WSJ: Banks Tighten Corporate Credit Lines
Submitted by
CalculatedRisk on Sun, 05/03/2009 - 4:37pm (208 comments)
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More layoffs may be a consequence.
I assume the default probabilities come from the market price of - gasp! - credit default swaps. True?
So the market is setting the price of borrowing? Bernanke is gonna be pissed if he finds out...
I think that credit default swaps would be a great thing, if only those with an insurable interest could buy them.
Moody's moat drying up?
How do I get rid of the border around my comments? It looks like I'm moronically trying to upstage CR on his own website by using his signature border.
I think the rally in equities is almost entirely based on the pyramid of shorts successively squeezing each other out, while any sign of life in consumer activity is wholly explainable by tax refunds and a strange kind of psychological capitulation at the events of the winter.
These kinds of stories give credence to the idea that we're still in mid-freefall.
Didn't realize a new thread had started. Will repost this here for pavel.chichikov and others:
The one 'truth' I have learned is that all human understanding is based on observation. We don't know anything until we 'see' it. The trouble with this is that human observation depends upon the truth appearing to us. Whether it is Moses and his burning bush or a climatologist and his melting ice caps,. we always assume that our perspective is relevant to what we are watching. That is hubris. Human perspective has changed over time. Our truths, our facts, our gods have all changed as our 'eyes' have seen more. I argue that our increased understanding is ultimately pointless. Knowing that we are chained to the wall and seeing a shadow of the sun, doesn't change the fact that we are still chained to the wall. True knowledge burns the eyes. It changes mankind, and I don't think it ultimately comes from mankind. In that sense I am more a deist than a Buddhist. I believe the watchmaker made the universe. We have a hereditary curiosity that makes us seek out the fingerprints of god in everything we observe, but in the end we don't know anything more about our creator than a computer. I find this strangely comforting to the endless frustration of my Southern Baptist family.
patientrenter, the border can only be seen by you. I have a border around mine too when I post. It just makes it easy to find your own posts that way, and CR's as well.
longwaver wrote: "So the market is setting the price of borrowing? Bernanke is gonna be pissed if he finds out..."
I am sure your tongue was in your cheek as you wrote this, but it may well turn out to be true. After all, this may inhibit more (reckless) lending, and our leaders would not tolerate that. Expect new Treasury / Fed moves on lines of credit.
interest rate determined by the price of default insurance as opposed to credit rating
This seems to be a change that makes sense
Comrade Kristina, thank you.
FWIW, a couple of "WHERE WE ARE NOW" tables:
How different investments did last week
- WSJ.com
Where world wide indexes started the bear market, where they've been recently and where they are now:
http://static.seekingalpha.com/uploads/2009/5/3/saupload_2_mei_v3.jpg
Just imagine....
if successful companies had retained their earnings instead of doing stock buybacks, buying out companies that turned into failures, and paying huge exec. compensation. They wouldn't need to survive on a continuous injection of borrowed money to fund their ongoing operations (or would be less dependent).
Now that their stocks have depreciated in huge steps downward, those dollars spent on buying stock have disappeared.
But, they could deduct the interest on their borrowing, so they thought this was good biz sense, and buybacks made their stocks look better on a P/E basis (until both price and earnings collapsed.
Anyone who says that our executive class deserves huge compensation should consider what they are compensating: failure.
HollywoodHack,
Similar idea in this link:
Why This Rally Is Unsustainable -- Seeking Alpha
They are charging significantly higher fees for the lines of credit, known as revolvers.
Oh, higher fees. It's a good thing the cost of credit is going down as proven by the commercial paper spreads.
Jim,
Yeah, another "paradigm lost" (to borrow someone's posting moniker). Despite average creditworthiness dropping across the board in recent decades companies have become addicted to cheap credit. The end is so not near.
Sunday's Haiku Moment:
--
Ben and Tim see signs:
So many green shoots! Bet they
Go great in stir-fry!
the duration has been shortened
Seems to be a universal theme, doesn't it? Could it be that everyone's waiting for the next shoe to drop???
Ironic, isn't it, the Friedmanites fear nothing more than an actual, functioning market?
The cost of liquidity facilities has increased across sectors since this thing began. Credit lines are smaller, shorter-term, and a heck of a lot more expensive.
Rob Dawg:
They are charging significantly higher fees for the lines of credit, known as revolvers.
Just a VISA card: except the lender can refuse to extend a fixed-term limit making a 'pay it ALL now' moment enitrely possible..
Now THAT'S a credit crisis indicator we can believe in.
JimPortlandOR (profile) wrote on Sun, 5/3/2009 - 6:05 pm reply Ignore user
Rob Dawg:
They are charging significantly higher fees for the lines of credit, known as revolvers.
Just a VISA card: except the lender can refuse to extend a fixed-term limit making a 'pay it ALL now' moment enitrely possible..
I know and what do you think happens May 7th when the fed says to 16 of the 19 banks "raise ratios NOW?"
Once again saving the banks no matter the damage to the rest of the economy.
JimPortland, the owners of companies (shareholders) don't get paid when earnings are retained. They are paid when real cash is paid to them. Dividends are far superior to buybacks for accomplishing that. Company management's options go up with buybacks, but down with dividends. For shareholders however, dividends are much better. Management dislikes dividends because it forces them to make a commitment to shareholders and real cash profitability that is hard to back away from. Buybacks can be decreased easily, dividends cannot.
Unfortunately, our tax code favors buybacks and debt over dividends and equity. So we have overleveraged companies that get away with overstating and artificially "stabilizing" earnings because they don't have to pay much of them out in cash every year.
If we made dividends fully tax deductible, and then taxed dividends received as regular income, we'd have a much better corporate structure. Company management would be very unhappy, though. They use populist opposition to dividends to prevent this change to our system.
Vonbeck777,
I like the 777 part. Also your references to Socrates. However, I don't know so much about your claim about observation. There are too many mysteries in life to make such statements, and maybe understanding is infused into us even before birth, as is the case with the Blessed Virgin Mary, St. John the Baptist, Jesus (of course), and numerous others both in sacred scripture, Fathers of the Church and Saints throughout the ages.
The very notion of baptism, and sacraments, wherein grace is received ( and observable, for that matter, to some) signifies that truth and understanding can be given to us in many ways, according to the Will and Providence of God. Anyway, good to see something spiritual on this site every now and then, as in discussing such things...though possibly off topic...at least fulfills the commandment of God: Remember to keep holy the Sabbath.
Best with You. ( and watch out for SKF and SDS...seems like theirs a gorrilla in the room as myself and others have observed. : ) )
....I'm sure there's no question here that when the 16+ banks need more cash, UncleO will "ride to the rescue" again.
