it ride a bit.
Obama
More bloviating and lying. Or not ? Here's a quote from FT: "he planned to press ahead with his plans to overhaul the healthcare and financial regulatory systems and introduce a cap for carbon emissions, all policies that business has criticised to varying degrees. ... 'We need businesses to support these efforts,” he said, adding that it was “not about being anti-business or pro-government; it’s about being pro-growth and pro-jobs.' ”
That part is true. he wants to draft (or recruit ?) big business into a crypto-fascist state to rule over the common man. In Nazi Germany, industrialists had a major role in both bring the Nazis to power and in running the state. Part of fascism is its satanic marriage of big business with totalitarianism government.
PS:
I have to thank a reader and oft astute commentor known a Sun Boy for this idea. He thought it mocking when made yesterday, but I recognized the value of reprising good, old posts from a few years ago for the thousands [ ;) ] of new readers of this blog. And some days I have nothing original to say after three years of daily posts. [Daily here means business days, plus a few weekends.]
Word of the Day
"Irrefragable" - adjective [$10]
Irrefragable means 1. (of a statement, argument or person) unanswerable, indisputable.
Sentence: The statement by Bunkerman that, 'credit defaults swaps and beefers were the core of the Panic of 2008', is an irrefragable truth by virtue of the facts of the AIG debacle.
OOOOOOOOOOOPS
Sorry, I used that one last week. I forgot to put its card into the "used recently" pile :((
Originally posted Sunday, January 14, 2007, this post explained the concept of the market actions explained by a bunch of animals nicknamed "beefers". My modification since then would be to include the piranhas, too - those beefers and beefer-like Wall Street financial institutions that feed on others in the markets, particularly their own customers. Goldman, Sachs is the Prince of Piranhas.
***Reprise begins***
Big Evil Funds
To understand stock and commodity markets, you need to know who are the important participants. Today the principal ones are index funds, hedge funds, Street proprietary trading funds, mutual funds, the active public, and the inactive public.
For fun and because the classification works in explaining market activity, I group hedge funds, active trading mutual funds and the Street proprietary trading operations together as the Big Evil Funds. Long Term Capital Management was one, as was Amaranth until they blew up; Janus of the 1990s was one, too. I'll going into the "evil" appellation later.
For now, imagine a large group of wild elephants at a water hole. They drink & drink & drain it, then they stop around in the mud for awhile to decide what direction to go to find another water hole. At some point they decide which way to go, and they are off in a stampede to another water hole. If they get there and it's small or dry, they stomp around more & then go off in another direction. You can see the metaphor at work.
The action in the stock & commodity markets since the first of the year is a fine example of the big evil funds at work. I call them "beefers" - derived from "Big Evil Funds" shortened to BEFunds, hence "beefer" - since "beefer" has humorous secondary meanings. Besides being a country term for cattle - hence the herd stampeding, etc. - see the Urban Dictionary for more.
Early in the year they rolled into tech stocks & out of energy. then after a few days - as they realize tech water hole was too small - they all barge out of tech & mill around. Some barge into retail, some back to energy. Always they are searching for more water. The press daily comes up with nonsense about the "market" thinking one thing and then another. Trying to put reasons on this action is silly - it's just beefers searching for a trend, milling around, stomping in the dust. Don't get confused by trying to rationalize this kind of action.
***reprise ends***
Markets
A bounce. I did nothing. The Green-Red rule came close to being triggered, but not. It's not a bright line rule. The the markets slightly trigger it, but look sluggish at the time, I let it ride a bit.
Obama
More bloviating and lying. Or not ? Here's a quote from FT: "he planned to press ahead with his plans to overhaul the healthcare and financial regulatory systems and introduce a cap for carbon emissions, all policies that business has criticised to varying degrees. ... 'We need businesses to support these efforts,” he said, adding that it was “not about being anti-business or pro-government; it’s about being pro-growth and pro-jobs.' ”
That part is true. he wants to draft (or recruit ?) big business into a crypto-fascist state to rule over the common man. In Nazi Germany, industrialists had a major role in both bring the Nazis to power and in running the state. Part of fascism is its satanic marriage of big business with totalitarianism government.
