Moral Hazard - a Danger to our Financial System
Lately Hank Paulson has drawn a line in the sand - no more bailouts - no more "moral hazard." The reasoning is, if market participants think the government will bail them out of their mistakes, they...
View ArticleRedefining "toxic waste"
As the financial crisis has deepened, the use of the phrase "toxic waste" has come up as a convenient and descriptive term to cover MBS, CDO, CDO^2, RMBS, the whole alphabet soup of Structured Finance....
View ArticleNY State to Regulate CDS as Insurance
Finally! A start to solving the CDS problem. New York Governor Paterson, together with Insurance Superintendent Dinallo, announced that the state will regulate credit default swaps as insurance when...
View ArticleBailout - Why the Big Rush?
The question that has been coming up again and again is why this has to be done by Friday, by early next week, why can't we take our time and do it right? One answer Hank and Ben didn't volunteer was...
View ArticleGarden Party II
This post extends an allegorical tale I started in March, the first five paragraphs date from then: Here we are, guests at a Stock-picker's party. At a country estate, on the carefully landscaped...
View ArticleHartford Financial Group Takes a Dive
Today as the market and financials in particular were bouncing back from yesterday's plunge, Hartford Financial Group (HIG) declined from 51.25 to as low as 31.26, apparently on Fitch's announcement...
View ArticleAIG Gets the Scarlet Letter
Watching Jim Cramer last night, he had AIG on the Sell Block - they may have 500 billion of exposure to Lehman, all the expensive junkets and golden parachutes, waste of taxpayer funds, terrible,...
View ArticleHartford Financial 3Q 2008 Earnings
Hartford Financial Group (HIG) recently reported 3Q 2008 earnings, a loss of 8.74, driven by investment losses, catastrophe loss in the P&C business, and a DAC (Deferred Compensation) unlock in the...
View ArticleAmbac earns downgrade from Moody's
Ambac (ABK) reported a third quarter loss of 8.45 per share, resulting in negative shareholder equity. Book value per share fell to (3.09). The primary cause was impairments of 2.5 billion on the...
View ArticleCitiGroup - they ought to change the rules on buybacks
As I watched CitiGroup (C) swing in the wind yesterday, yet another financial shorted down to a fraction of its book value, with the usual discussions - the market knows something, no-one will do...
View ArticlePericom Semiconductor - High Tech Value Play
Pericom Semiconductor (PSEM) is a high tech value play - the company has a genuine technological business with real sales and income, but also features a lot of cash and investment securities. At...
View ArticleIt Always Comes Back: Examining a Widely Held Premise
Part of everybody's set of investment beliefs, either consciuos or unconscious, is the idea that the market always comes back - after a bottom, there will be new heights to scale, higher than anything...
View ArticleSynthetic CDOs - a matter of preference
What got me started was reading MBIA (MBI) CEO Jay Brown's comments to Hank Paulson on the potential usefulness of the TARP Guarantee Program. Brown is on the topic of synthetic CDOs, kind of esoteric...
View ArticleA Mutual Fund that's Hard To Borrow
Stocks that are frequently sold short are labeled as "hard to borrow." Legally, in order to short a stock, it is necessary first to borrow it. When there is too much demand, the stock becomes hard to...
View ArticleNo Virgina, There Is No CDS Fairy
Everyone knows about the tooth fairy. Who as a child did not place a tooth under their pillow and wake up with a shiny quarter instead? Of course discovering that there really is no tooth farily is not...
View Article