Slightly OT. Is there another negative issue besides the P/E effect that is associated with stock buybacks?
This is dated 4/28, but it's a pretty good summary & on point:
"Middle market struggles to survive"
Reuters.com
Just goes to show, when you give a fool a revolver someone's bound to get hurt.
It's good to see that risk is beginning to be priced in. Now, when are we finally going to get proper risk pricing into residential lending?
Sounds like you've recently read Plato's The Cave. I loved it and see it as one way of defining reality and perception. BTW, I am a Southern Baptist, A Scientist and am not the least bothered by you perception of the world around you.
There is no normal.
There is no balance. There could be some balance if we study really really
hard for the next 1000 years. Maybe. But a designer is needed and we don't have
one and we aren't good enough now.
There are organisms that skitter to and fro, trying to avoid the slings
and arrows of outrageous fortune, with greater or lesser success.
I would like to pretend otherwise, but I can't force myself to.
I am happy to see that banks are destroying the real economy.. as most of the bank-worshiping morons who live in the real economy will not see the true source of their misery any other way
More layoffs may be a consequence. - reptillian
Absolutely. And for the good jobs too.
What happens is the 'hurdle rate' for a 'go project' gets MUCH higher. It used to be the hurdles were a function of the Fed rate...
FFR < Bank Prime < Risk Adjusted Borrow Rate < Hurdle Rate
Drop FFR and the rest follow... Raise FFR and the the rest follow.
In the mid80s I remember walking into a division of Cummins w/ a proposal where we offered them a pretty solid payback in 36 months... FFR at the time was like 15% & prime was like 18%... the Cummins buyer told me their internal hurdle was 12 months - basically that's 100%!!! Thats how much of a risk premium they faced then cooked their own risk factors into projects like that back then. That was a lot of the reason we had a 'rust belt'... who can run capital intensive industries like steel, chemicals, etc. with 100% annual return hurdles? You can't.
If the revolvers are cut off we'll see the same thing - companies will have to run on cash and there ain't none out there. So they do nothing instead.
The time tested method of destroying people's faith in any system or god is to let them believe and worship it till it starts killing them.
Credit lines are smaller, shorter-term, and a heck of a lot more expensive.
Unless, of course, you're borrowing from the Fed or Uncle Sam. In that case, it's larger, longer, and a hell of a lot cheaper
Unfortunately, I would prefer to live in a society where not everything is killed.
Lucifer (profile) wrote on Sun, 5/3/2009 - 6:26 pm
The time tested method of destroying people's faith in any system or god is to let them believe and worship it till it starts killing them.
"In the year AD 802,701 humanity has evolved into two separate species: the Eloi and the Morlocks. The Eloi are the spoiled, attractive group, living a banal life of ease on the surface of the earth, while the Morlocks live underground, tending machinery and providing food, clothing and infrastructure for the Eloi. Each class evolved and degenerated from humans of different social classes."
Life imitates art.
Lucifer (profile) wrote on Sun, 5/3/2009 - 6:26 pm
The time tested method of destroying people's faith in any system or god is to let them believe and worship it till it starts killing them.
"In the year AD 802,701 humanity has evolved into two separate species: the Eloi and the Morlocks. The Eloi are the spoiled, attractive group, living a banal life of ease on the surface of the earth, while the Morlocks live underground, tending machinery and providing food, clothing and infrastructure for the Eloi. Each class evolved and degenerated from humans of different social classes."
Life imitates art.
So the market is setting the price of borrowing? Bernanke is gonna be pissed if he finds out...
LOL - let's not tell him.
lawyerliz,
People usually wake up before that..
//Unfortunately, I would prefer to live in a society where not everything is killed.//
No I just use Plato cause most people are familiar with him to some degree. I haven't read Socrates dialogues in 15 years. Refreshed a little bit on some of the Atlantis stuff recently, because of an article I read about Atlantis being in the South China Sea based on some stuff they found after the tsunamis, but mostly I read Hegel. I say read, I understand very little. I stare in to Nietzsche's abyss sometimes too, but I am not that much of a pessimist. Mostly I am trying to bring back a revival of Aristotle's ethics. Golden mean still is valid today. Putting a book together about three virtues I tie to human concept of time. Three Ds: Discipline-Past, Dedication-Future, and Determination-Present. These three aspects of human personality also tie into the id, ego, and superego. Doomed to be an internet book that no one will read, but I am writing it anyway.
"In the year AD 802,701 humanity has evolved into two separate species: the Eloi and the Morlocks. The Eloi are the spoiled, attractive group, living a banal life of ease on the surface of the earth, while the Morlocks live underground, tending machinery and providing food, clothing and infrastructure for the Eloi. Each class evolved and degenerated from humans of different social classes."
I guess it is a good thing I always enjoyed spelunking.
Examples?
People on islands have fairly often destroyed themselves. See Collapse.
Sometimes destruction comes from outside.
Slightly OT. Is there another negative issue besides the P/E effect that is associated with stock buybacks?
You might find yourself short on cash if things tighten up.
Not off topic at all.
Is there another negative issue besides the P/E effect that is associated with stock buybacks?
In theory, no. But the way management justified buybacks was that since shareholder rate of return was greater than the cost of borrowing, management had a fiduciary duty to disgorge profits and pay for expansion via financing. Which, of course, created the debt bubble.
Also, there are issues with signaling, preferential purchases, etc.
Lucifer,
Such was said about Jesus.
And I guess to His followers as well, by association.
However, just recently we celebrated the Resurrection of Christ. And so death doesn't have the power that many might suspect.
Life and Wisdom continue, and will continue to continue.
In God.
Don't these stupid banks realize that they are not suppose to set higher lending standards? How can the be so dumb?
dryfly (profile) wrote (in reply to...) on Sun, 5/3/2009 - 6:30 pm reply Ignore user
So the market is setting the price of borrowing? Bernanke is gonna be pissed if he finds out...
LOL - let's not tell him.
The shriveled gnome is probably hunched over a terminal right now reading our every word plotting how to foil our every practical suggestion.
Rob,
Since you are here and a California resident, how does it look for the May 19th propositions?
lawyerliz,
For every small easter island, there are many examples like taiwan, japan, greek isles, cyrpus, british isles, caribbean islands
//People on islands have fairly often destroyed themselves.//
The shriveled gnome is probably hunched over a terminal right now reading our every word plotting how to foil our every practical suggestion.
Probably. But that is only because the cool kids like Spitzer never let him tag a long.
lawyerliz (profile) wrote on Sun, 5/3/2009 - 6:32 pm
Examples?