PS:
I have to thank a reader and oft astute commentor known a Sun Boy for this idea. He thought it mocking when made yesterday, but I recognized the value of reprising good, old posts from a few years ago for the thousands [ ;) ] of new readers of this blog. And some days I have nothing original to say after three years of daily posts. [Daily here means business days, plus a few weekends.]
Word of the Day
"Irrefragable" - adjective [$10]
Irrefragable means 1. (of a statement, argument or person) unanswerable, indisputable.
Sentence: The statement by Bunkerman that, 'credit defaults swaps and beefers were the core of the Panic of 2008', is an irrefragable truth by virtue of the facts of the AIG debacle.
OOOOOOOOOOOPS
Sorry, I used that one last week. I forgot to put its card into the "used recently" pile :((
Wednesday, February 17, 2010
Same Old ...
The problems with Greece debt has brought to the forefront the same old "root cause" of the Panic of 2008 and all the problems that arose in that financial crisis.
The root cause is the colossal sums sloshing around in hedge funds and the Wall Street "investment" banks that facilitate their antics.
Look at the FT article today: http://www.ft.com/cms/s/0/87c3d0c6-1b30-11df-953f-00144feab49a.html
Here are some excepts if you can't get it all: "A few weeks ago, a distinctive delegation was spotted in the financial quarter of Athens: bankers from Goldman Sachs were escorting a high-powered team from the investment group run by John Paulson, the American hedge fund guru, around meetings with Greek officials and analysts ... "
"That is partly because of the manner in which hedge funds and others are perceived to be betting against the euro in general, and the debt of economically “peripheral” countries such as Greece in particular, by using derivative instruments such as credit default swaps ... "
"Goldman burst on to the Athens scene in 2002 by arranging a massive swaps transaction aimed at reducing the cost of financing that country’s public debt, which had reached a level that exceeded annual gross domestic product. The deal involved some €5bn ($6.8bn, £4.4bn) of off-market cross-currency swaps linked to outstanding Greek debt, where bonds denominated in yen and dollars were swapped for euros. Because it was treated as a currency trade rather than a loan, it helped Greece to meet European Union deficit limits while pushing repayments far into the future."
In simple words, it was a financial scam to defraud "real" bond investors of necessary information. Who make hundreds of million (billion ?) facilitating the fraud ? GS.
Who created the subprime mess ? The Wall Street investment banks did, and the hedge fund provided money for the equity and lowest rated tranches. Of course, BOTH then shorted the securities they were selling to real investors. Their swaps and positions in phony indexes such as created by Markit and derivatives on those gave them a huge, unregulated sandbox to play their games.
And they created all those phony collateralized debt obligations (CDO) - some concocted out of swaps alone - and the credit default swaps on those. All that was done to have a hidden playroom for their proprietary trading arms and their co-conspirators, the hedge funds. Nothing was regulated or reported accurately.
And what is DC doing ? Ooops I means RC = Racketeer Central. Nothing. Most are busy collecting bribes and payoffs (oops, I mean campaign contributions) from hedge funds and Wall Street as payoffs to slow and complicate efforts for real reform.
Ban all credit default swaps. Stop proprietary trading operations in ANY financial institution with any governmental licenses for anything. Bring back openness and expose all "swaps" to disclosure and require real cash collateral to back open short positions in those. And regulate all large hedge funds; limit lending to them. They are dangerous to the common man.
Word of the Day
"Incontinent" - adjective [$10 for precise definition]
Incontinent means 1. unable to control movements of the bowels or bladder or both; 2. lacking self restraint (especially in regard of sexual desire); 3. (followed by 'of') unable to control.
Sentence: In the long term, the greed inherent in Wall Street and hedge funds make them terminally incontinent of their leverage and risk. Without real regulation, they will blow up again. That old "Liar's Poker" metaphor of a "Big, swinging dick" fits their incontinence (definition #2) perfectly, too.
The root cause is the colossal sums sloshing around in hedge funds and the Wall Street "investment" banks that facilitate their antics.
