NorthSideSox72 Posted March 10, 2009 Author Share Posted March 10, 2009 QUOTE (southsider2k5 @ Mar 10, 2009 -> 10:28 AM) This could be it!!! I wonder how much political willpower there is to change this? http://www.bloomberg.com/apps/news?pid=206...&refer=home That is a huge need - regulatory overhaul. Not just the rules and laws, but the agencies who enforce them as well. Link to comment Share on other sites More sharing options...
Cknolls Posted March 10, 2009 Share Posted March 10, 2009 QUOTE (StrangeSox @ Mar 10, 2009 -> 08:40 AM) As long as its not a dead cat bounce... Just look at 1929. After the crash low in Nov. 1929, there was a capitulation rally for 5 months into the spring of 1930. The mkt then proceede to fall almost 90% into JULY 1932. From 300 down to around 40. So do not get carried away if the mkt rallies 100-150 spx handles. Just a bear mkt rally, to be sold no doubt. Link to comment Share on other sites More sharing options...
Balta1701 Posted March 10, 2009 Share Posted March 10, 2009 So, Obama's education policy is a gigantic success? Link to comment Share on other sites More sharing options...
NorthSideSox72 Posted March 10, 2009 Author Share Posted March 10, 2009 QUOTE (Balta1701 @ Mar 10, 2009 -> 11:25 AM) So, Obama's education policy is a gigantic success? Heh. Looks like a good start to me, but he has some uphill battles ahead of him. Link to comment Share on other sites More sharing options...
Y2HH Posted March 10, 2009 Share Posted March 10, 2009 Uptick rule has been restored. Goes into effect in a month. Link to comment Share on other sites More sharing options...
Balta1701 Posted March 10, 2009 Share Posted March 10, 2009 QUOTE (NorthSideSox72 @ Mar 10, 2009 -> 09:27 AM) Heh. Looks like a good start to me, but he has some uphill battles ahead of him. I meant...Obama introduced his education policy and the markets have soared. Based on the standard set for the last month, the stock markets must love Obama's education policy like nobody's business. Link to comment Share on other sites More sharing options...
Y2HH Posted March 10, 2009 Share Posted March 10, 2009 QUOTE (Balta1701 @ Mar 10, 2009 -> 11:31 AM) I meant...Obama introduced his education policy and the markets have soared. Based on the standard set for the last month, the stock markets must love Obama's education policy like nobody's business. Hahah, I know you're joking, that education plan has nothing to do with this, nor does this phantom "standard he set a month ago" some people talk about. Link to comment Share on other sites More sharing options...
southsider2k5 Posted March 10, 2009 Share Posted March 10, 2009 QUOTE (Balta1701 @ Mar 10, 2009 -> 11:25 AM) So, Obama's education policy is a gigantic success? He had better just keep his mouth shut about the markets today. Link to comment Share on other sites More sharing options...
Balta1701 Posted March 10, 2009 Share Posted March 10, 2009 QUOTE (southsider2k5 @ Mar 10, 2009 -> 09:41 AM) He had better just keep his mouth shut about the markets today. You guys are priceless. Link to comment Share on other sites More sharing options...
Cknolls Posted March 10, 2009 Share Posted March 10, 2009 QUOTE (Y2HH @ Mar 10, 2009 -> 10:27 AM) Uptick rule has been restored. Goes into effect in a month. Says who, Barney Frank? Link to comment Share on other sites More sharing options...
Cknolls Posted March 10, 2009 Share Posted March 10, 2009 QUOTE (Balta1701 @ Mar 10, 2009 -> 10:25 AM) So, Obama's education policy is a gigantic success? Yeah, especially the part about the D.C.vouchers. Link to comment Share on other sites More sharing options...