People on islands have fairly often destroyed themselves.
Any truth to the theory that the statues on Easter Island were condo open house sign holders?
sepoy (profile) wrote on Sun, 5/3/2009 - 5:50 pm
interest rate determined by the price of default insurance as opposed to credit rating
This seems to be a change that makes sense
Yup, it will be sweet.
Their proprietary trading desks can jerk around the market prices of their borrowers' "default insurance" whenever it looks like commercial lending will not make the quarterly numbers.
If the borrowers complain about higher rates, the lending officer will show them a Bloomberg printout higher market rates on the borrowers "default insurance".
Sweet!!!
wisdomcanbefound,
But christianity does not have the power it used to have...
"Is there another negative issue besides the P/E effect that is associated with stock buybacks?"
Yup, a big one. Money is burned in overpriced stock purchases in order to support prices that keep incentive options packages in the money.
New update to lab confirmed cases and countries involved for the interested:
energyecon
Wisdom Speaker,
Interesting speculation in your comments on the current R0 for A/H1N1, agreed to that being key to how the current wave plays out. Most seem not to connect the prospects for significant mortality to a "mild" pandemic influenza - if the CAR is around 33% of the population (or ~100 million), each 0.1% in the CFR is 100,000 dead.
So the market is setting the price of borrowing? Bernanke is gonna be pissed if he finds out...
LOL - let's not tell him.
dryfly
Well it is nothing but print and buy, print and buy, print and buy.
Corp paper is finding some balance. I think Ts will take it in the chin in the next 12-16 months. Im out of HIO (+16%) and a cute bank called STBK (+160%). Am really interested in oil as a commodity play.
For those interested....my flu is over thank God! Feeling much better - staying at home for another week. It was a real bug indeed.
Also, there are issues with signaling, preferential purchases, etc.
How about artificially driving up the price of shares so that insider stock options can be exercised most profitably?
Rob Dawg,
The easter island story is much more complicated than stupid new york profs with pet theories (jared diamond) like to think..
I second that. Christianity has fundamentally changed many times in its history and the current version in the US resembles little of what it used to be.
HH beat me to it.
Yancey Ward (profile) wrote on Sun, 5/3/2009 - 6:37 pm reply Ignore user
Rob,
Since you are here and a California resident, how does it look for the May 19th propositions?
Field poll, Capitol poll and another poll all show Props 1A-1E failing with 1F 70%+ passing.
Exurban Nation: California Shutdown
Vonbek777,
Once christian religious leaders could declare crusades, burn heretics and torture converts who might have strayed from the path.. and collect taxes.
my flu is over thank God! Feeling much better - staying at home for another week. It was a real bug indeed.
if you start typing in Spanish, we'll know that you're immune to next season's flu, having been an early adopter and all..
Once people could declare themselves the bride (not figuratively but the actual bride of Jesus when he returned) of Jesus, raise armies and march on infidels, be martyred, and in a couple of generations turned into saints. Reading about early saints and the early stages of Christianity is a hobby of mine.
Japan retail investors flock to U.S. junk bonds
Page not found - - CNBC.com
The power of christ compels you!!
Catch-Up Buying May Lift S&P 500 as High as 1,000: Chart of Day
Catch-Up Buying May Lift S&P 500 as High as 1,000: Chart of Day - Bloomberg.com
By David Wilson
May 1 (Bloomberg) -- “Most investors have missed the rally” in U.S. stocks, so further gains are likely as they spend some of their cash to buy shares, according to Andrew Garthwaite, a global strategist at Credit Suisse Group.
Vonbek777,
I have always been fascinated by the reasons behind religious men asking witches about the shape of size of the devils penis, before burning them at the stake.
Now that's funny!
Speaking of the next show to drop, have you seen the cover of tomorrow's Barrons?
So the hole point of bailing out banks was to make sure there is a flow of credit within the Economy. Instead banks are sitting on cash and
a) Cut credit lines & increase interest rates for consumers.
b) Cut credit lines & increase interest rates for businesses.
Success? ha, i guess from now on it will be even harder to justify any bank related money transfusion. Doctor, opts Lawyer (president), the patient is dead, pull the plug... common. : (
Having lived in Germany for four years, I toured several torture museums....I think we have lost a lot of imagination as the wheels of progress turned, and that may not be a bad thing. I especially was dismayed at the virginity purity testing equipment. Man is truly a sick animal.
Lucifer,
Maybe thats what you think?
Numbers don't matter where Truth is concerned. And its pretty vain to attempt to count.
The lesson of the 'Good Thief ', is that we shouldn't be too quick to judge.
Really the Creator's business.
Power?
Can change in the blink of an eye. For better and for worse.
We have "Moorlock half price night" on Tuesdays. I usually add a bouncer.
"Catch-Up Buying May Lift S&P 500 as High as 1,000: Chart of Day"
a 1000?.. 1000 one, two. Do I hear a 1100? Yeah, ... 1250 one, two, sold !
don't we love it when analysts pull info out of their axxes?
Well, my CR border has dollar signs ($$$$$$$$) all around it. I guess I'm either special or broke.
Vonbek777,
From the medeivial age or the third reich?
//Having lived in Germany for four years, I toured several torture museums//
Comrade de Chaos,
I call that a prayer..
//"Catch-Up Buying May Lift S&P 500 as High as 1,000: Chart of Day"//
We have "Moorlock half price night" on Tuesdays. I usually add a bouncer.
Hey Lefty - do we have to shower first or can we come straight from the mine?
CdC,
Didn't Abbey Cohen crawl out from under a rock to make a recent prounouncement along those lines?
I just noticed and clicked on a (in reply to...) button.
Neat.
thank you, Kcoop.
Woohoo! Looks like it's time to start manipulating my competitor's CDS market!
Did they ever do anything about all the blatant insider trading happening in the CDS market?
energyecon,
Now that is one good candidate for witch burning.
//Didn't Abbey Cohen crawl out from under a rock to make a recent prounouncement along those lines?//
Thanks Rob. Will have to put your site in my favorites list.
Wow, not looking good for the dopes in Sacramento. Honestly, your state is so dysfunctional that I feel like the only way forward is to jettison the entire government and start over from scratch.
I feel like the only way forward is to jettison the entire government and start over from scratch.
I can dream.
dryfly (profile) wrote (in reply to...) on Sun, 5/3/2009 - 6:59 pm reply Ignore user
We have "Moorlock half price night" on Tuesdays. I usually add a bouncer.
Hey Lefty - do we have to shower first or can we come straight from the mine?