Look at the FT article today: http://www.ft.com/cms/s/0/87c3d0c6-1b30-11df-953f-00144feab49a.html
Here are some excepts if you can't get it all: "A few weeks ago, a distinctive delegation was spotted in the financial quarter of Athens: bankers from Goldman Sachs were escorting a high-powered team from the investment group run by John Paulson, the American hedge fund guru, around meetings with Greek officials and analysts ... "
"That is partly because of the manner in which hedge funds and others are perceived to be betting against the euro in general, and the debt of economically “peripheral” countries such as Greece in particular, by using derivative instruments such as credit default swaps ... "
"Goldman burst on to the Athens scene in 2002 by arranging a massive swaps transaction aimed at reducing the cost of financing that country’s public debt, which had reached a level that exceeded annual gross domestic product. The deal involved some €5bn ($6.8bn, £4.4bn) of off-market cross-currency swaps linked to outstanding Greek debt, where bonds denominated in yen and dollars were swapped for euros. Because it was treated as a currency trade rather than a loan, it helped Greece to meet European Union deficit limits while pushing repayments far into the future."
In simple words, it was a financial scam to defraud "real" bond investors of necessary information. Who make hundreds of million (billion ?) facilitating the fraud ? GS.
Who created the subprime mess ? The Wall Street investment banks did, and the hedge fund provided money for the equity and lowest rated tranches. Of course, BOTH then shorted the securities they were selling to real investors. Their swaps and positions in phony indexes such as created by Markit and derivatives on those gave them a huge, unregulated sandbox to play their games.
And they created all those phony collateralized debt obligations (CDO) - some concocted out of swaps alone - and the credit default swaps on those. All that was done to have a hidden playroom for their proprietary trading arms and their co-conspirators, the hedge funds. Nothing was regulated or reported accurately.
And what is DC doing ? Ooops I means RC = Racketeer Central. Nothing. Most are busy collecting bribes and payoffs (oops, I mean campaign contributions) from hedge funds and Wall Street as payoffs to slow and complicate efforts for real reform.
Ban all credit default swaps. Stop proprietary trading operations in ANY financial institution with any governmental licenses for anything. Bring back openness and expose all "swaps" to disclosure and require real cash collateral to back open short positions in those. And regulate all large hedge funds; limit lending to them. They are dangerous to the common man.
Word of the Day
"Incontinent" - adjective [$10 for precise definition]
Incontinent means 1. unable to control movements of the bowels or bladder or both; 2. lacking self restraint (especially in regard of sexual desire); 3. (followed by 'of') unable to control.
Sentence: In the long term, the greed inherent in Wall Street and hedge funds make them terminally incontinent of their leverage and risk. Without real regulation, they will blow up again. That old "Liar's Poker" metaphor of a "Big, swinging dick" fits their incontinence (definition #2) perfectly, too.
Thursday, January 14, 2010
Obvious
That is how the big Wall Street proprietary trading houses are houses of frauds. When you create a product to "sell" to customers and then sell the same or similar products short for their own account, it is simply a fraud and the lowest form of bunco. Yet the GS bigshot says it's risk management. No way, IF GS ended up net short, which they did. That's a play on the failure of their own product.
I was happy to see the former CA treasurer make that point bluntly to the big boss of GS.
This is one way that Wall Street proprietary trading is really a parasitical business to feed off their own customers. Every single proprietary trade with a "customer" is a play to make money off them. That whole business model is pure bunco. IF GA wants to be a hedge fund, let them be a hedge fund and drop the gloss of being a broker or an investment or commercial bank.
The same goes for every Wall Street firm and major banks. It's time for clarity and simplicity to be mandated on the public markets.
Markets
The grind up continues. I await S&P 1200 to appear on the horizon, or March, whichever is sooner, to re-buy a put ladder.
Word of the Day
"Bodeful" - adjective [$10]; and "Bode" - verb, transitive [$10]
Bode means 1. portend, foreshow; 2. foresee, foretell (evil).
Bodeful means ominous.
Sentence: The new tax on large financial firms bodes much more to come. As long as Wall Street does not change its business practices, more and more taxes & regulatory shackles will be imposed over time.
I was happy to see the former CA treasurer make that point bluntly to the big boss of GS.
This is one way that Wall Street proprietary trading is really a parasitical business to feed off their own customers. Every single proprietary trade with a "customer" is a play to make money off them. That whole business model is pure bunco. IF GA wants to be a hedge fund, let them be a hedge fund and drop the gloss of being a broker or an investment or commercial bank.
The same goes for every Wall Street firm and major banks. It's time for clarity and simplicity to be mandated on the public markets.