Balta1701 Posted March 11, 2009 Share Posted March 11, 2009 I know I said I wasn't coming back to the M2M discussion, but Bah, I learned something tonight. To start off that discussion, 2k5 insisted relaxing M2M would allow the markets to go through the roof. I responded that there was no way they were pricing these assets at the current market price (like 20% of their initial value) because if they were doing so they'd already be insolvent. 2k5 Responded that if that was the case they'd be breaking the law. As far as my brain could comprehend we were both right, either they had to be breaking the law or they were insolvent because those assets are so close to worthless. I can offer a response to that in the SEC's "Clarification" of the mark to market rules that they issued last September. Basically they set up a 3 tiered system of how you price complicated assets. The first tier, used in normal times, is what you could get for the asset on the market right then. If there is no solid market for an asset though, then the bank is allowed to account the asset under level 2...the price for similar assets. But if similar assets are being sold off at fire-sale prices because they can't be moved, then the bank is allowed to price the assets based on the company's models of how it would be valued in normal times. In other words, to my eyes the SEC already allowed the banks to value these assets on their books at much higher amounts than what they'd be worth on the market right now, and they may very well be allowing them to value them higher than I think would be a reasonable value for them even long-term...because the valuation in the model is going to depend incredibly strongly on how you model the real estate market, where the bottom is, and how rapidly it recovers. So, it's possible that I'm still right and 2k5 is also right...the banks aren't breaking the law, but the "Clarification" has already allowed for pricing of these assets in a way that assumes some model of their long-term performance. That brings up a number of issues. First, someone else can elaborate for me on this...let's say the SEC dropped the M2M provision in 2 days (Rumor says they won't)...if the rules are as loose as my reading of the "Clarification" says they are, that the bank simply has to use a reasonable model to produce a value for those assets for their bookkeeping, then how exactly would relaxing it any further do anything? It might improve the appearance of the bank balance sheet because the bank might inflate the value of those assets on their books even more, but if the loans go bad even at the rate they're currently modeling them, then the money on that balance sheet would still turn into write-downs in the near future for someone. Second, given the price of the stocks of those banks, I'd say its entirely possible that the market is in the stock price evaluating the models that the banks are using. If the market believed the banks were using solid models, then the banks would be on sound footing and there would be no worries. Which of course means that...if the market already doesn't believe the numbers the banks are putting out...then how will allowing the banks to pretend that the assets are worth even more improve its confidence? Anyway, the SEC rule on these is a fascinating read. Really you can sense the trouble they realize the banks will be in if they don't give them a wide berth to decide what their assets are worth. I like learning things. Link to comment Share on other sites More sharing options...
kapkomet Posted March 11, 2009 Share Posted March 11, 2009 I really need to make my M2M post from an accounting standpoint and what went wrong. I'm sorry I haven't because it would add a lot to the discussion. I promise, I'm not trying to pat myself on the back, it's just my profession and I can add a lot to it. I will hopefully tomorrow. Link to comment Share on other sites More sharing options...
Balta1701 Posted March 12, 2009 Share Posted March 12, 2009 So yeah, this was absolute brilliance. The federal agency that insures bank deposits, which is asking for emergency powers to borrow up to $500 billion to take over failed banks, is facing a potential major shortfall in part because it collected no insurance premiums from most banks from 1996 to 2006. The Federal Deposit Insurance Corporation, which insures deposits up to $250,000, tried for years to get congressional authority to collect the premiums in case of a looming crisis. But Congress believed that the fund was so well-capitalized - and that bank failures were so infrequent - that there was no need to collect the premiums for a decade, according to banking officials and analysts. We don't need any insurance any more. What could go wrong? Link to comment Share on other sites More sharing options...
Balta1701 Posted March 12, 2009 Share Posted March 12, 2009 A statement that probably slips by most readers of this piece that basically says dropping M2M accounting can be a way of using the treasury to allow the banking industry to totally rape the American taxpayers while the Obama administration gets good press for getting a great deal on those assets that are returning $.05 on the dollar. But with few options left to save the banks, government officials might see a change to mark-to-market rules as the most promising way remaining to bolster the banks and their bottom lines. What's more, relaxing the accounting requirement might make it easier for Treasury to iron out a plan to remove toxic assets from bank balance sheets. The Treasury Department is looking into purchasing those assets, whether through a public-private partnership or through some other mechanism. Part of the stumbling block is price. Paying more than the banks are able to say the assets are worth would certainly lead to criticism that the government is providing another massive handout to the banking industry. But if the banks are allowed to market the toxic assets back up to their original precrunch prices or close to them, that would give the Obama Administration political cover: Treasury can come in and underbid the value of the toxic assets, declaring before Congress and the taxpayers that it is driving a hard bargain with the banks. What price might Treasury offer? Treasury Secretary Timothy Geithner is doing a "stress test" of the banks to determine how much capital they need to survive. Whatever number that ends up being might be a good price for the toxic assets. "We want to get the assets off our books," says Talbott. Link to comment Share on other sites More sharing options...