I wanna know if there will be Soylent Green dip for the chips.
OK this is OT but I just can't stop myself:
Flu outbreak in Britain "contained"
LONDON (Reuters) - The spread of the new flu strain has been contained in Britain but there will be more confirmed cases, Health Secretary Alan Johnson said on Sunday.
Health officials had to be ready for a more serious wave of the new H1N1 virus later in the year, he warned.
The World Health Organisation says the flu has not spread in a sustained way outside North America but still warns the unpredictable virus is likely to become a pandemic.
"Pandemic just describes the geographic spread, it doesn't describe the severity. So far because we've managed to get to people to isolate it ... I think it is contained," Johnson told BBC TV.
Flu outbreak in Britain contained
| Top News
| Reuters
That is one of the arguments that lead me astray from conservative Christian beliefs. I believe we do have a moral responsibility to judge our fellow man. We have taken that away from modern man and it is part of the reason we are in decline. Wolves, bears, elephants, gorillas, and many other highly advanced social animals judge members and expel or destroy those that violate the law of the pack. I understand the danger of judgment. I don't take it lightly and I understand the potential of misuse for personal gain. That is why a rebirth of true ethics in this world would be nice. But knowing god is going to punish the repeat offender raptist/murder/child molester in the next life leaves me with little comfort. There must be a return to balance.
What about auto-asphyxiation?
The Big Bored: NYSE Traders Look For Diversions as Life Slows on Floor
Even as Markets Gyrate, Electronic Trading Has Cut the Work; Solace in the 'Movie Room'
The Big Bored: NYSE Traders Look for Diversions as Life Slows on Floor - WSJ.com
By MARY PILON
On Thursday by 10:30 a.m., trading had been under way for an hour on the floor of the New York Stock Exchange. Down a stone stairwell, half a dozen traders sat in a dark room, slumped in black office chairs watching a movie.
Officially a members' lounge, the "Movie Room" has screened hundreds of DVDs on a TV set during trading hours, traders say. "Rambo," "Star Wars" and "Wall Street" are among the favorites.
As the financial markets continue their wildest ride in decades, many once-frantic floor traders find themselves all dressed up in mesh-backed jackets with less work to do. Some say they're flat-out bored.
Craigslist Ad of the Day
BOBCAT AND DUMPTRUCK FOR TRADE HIRE!
Hello, and thank you for looking at my add. I am a Professional Concrete Worker with a bobcat and a dumptruck. I am willing to work for alot of things like a laptop, a tv (maybe you have an old one), a computer (hard drive or screen), money, nintendo wii or games or ds, mainly anything! Or say your a handyman. I do a job for you and you do a job for me! I do have some things that need to be fixed around my house so please call me at ****. Or email me your number at ****. My name is Ken. Thank you!
I wanna know if there will be Soylent Green dip for the chips
LOL - I'm gonna have to make some of that next BBQ party [okay maybe a little green dye in the regular dip but how will they know if I tell'em it's Soylent]...
They are talking about a state constitutional convention.
Probably a bad idea, who knows what sort of "new and improved" system they would create.
I suspect that the first thing to go would be Hiram Johnson's propositions.
I thought by now the new drink would be a Green Shooter!
Medeival mostly, but a couple from WWII. Medieval was personal and maximum fear and suffering. Third reich liked efficiency and the more the merrier.
Worries Rise On the Size Of U.S. Debt - NY Times
NYT
Worries Rise on the Size of U.S. Debt
How did that work out?
Capitalist for the Common Man
Capitalist for the Common Man - WSJ.com
May 4, 2009
The scene was a low-rent Manhattan auditorium, circa 1978. A young Congressman from Buffalo with a raspy voice and rapid delivery was debating a liberal from central casting about the necessity of tax-cutting to stimulate economic growth and spread prosperity. Here, we thought, was something exciting: A politician who could speak about the benefits of capitalism for the average American. The crowd was mainly hostile, but then Jack Kemp never did confine his free-market evangelizing only to the believers.
FFDIC - short the USD!
Naw, you can shower here, I have a hose out back tapped into a fire hydrant.
And as usual at Leftys, you gotta guess whats in the dip. we are also H1N1 approved.
Vonbek777,
I was implying that attitudes often do not change much.. the technology and possibilities might..
I thought by now the new drink would be a Green Shooter!
1 part Everclear
1 part Creme de Mint
1 part Ipecac
Bottoms up!
Lucifer, forget how it worked out, we're still waiting for a significant portion of the population, the WSJ editorial page prime among them, to realize this is no longer 1980.
Ah, once the savage always the savage?
Lucifer (profile) wrote on Sun, 5/3/2009 - 6:39 pm
wisdomcanbefound,
But christianity does not have the power it used to have...
neither does santanism
Well the only thing killed in this world is HOPE.....That was killed a long time ago...folks just stepped back from the party only to realize...somebody has to pick up the tab. The tab was passed to the 20-40 somethings and it's panic time. Makes the hangovers a real mother f-cker!
Indulge my sense of humor
Reinvent Mailbag: Matching Skills and Interests to a New Career
MAY 3, 2009, 8:01 P.M. ET
Reinvent Mailbag: Matching Skills and Interests to a New Career - WSJ.com
By ALEXANDRA LEVIT
Q: At 45, I am excited about reinvention. I have twenty years in commercial lending and corporate global cash management. I have co-chaired and raised more than $200,000 for a local children's hospital, and chaired a private fundraiser for an eight year-old in need of a heart transplant. On the hand, I have owned my own company and traveled the high-end circuit selling my designs. I enjoy customer service, interpersonal skills, brainstorming ideas, creating and facilitating, and working with high profile clients and executives. What industry can I transfer my passions to?
A: Based on your volunteer work, I assume you'd consider a paid position on the financial side of a large nonprofit organization? It also strikes me that you'd be well-suited to work for the president of a college or university, as major functions of this position include fundraising and working with highly visible alumni. In any case, you should check out a few self-assessment tools, such as the Campbell Interest and Skills Survey,which will assist you with understanding how your unique set of interests and skills relate to specific industries and occupations.
sanityclause,
That is what I was implying.. MSM still lives in a parallel universe.
Vonbek777,
Yes, and that germans have a particular love of machinery.
Oh, and one more thing on spirituality. Love what God loves Hate what God hates and we COULD maybe get this thing going in a better direction. It's called Righteous Indignation........
mock turtle,
Well, you have a system dominated by Paulson, Corzine, Blankfein, Rubin, Summers, Geithner, Thain, Pandit, Mozillo, Gramm and others. I rest my case.