Markets
The grind up continues. I await S&P 1200 to appear on the horizon, or March, whichever is sooner, to re-buy a put ladder.
Word of the Day
"Bodeful" - adjective [$10]; and "Bode" - verb, transitive [$10]
Bode means 1. portend, foreshow; 2. foresee, foretell (evil).
Bodeful means ominous.
Sentence: The new tax on large financial firms bodes much more to come. As long as Wall Street does not change its business practices, more and more taxes & regulatory shackles will be imposed over time.
Monday, January 4, 2010
A New Year Begins ...
Krypto Fund returned 21.56%, beating most hedge funds according to FT. Krypto Fund uses a simple asset allocation model on Excel to invest the long term money among asset classes: cash, TIPs, bonds, US stocks, Foreign stocks, real estate and precious metals. The fees are dog biscuits, paid to the manager, Krypto, my dog, who pushes a button on the computer to re-allocate. Who needs beefers ?
What do we know now that we did not know one year ago ?
First
The big banks all repaid TARP in 2009. Losses, while large, were not the industry-wide monumental tidal wave that the bomb throwers proclaims so stridently in 2008. That means that "most" of the collapse in the financial markets in 2008 truly was a simple panic, not the incurable end of the world proclaimed.
How did the panic get so bad ?
Simple: huge money pools of hedge funds sloshing around worldwide making huge "bets" on collapse through short selling (often naked) and credit defaults swaps. The simple answer is, "The beefers did it."
Don't overstate or understate this. There was more than smoke. There was a modest fire that the Fed was controlling. But then the beefers threw on the gasoline.
The TARP investments in the big banks helped stop the panic, which was truly out of control as a run on the bank in money market funds was incredibly dangerous. Note: only one major money fund broke the buck, due to excessive investment in Lehman paper.
Second
This means that the Republicans in Congress were completely wrong in causing the initial defeat of TARP. After that defeat, the stock market fell 20% and the retirement assets of a generation were gutted. The market has "almost" recovered that, but not quite. The pure libertarian philosophy, while so attractive in theory, proved again to be inadequate in a dynamical world.
Third
The public was NOT right, either in its opposition to the TARP or in its belief that housing was a retirement asset that could not go down. That belief led millions upon millions of them to commit to pay too much of their income for housing, thinking it would go up in value to let them repay that huge debt burden. This was a "greater fool" bubble by the PUBLIC. The group thinking of the people was WRONG.
Book of the Week
"Public Opinion" by Walter Lippmann. This excellent book was written in 1922 by the man who became the first nationally syndicated columnist and wrote a hugely influential column for forty years. The main point of the book is that the public and most governmental leaders have insufficient information to make truly informed decisions about modern, complex issues. I state part of his thesis thus: "polls based on ignorance are meaningless". They are useless for making informed, correct decisions.
It's remarkable to me that this book and its arguments seem foreign to modern journalists. They blather endlessly about what the people think about some issue yet Lippmann almost 90 years ago knew, and showed, that the people mostly are ignorant of even the simplest facts or theory to base a truly informed opinion. Lippmann had personal experience in the World War I propaganda machine and knew both its power and the difficulty informing the people.
He also was one of the rich and powerful and recognized the power of his class. He recognized how they often used their power to gather more power and wealth.
I haven't yet finished the book, but so far, it's a jewel.
PS: The new edition with the introduction by Lippmann's biographer, Ronald Steel, is best.
Word of the Day
"Scry" - verb, intransitive [$10]
Scry means to divine by crystal gazing.
Sentence: Bunkerman did not scry to learn the conclusions in today's blog; they came from the application of simple principles and ruthless logic to events in the public press.
What do we know now that we did not know one year ago ?
First
The big banks all repaid TARP in 2009. Losses, while large, were not the industry-wide monumental tidal wave that the bomb throwers proclaims so stridently in 2008. That means that "most" of the collapse in the financial markets in 2008 truly was a simple panic, not the incurable end of the world proclaimed.
How did the panic get so bad ?
Simple: huge money pools of hedge funds sloshing around worldwide making huge "bets" on collapse through short selling (often naked) and credit defaults swaps. The simple answer is, "The beefers did it."