kapkomet Posted March 12, 2009 Share Posted March 12, 2009 QUOTE (Balta1701 @ Mar 12, 2009 -> 05:54 PM) A statement that probably slips by most readers of this piece that basically says dropping M2M accounting can be a way of using the treasury to allow the banking industry to totally rape the American taxpayers while the Obama administration gets good press for getting a great deal on those assets that are returning $.05 on the dollar. That's pretty interesting. It gives both sides what they want. Nice. And bad, at the same time. Link to comment Share on other sites More sharing options...
Balta1701 Posted March 13, 2009 Share Posted March 13, 2009 QUOTE (kapkomet @ Mar 12, 2009 -> 04:32 PM) And bad, at the same time. Depends on which category you fall in to: 1. the bankers, 2. the President and his administration, or 3. everyone else. Link to comment Share on other sites More sharing options...
kapkomet Posted March 13, 2009 Share Posted March 13, 2009 Bad for everyone else. As I said, what do you think the Messiah is telling people behind closed doors? Basically, it's I have to bash you in public, but don't worry fellas, we'll take care of you. Link to comment Share on other sites More sharing options...
Balta1701 Posted March 13, 2009 Share Posted March 13, 2009 Hmmm, it appears tonight another of the economists who seem to be getting things right, Simon Johnson from MIT, will be following an appearance before the House Foreign Relations Committee’s Subcommittee on Terrorism, Nonproliferation, and Trade with an appearance on the Colbert Report. Link to comment Share on other sites More sharing options...
Balta1701 Posted March 15, 2009 Share Posted March 15, 2009 To prove once again that the AIG bailouts were the BEST DECISION EVA!, AIG is awarding what started as reportedly $100 to $170 million, and if you believe the WSJ, $450 million, in another batch of the seemingly never-ending series of retention bonuses for its executives and in particular the financial products division that sold off those trillions of dollars worth of credit default swaps that brought the company down. The beauty of this round is that Geithner realized it was going to be a problem, so he told AIG to come up with some way to not pay them. After all, right now the banks are hemorrhaging jobs, if anyone there quits because they don't get their retention bonus, first of all they still are the same folks who brought the company down so the taxpayer shouldn't care if they leave, and second, there's plenty of better people to take their place. The problem is...these performance-bonuses are in their employment contracts. Normally, a company like AIG wouldn't have any problem breaking and rewriting employment contracts because it would be in bankruptcy. But despite a trillion dollar hole in their books, AIG isn't in bankruptcy, because the Federal government keeps giving them money to light on fire. So, we bail out AIG, save them from bankrutpcy, and thus, we have no means to rewrite any of the disastrous pre-collapse contracts they wrote with anyone. So we just keep paying and paying and lighting more and more money on fire. Watching money burn is cool Link to comment Share on other sites More sharing options...
NorthSideSox72 Posted March 16, 2009 Author Share Posted March 16, 2009 So, I guess some people in the sector were listening to me. The CME and Citadel announced their platform for clearing swaps was approved. The article also states that the ICE is building something similar. So, looks like we'll finally get a real exchange venue and a clearing house for at least part of the swaps business. Good stuff. Link to comment Share on other sites More sharing options...
mr_genius Posted March 16, 2009 Share Posted March 16, 2009 market up again today Link to comment Share on other sites More sharing options...
bmags Posted March 16, 2009 Share Posted March 16, 2009 slow news day Link to comment Share on other sites More sharing options...
BaseballNick Posted March 16, 2009 Share Posted March 16, 2009 (edited) QUOTE (bmags @ Mar 16, 2009 -> 11:24 AM) slow news day Market is up and news came out that AIG has paid out $165Mil in bonuses. AIG pisses me off. Edited March 17, 2009 by BaseballNick Link to comment Share on other sites More sharing options...
southsider2k5 Posted March 16, 2009 Share Posted March 16, 2009 QUOTE (BaseballNick @ Mar 16, 2009 -> 02:07 PM) Market is up and news came out that AIG has paid out $1.2B in bonuses. AIG pisses me off. They should have just called it a stimulus plan. Then it would have been unpatriotic to question it. Link to comment Share on other sites More sharing options...
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