//neither does satanism//
Imagine a German riding along with 12 flintlock pistols that he had to light by hand and hope were stable enough not to blow up in his face. True desperadoes. I wish hollywood would make movies about the young German gunsmith bands roving the medieval countryside working for the highest bidder and along the way inventing the technology still at the heart of the modern firearm.
In the prior thread, Pavel said: I think the bankers are you and me as bankers.
I could not disagree more. These are people who destroyed the world so they could make their second or 3rd $100 million. These people are different - they have no souls. You yourself have cast it as a moral issue.
For myself, I loved it when somebody clocked Fuld in his health club. Too bad he got up again.
Soylent Green dip
You mean guacamole?
These prayers are becoming more frequent and impassioned..
Rules for Investing in the Next Bull Market
How to be smarter when the market comes back – and it will.
12 Rules for Investing in the Next Bull Market - WSJ.com
MAY 1, 2009
BRETT ARENDS
Is this a new bull market? Nobody really knows for certain. But one will -- presumably -- come along in due course. Will investors make the same mistakes they made last time, or will they be wiser? Here are 12 rules for the next bull market -- whenever it turns up.
bobn,
You mean "sociopaths"?
// These are people who destroyed the world so they could make their second or 3rd $100 million. These people are different - they have no souls. You yourself have cast it as a moral issue.//
Considering what sorry shape humanity is in, I would say god hates us. Definitely a neglectful father. We need a spanking so bad. That is why I prefer the comfort of a creator that moved on and left us our brain to find his fingerprints in the universe. I do believe in a god. I believe you can find his touch in everything. But we have to clean up our own mess.
Oh Brett, you had me at bull....
I resent it.. the magicians resent it, the shamans resent it, the vodoo priests resent it
Bank capital hocus-pocus
May 3, 2009, 12:46 PM
Bank capital hocus-pocus - Paul Krugman Blog - NYTimes.com
Aha. When the proposal to bulk up bank capital by converting the government’s preferred shares into common equity came out, I pronounced myself baffled. But was I missing something? Via Henry Blodget, Paul Kasriel of Northern Trust says the same thing, in more detail.
PS: Kasriel should be careful about hypothetical examples involving Gotham City Bank. I used Gothamgroup — and the legal department got a call from the Gotham Bank of New York, which had to be assured that it wasn’t about them.
FFDIC,
I remember back at the height of the dot-com bubble there was a day when a guest on CNBC started talking about (gasp!) profits. At that point I knew the top was in -- profits mattered again.
This sudden mainstream discord over the dollar reminds me of that -- deficits matter again.
The plans two drawbacks are quite minor IMHO
New Bank Fix Is Bogus, Too
the balance sheets of the banks
Blodget|May. 2, 2009, 9:23 AM|29
Tim Geithner has a clever new way to "recapitalize" banks that fail the stress test: Convert the taxpayer's preferred stock to common stock.
From Geithner's perspective, this technique has several advantages:
The banks will suddenly seem healthy, because their assets-to-common equity ratios will rise.
Geithner doesn't have to ask Congress for more baillout money yet.
Taxpayers won't understand that they're giving up a nice dividend and a safer security just to make the banks look better.
If Geithner is right that what's wrong with the banks is just a temporary liquidity problem, the taxpayer should do well when the stocks rise. (We don't think he's right.)
Unfortunately, the plan also has two major flaws: First, it's smoke and mirrors. Second, the taxpayers will be even more exposed to losses than they are now.
Krugman's made that claim numerous times. If he'd read the freaking regulations that define what constitutes Tier 1 capital, he'd realize that the government's preferred shares ARE NOT Tier 1 capital. Therefore, conversion of the preferred to common, which is Tier 1 capital, would increase that metric of bank capitalization.
All preferred shares are not alike.
Basel Too,
I think we have sailed past the last markers of stable legal definitions of anything.. what do you think?
Re credit conditions, as a peculiar foil you may want to check out what our partners in China are throwing money at. SOE's are rolling in it, while the most productive sectors of the economy go wanting.
China Financial Markets
Surely policy makers on both sides are falling back on the tried and failed measures with which they're most familiar... reminded of CBR's "three legged race to perdition".
You are kidding .. right?
Buffett Says Citigroup Distorts Perception of Banks (Update2)
Buffett Says Citigroup Distorts Perception of Banks (Update2) - Bloomberg.com
By Erik Holm and Andrew Frye
May 3 (Bloomberg) -- Billionaire Warren Buffett said losses at Citigroup Inc. have distorted the public perception of U.S. banks and that lenders including Wells Fargo & Co. are better able to withstand the recession.
“Wells Fargo has a dramatically different business model,” Buffett said at a press conference in Omaha, Nebraska, one day after his Berkshire Hathaway Inc. had its annual shareholders meeting.
FFDIC (profile) wrote on Sun, 5/3/2009 - 10:07 pm
NYT Worries Rise on the Size of U.S. Debt
Good to know those crack NYTers are on top of the game.
Seriously? Did their Christmas party just end and someone realize they'd better get busy?
Lucifer
you took my meaning the opposite way
"satanism isnt what it used to be" (i.e. it used to be in check when christianity was strong)
now it runs rampant (at least in the current financial universe)
however when it comes to raw carnage attila, caeasar stalin pol pot and hitler have have most if not all the current contenders in check
eliminated ddouble post
Re: Stock Buybacks
Thanks to everyone who gave input. It was enlightening.
of course, everyone tries to push the limits of legal definitions in their favors; i'm not stupid.
But if the point of the TARP is to recapitalize the banks, which was Congress's mandate, then it's silly to argue for the government go in there with debt-type securities that can't function as capital. The whole point of bank capital is to function as a loss cushion.
Whether Congress should have done it at all is an entirely different issue. My point is only a reflection of the execution.
mock turtle,
I am not sure about that.. would a true god support killing infidels, burning witches, torturing heretics? and castrating young boys to sing in church choirs?
Maybe some of you banker types in the group could answere something I long wondered about. How does theunused part of a credit line affect the bank's accounting? For example, if I receive a $100k line of credit, but I have only drawn $20k out of it, how is the remaining $80k reflected in the bank's accounting?
Is the entire $100k counted as an asset as soon as it is authorized, or only once the funds are drawn?
The reason I'm asking, is that I'm trying to understand if reducing credit lines is only a risk management issue or are there accounting,//P&L/balance sheet issues as well.
“Wells Fargo has a dramatically different business model,” Buffett said at a press conference in Omaha, Nebraska, one day after his Berkshire Hathaway Inc. had its annual shareholders meeting.