Don't overstate or understate this. There was more than smoke. There was a modest fire that the Fed was controlling. But then the beefers threw on the gasoline.
The TARP investments in the big banks helped stop the panic, which was truly out of control as a run on the bank in money market funds was incredibly dangerous. Note: only one major money fund broke the buck, due to excessive investment in Lehman paper.
Second
This means that the Republicans in Congress were completely wrong in causing the initial defeat of TARP. After that defeat, the stock market fell 20% and the retirement assets of a generation were gutted. The market has "almost" recovered that, but not quite. The pure libertarian philosophy, while so attractive in theory, proved again to be inadequate in a dynamical world.
Third
The public was NOT right, either in its opposition to the TARP or in its belief that housing was a retirement asset that could not go down. That belief led millions upon millions of them to commit to pay too much of their income for housing, thinking it would go up in value to let them repay that huge debt burden. This was a "greater fool" bubble by the PUBLIC. The group thinking of the people was WRONG.
Book of the Week
"Public Opinion" by Walter Lippmann. This excellent book was written in 1922 by the man who became the first nationally syndicated columnist and wrote a hugely influential column for forty years. The main point of the book is that the public and most governmental leaders have insufficient information to make truly informed decisions about modern, complex issues. I state part of his thesis thus: "polls based on ignorance are meaningless". They are useless for making informed, correct decisions.
It's remarkable to me that this book and its arguments seem foreign to modern journalists. They blather endlessly about what the people think about some issue yet Lippmann almost 90 years ago knew, and showed, that the people mostly are ignorant of even the simplest facts or theory to base a truly informed opinion. Lippmann had personal experience in the World War I propaganda machine and knew both its power and the difficulty informing the people.
He also was one of the rich and powerful and recognized the power of his class. He recognized how they often used their power to gather more power and wealth.
I haven't yet finished the book, but so far, it's a jewel.
PS: The new edition with the introduction by Lippmann's biographer, Ronald Steel, is best.
Word of the Day
"Scry" - verb, intransitive [$10]
Scry means to divine by crystal gazing.
Sentence: Bunkerman did not scry to learn the conclusions in today's blog; they came from the application of simple principles and ruthless logic to events in the public press.
Thursday, October 29, 2009
The Good, the Bad, and ...
The Ugly.
That's watching a few clips of Yankee batters whiffing last evening. The Universe is troubled, and in disharmony as the Yankees lost Game 1 of the World Series at home 6-1. Yankees fans must hope that this loss occurred from overconfidence and the Bronx Bombers now will reach deep into themselves for renewed energy and vitality to win the Series.
Here's an interesting headline from Le Monde on the heritage of the Yankees - "Base-ball: la gloira retrouvée des Yankees" meaning "Baseball: glory regained for the Yankees". The article will be my French study lesson for today. One thing that self-study of a foreign language requires is translation workouts that are interesting.
The Bad
As usual for the past few years, that's Wall Street and its seemingly immanent sleaze. Galleon paid millions to Wall Street firms for trading information, aka "color", that would not have been normally disclosed to most investors. I suppose it got value for its money. Now think. Who gave them that information ? Goldman Sachs, Morgan Stanley, etc. And who profits hugely from proprietary trading ? Goldman Sachs, Morgan Stanley (in the past), etc. So Goldman Sachs and the rest of the Street and big banks with proprietary trading desks - who ALSO represent themselves as honest brokers - make money from THE SAME information that Galleon is supposed to have illegally obtained.
There are honest brokers, and there are sleazy brokers. A sleazy broker, whether in stocks or real estate or cotton, trades and deals ahead of and in competition with its OWN customers. In some professions that is expressly illegal. It no doubt violates the duty an agent (the broker) owes to its client (the customer).
Financial reform should prohibit any broker from operating a proprietary trading desk. Period. If Goldman Sachs employees or even its stockholders want them to trade for their own account, let them split into two companies, viz. an honest broker and investment banks, and a hedge fund.
The Good
It's possible that cluster FUBAR climate treaty will collapse. Europe is bickering over the costs. China and the US disagree, too. Good.
Actions
The markets dropped yesterday when the beefers and traders, as usual, all tried to sell at the same time. Hardest hit were their technology and resource favorites.
I bought some more VVUS (a long term speculation on their promising diet drug), re-bought some RIMM at the gap support level to re-start a position, and a few more MT call options. MT earnings seemed good to me, but that stock was hammered.
I have plenty of cash on the sidelines and am looking for more speculations.
Word of the Day
"Cant" - noun and verb [$10]; this is one set of meanings.
Cant means (noun) 1. insincere pious or moral talk; 2. ephemeral or fashionable catchwords; 3. language peculiar to a class, profession, seat, etc.: jargon.
Sentence: Almost every public statement that I've heard from Wall Street figures is mere cant to delude the public to help preserve the vig they skim from the public and investors.
That's watching a few clips of Yankee batters whiffing last evening. The Universe is troubled, and in disharmony as the Yankees lost Game 1 of the World Series at home 6-1. Yankees fans must hope that this loss occurred from overconfidence and the Bronx Bombers now will reach deep into themselves for renewed energy and vitality to win the Series.
Here's an interesting headline from Le Monde on the heritage of the Yankees - "Base-ball: la gloira retrouvée des Yankees" meaning "Baseball: glory regained for the Yankees". The article will be my French study lesson for today. One thing that self-study of a foreign language requires is translation workouts that are interesting.
The Bad
As usual for the past few years, that's Wall Street and its seemingly immanent sleaze. Galleon paid millions to Wall Street firms for trading information, aka "color", that would not have been normally disclosed to most investors. I suppose it got value for its money. Now think. Who gave them that information ? Goldman Sachs, Morgan Stanley, etc. And who profits hugely from proprietary trading ? Goldman Sachs, Morgan Stanley (in the past), etc. So Goldman Sachs and the rest of the Street and big banks with proprietary trading desks - who ALSO represent themselves as honest brokers - make money from THE SAME information that Galleon is supposed to have illegally obtained.
There are honest brokers, and there are sleazy brokers. A sleazy broker, whether in stocks or real estate or cotton, trades and deals ahead of and in competition with its OWN customers. In some professions that is expressly illegal. It no doubt violates the duty an agent (the broker) owes to its client (the customer).
Financial reform should prohibit any broker from operating a proprietary trading desk. Period. If Goldman Sachs employees or even its stockholders want them to trade for their own account, let them split into two companies, viz. an honest broker and investment banks, and a hedge fund.
The Good
It's possible that cluster FUBAR climate treaty will collapse. Europe is bickering over the costs. China and the US disagree, too. Good.
Actions
The markets dropped yesterday when the beefers and traders, as usual, all tried to sell at the same time. Hardest hit were their technology and resource favorites.
I bought some more VVUS (a long term speculation on their promising diet drug), re-bought some RIMM at the gap support level to re-start a position, and a few more MT call options. MT earnings seemed good to me, but that stock was hammered.
I have plenty of cash on the sidelines and am looking for more speculations.
Word of the Day
"Cant" - noun and verb [$10]; this is one set of meanings.
Cant means (noun) 1. insincere pious or moral talk; 2. ephemeral or fashionable catchwords; 3. language peculiar to a class, profession, seat, etc.: jargon.
Sentence: Almost every public statement that I've heard from Wall Street figures is mere cant to delude the public to help preserve the vig they skim from the public and investors.
Friday, February 6, 2009
Zzzzzzzzzzzz ...
I overslept, so a short post.
Here is another example of how Wall Street was nuts.
***quote begins***
WSJ: Deutsche Bank Fallen Trader Left Behind $1.8 Billion Hole
The fall of Boaz Weinstein, once one of Wall Street's hottest traders, speaks volumes about why financial firms still are reeling from the shattered global markets.
As a chess master, poker and blackjack devotee and top trader at Deutsche Bank AG, Mr. Weinstein made big bets using complex financial instruments, generating large returns for the bank and about $40 million in annual pay for himself. But in 2008 the group he ran saddled the bank with $1.8 billion in losses, erasing more than two years of trading gains.
On Thursday, the German banking giant reported a 2008 loss of $5 billion (€3.9 billion), its first one-year loss in over five decades and a reminder that financial firms are not out of the woods. In an earnings conference call, Chairman Josef Ackermann described the market environment as a "series of earthquakes with constantly changing epicenters."
***quote ends***
Why oh why would ANY corporation let some guy take such risks with shareholders money ?