Substitute Countrywide for Wells Fargo and Angelo Mozilo for Warren Buffett.
Well I am not as smart as Buffett. I can't tell how Wells Fargo is different from citi or bofa. All three seem like black holes to me. It is like the auto industry. It is like we are picking one of the big banks to survive to give people comfort that not all in America is dead.
Rob Dawg,
I think the word business model is the wrong term for what they are doing.. I prefer to see it as a better version of vodoo.
Seriously? Did their Christmas party just end and someone realize they'd better get busy?
Christmas 2006...
Vonbek777,
He is not smart, just lucky.
//Well I am not as smart as Buffett. I can't tell how Wells Fargo is different from citi or bofa. All three seem like black holes to me.//
Well it is said that it is better to be lucky than smart.
Gawkamole - purée of innocent bystander
Vonbek777,
Black holes have a purpose, namely encourage gas aggregation and star formation. These fine institutions do not have any purpose.
//All three seem like black holes to me.//
Lucifer (profile) wrote on Sun, 5/3/2009 - 7:41 pm
mock turtle,
I am not sure about that.. would a true god support killing infidels, burning witches, torturing heretics? and castrating young boys to sing in church choirs?
oh, now you are talking about a true God...ok
i thought you were talking about, so called "Christianity", which btw has done a fine job of mixing up much of what was probably core teachings of the riddle speaking prophet
if I receive a $100k line of credit, but I have only drawn $20k out of it, how is the remaining $80k reflected in the bank's accounting?
For capitalization purposes, the $80K is treated as an off-balance-sheet contingent asset. Under existing regs, if the line expires > 1 year and assuming consumer borrower, it's weighted to 50% as to the amount, then 100% of that amount is used calculate the risk-weighted asset value. If less than a year, then the numbers are 0% and 100%, respectively, which comes out to zero.
I used the black hole analogy last week. I feel like the mega banks have never been profitable on paper. All they did was eat smaller banks and shuffle assets around. A sci-fi book I read when I was young theorized that black holes collapse in on themselves after they gobble up everything. This is what is happening to bofa in particular. Just how I think about it. Not technically correct I know, but it is the mental picture.
Lucifer (profile) wrote on Sun, 5/3/2009 - 10:30 pm
The plans two drawbacks are quite minor IMHO
How many ways will they try to repackage crap and pretend it's a box of roses before throwing up their hand and admitting it can't be done?
Someone should remind Timmy this is very expensive comedy ....
But if the point of the TARP is to recapitalize the banks
The only difference between preferred and common shares is their relative sequence in taking loss hits. Both are are ahead of bondholders. So conversion of preferreds into common does not really change the riskiness of banks from the debt perspective. From the economic standpoint the only thing such conversion changes is that a bit of cash will preserved instead of being paid out to the taxpayers. Sheesh.
Lucifer
BTW..not to get tooo deep into the religious thing, but just to stop jesting and jousting with you, i do believe in God, but not the conventional one...and i believe that the material world as it pertains to self-ish wants and desires is the relm of the devil ...and so ruled
as for why God allows evil things to happen...i dont know
if I receive a $100k line of credit, but I have only drawn $20k out of it, how is the remaining $80k reflected in the bank's accounting?
For capitalization purposes, the $80K is treated as an off-balance-sheet contingent asset. Under existing regs, if the line expires > 1 year and assuming consumer borrower, it's weighted to 50% as to the amount, then 100% of that amount is used calculate the risk-weighted asset value. If less than a year, then the numbers are 0% and 100%, respectively, which comes out to zero.
That's strictly how the regulatory capital charges are calculated. The regulators themselves are very interested in the likely utilization of the line of credit before the borrower goes delinquent. The bank is supposed to be able to estimate that - and to apply a capital charge in its internal capital adequacy assessment.
true gods are an interesting topic. Leaving the watchmaker aside, what about the gods of man. Would we know them today? Everyone seems so focused on an all-powerful, all-knowing god... but the tales tell different stories. Fallible gods. Gods who act in anger. Gods who say they are sorry....One of my favorite bible stories is when Abraham meets the men in white who are on the way to Sodom and Gomorrah to 'see' the evil with their own eyes! Great story!
Lucifer said: You mean "sociopaths"?
That covers it. Rabid dogs - no cure, you just put them down. You made a pretty good list in another comment...... Paulson first, I say.
Vonbek777, wrote
Black holes have a purpose, namely encourage gas aggregation and star formation.
yes, but like banks they accumulate but not for distribution in this space / time continuum
I'm trying to understand if reducing credit lines is only a risk management issue or are there accounting,//P&L/balance sheet issues as well.
Risk management actions today are supposed to protect P&L and balance sheet tomorrow. Banks reduce credit lines to lower future write-offs.
The only difference between preferred and common shares is their relative sequence in taking loss hits.
In terms of liquidation, you're absolutely correct. However, in terms of capitalization, there is a big difference in the conversion. Under existing regulations, only perpetual non-cumulative preferred shares are considered Tier 1 because the infinite duration and non-cumulativeness move these types of securities to the equity side of the pendulum.
What the UST currently has is borderline Tier 2.
Side order for the nothingburger...unedited transcript of today's CDC briefing (no mp3 link available on CDC website as of yet)
Unedited CDC Briefing Transcript 5 3 2009 [Pandemic] - MarketTicker Forums
“Wells Fargo has a dramatically different business model,” Buffett said..
Hmmm, where have we heard that before?
Ron Shuffield, president of Esslinger-Wooten-Maxwell Realtors says that "South Florida is working off of a totally new economic model than any of us have ever experienced in the past." He predicts that a limited supply of land coupled with demand from baby boomers and foreigners will prolong the boom indefinitely. (3.25.2005)
Black holes have a purpose
C'mon man - gravity has a purpose? Electricity has a purpose?
Like objective to be attained (Purpose) - Definition and More from the Free Merriam-Webster Dictionary
Krugman's made that claim numerous times. If he'd read the freaking regulations that define what constitutes Tier 1 capital, he'd realize that the government's preferred shares ARE NOT Tier 1 capital. Therefore, conversion of the preferred to common, which is Tier 1 capital, would increase that metric of bank capitalization.
The Fed pre-empted the regulations:
For these reasons and in order to support and facilitate the timely implementation and acceptance of the Capital Purchase Program and promote the stability of banking organizations and the financial system, the Board has adopted this interim final rule to permit bank holding companies that issue new Senior Perpetual Preferred Stock to the Treasury under the TARP to include such stock without limit as Tier 1 capital for purposes of the Board’s riskbased and leverage capital rules and guidelines for bank holding companies.