Word of the Day
"Natiform" - adjective [$1000]
Natiform means resembling or having the form of the buttocks. Natiform complements Samuel Johnson's fine word, "asshead" in the physical sense. From "World Wide Words" - "[Natiform] derives from Latin nates, plural of natis, a buttock. It has never been used to refer to the buttocks themselves, instead always to some anatomical feature that contains a deep cleft."
Sentence: (from OED 1898 usage) The skull assumes a peculiar and characteristic shape, to which the term natiform has been applied.
Current Sentence: I suppose that one could alter "natiform" into a humorous pejorative, "natiface" or perhaps even "natihead" as a erudite version of "butthead".
[I wonder if James Fenimore Cooper was having a bit of obscure fun with the name of his character, Natty Bumpo ?]
Le Mot du Jour
"Se réveiller" - a reflexive verb
Se réveiller means 1. to awake, to wake up; 2. to be roused, to be reawakened; 3. to reawaken, to stir again.
La Phrase: Je me suis réveillé trop tard.
English: I woke up too late. [I overslept.]
Here is another example of how Wall Street was nuts.
***quote begins***
WSJ: Deutsche Bank Fallen Trader Left Behind $1.8 Billion Hole
The fall of Boaz Weinstein, once one of Wall Street's hottest traders, speaks volumes about why financial firms still are reeling from the shattered global markets.
As a chess master, poker and blackjack devotee and top trader at Deutsche Bank AG, Mr. Weinstein made big bets using complex financial instruments, generating large returns for the bank and about $40 million in annual pay for himself. But in 2008 the group he ran saddled the bank with $1.8 billion in losses, erasing more than two years of trading gains.
On Thursday, the German banking giant reported a 2008 loss of $5 billion (€3.9 billion), its first one-year loss in over five decades and a reminder that financial firms are not out of the woods. In an earnings conference call, Chairman Josef Ackermann described the market environment as a "series of earthquakes with constantly changing epicenters."
***quote ends***
Why oh why would ANY corporation let some guy take such risks with shareholders money ?
Word of the Day
"Natiform" - adjective [$1000]
Natiform means resembling or having the form of the buttocks. Natiform complements Samuel Johnson's fine word, "asshead" in the physical sense. From "World Wide Words" - "[Natiform] derives from Latin nates, plural of natis, a buttock. It has never been used to refer to the buttocks themselves, instead always to some anatomical feature that contains a deep cleft."
Sentence: (from OED 1898 usage) The skull assumes a peculiar and characteristic shape, to which the term natiform has been applied.
Current Sentence: I suppose that one could alter "natiform" into a humorous pejorative, "natiface" or perhaps even "natihead" as a erudite version of "butthead".
[I wonder if James Fenimore Cooper was having a bit of obscure fun with the name of his character, Natty Bumpo ?]
Le Mot du Jour
"Se réveiller" - a reflexive verb
Se réveiller means 1. to awake, to wake up; 2. to be roused, to be reawakened; 3. to reawaken, to stir again.
La Phrase: Je me suis réveillé trop tard.
English: I woke up too late. [I overslept.]
Monday, January 26, 2009
Another Reader Revealed ...
Perusing this morning's Financial Times online, I saw evidence this blog has another silent reader. It's really remarkable how much one can read here in advance of other more prominent people saying the same thing. How can I conclude otherwise than they read this blog ? [joke]
***quote begins ***
The financial crisis has exposed greed, predatory behaviour and conflicts of interest in Wall Street banks and investment firms, one of the top investors in the US has said. David Swensen, the chief investment officer of Yale University’s endowment who has achieved near-legendary fame, said he hoped some “moderation of compensation” on Wall Street would be a result of the crisis.
He said: "Even if the returns they generated were real, they were paid too much, and in the context of the absolutely disastrous performance of these institutions their pay was obscene".
Fortress, Goldman Sachs, Microsoft, Morgan Stanley and large buy-out funds are among those which he criticises for self-interested actions at the expense of their investors.
He said: “Look at investment banks and how they price swap transactions. Instead of being symmetric and using the same discount rate when selling and buying, they will say that on the cash flows you owe us, we’re going to use a low discount rate, and on the cash flows we owe you, we’re going to use a high discount rate.
“It’s stunning that anyone could say something like that with a straight face.