Federal Register, Volume 73 Issue 205 (Wednesday, October 22, 2008)
Under existing regulations, only perpetual non-cumulative preferred shares are considered Tier 1 because the infinite duration and non-cumulativeness move these types of securities to the equity side of the pendulum.
That's precisely my point - conversion of preferreds to common will affect regulatory capital ratios because of how these ratios are defined, but will have zero impact on the risk level of debt. And it is the latter that is supposed to be the issue at hand, no?
Basel Too (profile) wrote on Sun, 5/3/2009 - 10:40 pm
But if the point of the TARP is to recapitalize the banks, which was Congress's mandate, then it's silly to argue for the government go in there with debt-type securities that can't function as capital. The whole point of bank capital is to function as a loss cushion.
Whether Congress should have done it at all is an entirely different issue. My point is only a reflection of the execution.
Did you say Congress? We don't need no stinkin' Congress--We've got Ben!
Time for a Haiku reprise before signing off:
Doc throws the green switch
Timmy jumps with glee--Oh, Ben!
Such crispy new notes!
Banks aren't Black Holes... they just SUCK!*
.
.
.
.
.
.
.
* Hockey 'Goalie Chant' - yelled at opposing team goalie after he lets in a goal:
“Hey! [opposing team goalie name]! You’re a sieve!
No wait, you’re not a sieve, you’re a funnel!
No wait, you’re not a funnel, you’re a vacuum!
No wait, you’re not a vacuum, you’re a black hole!
No wait, you’re not a black hole, YOU JUST SUCK! YOU JUST SUCK! YOU JUST SUCK!”
MrM you give me pause tonight. A little touch of synchronicity. I had a dream last night in which Albert Einstein was riding a rainbow in space. He started speaking to me. Told me that gravity was like light, both a particle and a wave and electricity was both the cause and effect. Woke me up and I have had a headache ever since.
“Wells Fargo has a dramatically different business model,” Buffett said..
Well, maybe he was referring to Congressmen lined up to support WFC. Citi may have been just a little too obvious at the front of the line. Shoot the first hog, then feed the rest.
Thanks Basel Too
So based on that, reducing credit lines and in particular repayment terms to under 1 year, is part of the effort to improve capitalization ratios,
Banks aren't Black Holes... they just SUCK!
"I didn't think it was physically possible, but this both sucks and blows "
- Bart Simpson
Yes, the Fed preempted the rules for BHC/FHC for which it has regulatory jurisdiction, but from my understanding the interim rule does not apply to the capitalization calculations at the non-member DI and IB, where the lending and losses are actually occurring. But i've been known to be wrong many, many times.
Woke me up and I have had a headache ever since.
Vonbek777 - You should not be mixing gravity with electricity, or with any hard liquors. That's not good for your health or for building a grand unified theory.
Pavel,Bankers at the senior level are not like the rest of us.I have worked at Banks,and at the senior levels what you see are Money worshipping very clever sociopaths.The selection process is rigorous and weeds out all who have a conscience.
dryfly (profile) wrote on Sun, 5/3/2009 - 11:04 pm
Banks aren't Black Holes... they just SUCK!*
Hockey 'Goalie Chant' - yelled at opposing team goalie after he lets in a goal:
This is probably the best explanation yet for those bloodied fans you see on TV ...
Bart Simpson for Sec'ty of Treasury!
but will have zero impact on the risk level of debt. And it is the latter that is supposed to be the issue at hand, no?
by debt, i assume you meant loans? otherwise, the following is not going to make any sense.
There are two objectives with EESA in terms of capital. The first that you mentioned is risk level of the debt (loss cushion), which can not change, except at the macro level. The other issue is lending. If a bank is under-capitalized, it simply can not lend regardless of the quality of its assets. The conversion is meant to solve the latter.
Amen to that!
OT,the sculptor Daniel Oberti died last night.He was a good man and a good friend.I went to the viewing today and he is still better looking than I am.Life is not fair...and neither is death.they just are.
Samdog - may I add a line to your haiku (even if that would be against the rule of the genre)?
Doc throws the green switch
Timmy jumps with glee--Oh, Ben!
Such crispy new notes!
But why do they have Chinese characters?
to permit bank holding companies that issue new Senior Perpetual Preferred Stock to the Treasury under the TARP to include such stock without limit as Tier 1 capital
That's another flaw with the TARP. The banks (deposit institutions) should have been the ones issuing the preferred shares, so that the more of the effect would have been felt on main street. instead, the BHC issued the shares, which allowed the BHC to send that capital to other units, particularly the IBs, under its umbrella.
dryfly (profile) wrote (in reply to...) on Sun, 5/3/2009 - 8:11 pm reply Ignore user
Bart Simpson for Sec'ty of Treasury!
Ummmmm. Wouldn't that make the position hereditary?
by debt, i assume you meant loans?
Any bank debt - loans, bonds, CP
If a bank is under-capitalized, it simply can not lend regardless of the quality of its assets. The conversion is meant to solve the latter.
If you think the banks are dying to lend and the only thing that stops them is regulatory capital ratios, think again. We discussed this at this board more than once - no reasonable lender would want to increase lending when the economy is in recession. You can set regulatory capital ratios to zero and prudent banks will not increase their lending.
Now, banks that are not prudent and that want to gamble relying on taxpayers' bailout, is a whole separate story
"I had a dream last night in which Albert Einstein was riding a rainbow in space. He started speaking to me. Told me that gravity was like light, both a particle and a wave and electricity was both the cause and effect. Woke me up and I have had a headache ever since."
I ride gravity all the time.
MrM (profile) wrote on Sun, 5/3/2009 - 11:13 pm reply Ignore user Samdog - may I add a line to your haiku (even if that would be against the rule of the genre)?
Doc throws the green switch
Timmy jumps with glee--Oh, Ben!
Such crispy new notes!
But why do they have Chinese characters?
Excellent!
I was going to say, "sure, there are no rules among Bhuddists." Then my eye caught your line!
Tom Stone (profile) wrote on Sun, 5/3/2009 - 8:12 pm reply Ignore user
OT,the sculptor Daniel Oberti died last night.He was a good man and a good friend.
The cosmic implications of a man named Stone being friends with a sculptor... I gotta go knurd somethin'.
Then my eye caught your line!
Ouch!
Sounds like a bad fishing accident!
G'night All
Last night someone (otishertz?) was talking about how due to the Fed increasing their balance sheet, we now have some backing behind the dollar. I'm not an expert, but I think they've increased their balance sheet by buying MBS, now CMBS, T-bills, and perhaps equities? I was just thinking if the dollar is now backed by equity stakes in banks and carmakers; doesn't work against the traditional role of cash... ie. equities rise, dollar falls (flee to safety?). So let's say the stock market takes a 30% dive, our T-bills can be advertised as "now with 30% less safety!"
Homer Simpson's Emergency Haiku:
Only red buttons work
All the others are useless
Any donuts left?
Just glad Steppenwolf's Magic Carpet Ride wasn't playing in my dream. It would have been too much.
Re: Lines of Credit
For what it is worth, when Lehman and Prime Reserve money market fund went belly up last year, ALL the CFOs I know drew down all their credit lines and stashed the cash in T-Bills.
Use it our lose it.
That meredith whitney clip is pretty damn awesome! She just totally gets it: the balance sheets, motives, strategies, politics, and the markets. I loved her response at 17:50 when asked whether we can expect to see consolidation, with the strong banks buying the weak banks. "well, the big banks are all of the weaker banks, so..."
YouTube - Gains Of Bank Of America - Bloomberg
If you think the banks are dying to lend and the only thing that stops them is regulatory capital ratios, think again.
No, I'm on the same boat as you. this a "balance sheet" recession. I'm just presenting Treasury's side of the issue; it's not a totally irrational perspective. There are two balance sheets deleveraging right now, financial and everyone else, but EESA is not concerned about the non-financials. That's what ARRP and the like are for.
It does have a "chicken and egg" feel to it, or is it "cart and horse". Then again, no one rings their Congressperson because they CAN get a loan. except maybe Rick Santelli and the teabaggers
Homer Simpson's Emergency Haiku
Great stuff, dry - we are pushing them all red buttons
I'm sorry to hear about Daniel Oberti.
His sundial statues were really neat and fun.
He'll be missed.
NW
503 - Account disabled... - (Sonic.net, Inc.)
You're right, B2. I've been assuming (and a lot of others seem to be doing so as well) that other regulators would follow the Fed's lead on this, but since I can't find anything official from anybody but the Fed I may well be wrong.
One of the things I have been thinking about is the responsibility factor in this whole mess. From the corporate leaders, government, traders, all the way down to individual consumers we all need to admit wrong in order to proceed out of denial. I feel very much that we are like the British with the sun setting on the empire and no one wanting to take responsibility for it. This mess just didn't happen. It was a collective process. I wonder if we have the guts to admit it to ourselves...
The author of "The Invention Of Air" claims the age of rationality was partly from a shift in daily alcohol to tea. We seem to be in a shift from caffeine to weed. If you dream of Albert Einstein, you might be ahead of the curve
As an example, here's a piece of commentary from S&P in February:
"Another significant benefit, in our view, is that the TARP preferred will continue to be treated as Tier 1 capital for
regulatory capital purposes, bolstering what otherwise would be relatively weak regulatory capital ratios at a
number of institutions during a period of severe stress for the U.S. bank sector.
No mention that this is only true of one regulator, no clear mention that it only applies to certain institutions (I suppose the limitation to "a number of institutions" could be read that way, but it seems rather to be a reference to those particular institutions that would otherwise be undercapitalized), and no references so there's no way to know why they're drawing these conclusions.
Maybe I've just allowed them to pull the wool over my eyes?
This mess just didn't happen. It was a collective process. I wonder if we have the guts to admit it to ourselves
I daresay this process should start at the top, but the Administration does not want to make our pretty heads worried. Instead, we are reassured that the recovery is in sight.
ALL the CFOs I know drew down all their credit lines and stashed the cash in T-Bills
For the company, themselves, or both?
Norka,He will be missed ,by many including my daughter Rosetta who spent quite a few hours drawing and flirting with Daniel (My sister still has not forgiven me for naming her that).Daniel was a blast and the ladies loved him as much as he loved them.
No rush for the exits yet in the futures. Kermit peeking out into the future.
Honest to god I am teetotaler. Parents were Southern Baptist. Don't drink or smoke or dance for that matter much to the chagrin of my wife. Just don't have it in me. I am a glutton however. All the repression I suppose. Considering all the chemicals in food these days that affect normal brain function perhaps your suggestion would be safer.
As an example, here's a piece of commentary from S&P in February:
"Another significant benefit, in our view, is that the TARP preferred will continue to be treated as Tier 1 capital for
regulatory capital purposes, bolstering what otherwise would be relatively weak regulatory capital ratios at a
number of institutions during a period of severe stress for the U.S. bank sector.
The irony of it is that S&P itself assigns a very low weight to the TARP funds in its own capital adequacy calculations (as do other rating agencies)
yalt:
i never did understand why the capitalization of overall FHC was calculated, other than it was required by law, since it's always a particular unit that does the crapping out.
I guess the theory is that a well-capitalized FHC could steer reserves from one unit to buffer losses elsewhere ("source of strength" theory), but in reality the FHC just created a black hole where no one knows nothing.
now back to the rule against hearsay.
And Dawg,I am an improbable man.It is my saving grace.
Most of them worked for hedge or private equity funds. Bonuses are based on 12/31 year end. Use of the cash? Well, you can figure it out.
ALL the CFOs I know drew down all their credit lines and stashed the cash in T-Bills
For the company, themselves, or both?
The way executive compensation has been lately - is there a difference?
Luck that lasts the better part of 50 years in the financial industry is not "luck".
As smart as you think you are, I daresay that there's far more evidence on Buffet's side of the scales than there is on yours.
Vonbek777,
He is not smart, just lucky.
//Well I am not as smart as Buffett. I can't tell how Wells Fargo is different from citi or bofa. All three seem like black holes to me.//
No rush for the exits yet in the futures.
This market is based on the gentleman's agreement, so no rush for exits until the trumpet signals retreat
I still hold this will be an interesting if not critical week for the markets. Just my gut talking, no evidence or support for this. I feel like Don Quixote is surrounded by the mirrored armor and has to see his reflection finally. Probably just wishful thinking. It does seem that hope will spring eternal....
"From the corporate leaders, government, traders, all the way down to individual consumers we all need to admit wrong in order to proceed out of denial."
.....you DO live in a fantasy world. The consumer wrong is over-stated. Had the system been in place and working, greed wouldn't have had front seat. The banks blew it plain and simple as did the bought and paid for Congress. Greed is quite a motivator.
dryfly,
Great explanation of the damaging effects of inflation on industry...I clipped it for future reference. I think a lot of criticism of US mfg management regarding investment in modernization missed this point; that due to inflation investing in physical assets didn't make financial sense.
I guess if we all just pray hard enough, we'll all be saved
cough
no kool aid?