“This bad, predatory behaviour – unilaterally changing marks, asking for more collateral, etc – it seems the financial crisis stripped off this veneer and caused them all to behave in more venal ways.
“The overwhelming number of investors fail because the fees charged by the investment management industry are egregious relative to the amount of value that is added. It is really quite stunning.“
Mr Swensen said nobody should use hedge funds of funds, which take investor money and, for an additional fee, allocate it to a range of hedge funds.
“You can’t make sensible investment decisions with fund of funds or consultants. Madoff is just a great example of the dangers of making an investment and not understanding where the money is going.”
He said the $17bn Yale endowment was shifting as much available money as possible into distressed debt.
*** quote ends ***
More ...
Davos is coming .... arghhhhhhhhh. I think I have an old post about that rat's nest.
Actions - The Fido Fund
I re-bought some GE on Friday around 12. This is a very long term account - not part of Obama Fund. It's now fully invested until I put more money into it in the Spring. The fund holds CCJ, RIG, JPM, GE, DVN, AAPL, and GOOG. Those are my old favorites - so I've named the fund the Fido Fund, after my first dog, Fido.
Word of the Day
"Flagitious" - adjective [$10]; a reprise of a good one.
Flagitious means criminal, utterly villianous.
Original usage noted from a super book, "The Battle for North America" by Francis Parkham
"The Duke of New Castle used flagitious patronage to win elections."
Sentence: That Wall Street trading desks have inherently flagitious behavior has been known for years. The entertaining book, "Liar's Poker", had numerous sketches from the venal 1980s firm, Salomon Brothers. David Swensen in today's FT mentions more modern versions of Wall Street sleaze in the swaps markets.
***quote begins ***
The financial crisis has exposed greed, predatory behaviour and conflicts of interest in Wall Street banks and investment firms, one of the top investors in the US has said. David Swensen, the chief investment officer of Yale University’s endowment who has achieved near-legendary fame, said he hoped some “moderation of compensation” on Wall Street would be a result of the crisis.
He said: "Even if the returns they generated were real, they were paid too much, and in the context of the absolutely disastrous performance of these institutions their pay was obscene".
Fortress, Goldman Sachs, Microsoft, Morgan Stanley and large buy-out funds are among those which he criticises for self-interested actions at the expense of their investors.
He said: “Look at investment banks and how they price swap transactions. Instead of being symmetric and using the same discount rate when selling and buying, they will say that on the cash flows you owe us, we’re going to use a low discount rate, and on the cash flows we owe you, we’re going to use a high discount rate.
“It’s stunning that anyone could say something like that with a straight face.
“This bad, predatory behaviour – unilaterally changing marks, asking for more collateral, etc – it seems the financial crisis stripped off this veneer and caused them all to behave in more venal ways.
“The overwhelming number of investors fail because the fees charged by the investment management industry are egregious relative to the amount of value that is added. It is really quite stunning.“
Mr Swensen said nobody should use hedge funds of funds, which take investor money and, for an additional fee, allocate it to a range of hedge funds.
“You can’t make sensible investment decisions with fund of funds or consultants. Madoff is just a great example of the dangers of making an investment and not understanding where the money is going.”
He said the $17bn Yale endowment was shifting as much available money as possible into distressed debt.
*** quote ends ***
More ...
Davos is coming .... arghhhhhhhhh. I think I have an old post about that rat's nest.
Actions - The Fido Fund
I re-bought some GE on Friday around 12. This is a very long term account - not part of Obama Fund. It's now fully invested until I put more money into it in the Spring. The fund holds CCJ, RIG, JPM, GE, DVN, AAPL, and GOOG. Those are my old favorites - so I've named the fund the Fido Fund, after my first dog, Fido.
Word of the Day
"Flagitious" - adjective [$10]; a reprise of a good one.
Flagitious means criminal, utterly villianous.
Original usage noted from a super book, "The Battle for North America" by Francis Parkham
"The Duke of New Castle used flagitious patronage to win elections."
Sentence: That Wall Street trading desks have inherently flagitious behavior has been known for years. The entertaining book, "Liar's Poker", had numerous sketches from the venal 1980s firm, Salomon Brothers. David Swensen in today's FT mentions more modern versions of Wall Street sleaze in the swaps markets.
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