Comments on: Financial Cooking http://www.senseoncents.com/2009/07/financial-cooking/ Navigating the Economic Landscape Thu, 18 Mar 2010 01:08:18 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Larry Doyle http://www.senseoncents.com/2009/07/financial-cooking/comment-page-1/#comment-3030 Larry Doyle Mon, 06 Jul 2009 11:52:01 +0000 http://www.senseoncents.com/?p=7262#comment-3030 Aaron, Thanks for the plug. Glad you enjoy <em>Sense on Cents</em>. Please visit and comment often! As much as people may want to paint our economic reality in a different light, we are faced with adjusting to the new reality. In that process, losses have to be addressed.....whether we like it or not. You can pay me now...or you can pay me later. Aaron,

Thanks for the plug. Glad you enjoy Sense on Cents. Please visit and comment often!

As much as people may want to paint our economic reality in a different light, we are faced with adjusting to the new reality. In that process, losses have to be addressed…..whether we like it or not. You can pay me now…or you can pay me later.

]]> By: kbdabear http://www.senseoncents.com/2009/07/financial-cooking/comment-page-1/#comment-3027 kbdabear Mon, 06 Jul 2009 07:57:18 +0000 http://www.senseoncents.com/?p=7262#comment-3027 http://blogs.reuters.com/commentaries/2009/07/05/a-goldman-trading-scandal/ A Goldman trading scandal? Did someone try to steal Goldman Sachs’ secret sauce? While most in the US were celebrating the 4th of July, a Russian immigrant living in New Jersey was being held on federal charges of stealing top-secret computer trading codes from a major New York-based financial institution—that sources say is none other than Goldman Sachs. The allegations, if true, are big news because the codes the accused man, Sergey Aleynikov, tried to steal is the secret code to unlocking Goldman’s automated stocks and commodities trading businesses. Federal authorities allege the computer codes and related-trading files that Aleynikov uploaded to a German-based website help this major “financial institution” generate millions of dollars in profits each year. http://blogs.reuters.com/commentaries/2009/07/05/a-goldman-trading-scandal/

A Goldman trading scandal?

Did someone try to steal Goldman Sachs’ secret sauce?

While most in the US were celebrating the 4th of July, a Russian immigrant living in New Jersey was being held on federal charges of stealing top-secret computer trading codes from a major New York-based financial institution—that sources say is none other than Goldman Sachs.

The allegations, if true, are big news because the codes the accused man, Sergey Aleynikov, tried to steal is the secret code to unlocking Goldman’s automated stocks and commodities trading businesses. Federal authorities allege the computer codes and related-trading files that Aleynikov uploaded to a German-based website help this major “financial institution” generate millions of dollars in profits each year.

]]> By: Larry Doyle http://www.senseoncents.com/2009/07/financial-cooking/comment-page-1/#comment-3022 Larry Doyle Mon, 06 Jul 2009 01:13:36 +0000 http://www.senseoncents.com/?p=7262#comment-3022 Coe.....you are truly a wealth of knowledge and enlightenment. We who are about to die, salute you !! I love it. Coe…..you are truly a wealth of knowledge and enlightenment.

We who are about to die, salute you !!

I love it.

]]> By: coe http://www.senseoncents.com/2009/07/financial-cooking/comment-page-1/#comment-3018 coe Sun, 05 Jul 2009 23:00:20 +0000 http://www.senseoncents.com/?p=7262#comment-3018 LD - if a tree falls in the middle of the forest, does anyone hear it?..you are actually tackling two key issues at once - the intrinsic inconsistencies and asymmetry of the accounting model, and the serious position that the FHLB system holds in our "banking" system...I've commented before on both in response to your columns, but thought I might try a new angle tonight...have we ever thought that, on balance, most of us in business try to do the rational thing - i.e. something in our own self-interest and in behalf of the better interest of the shareholders if we are a public company...you truly cannot say the same thing about the federal government or the federal agencies..I find it quite curious that the FHLB advance book has shrunk some 12% quarter vs quarter...that speaks volumes on several levels - first of all, it tells us loud and clear that the "members" are either not borrowing as much, and/or have cheaper sources of funds in other directions...I think both of these conditions are true and both are frightening - there just isn't that much of a demand from corporate America to invest/borrow from the banking system, and, despite all the jawboning to thaw out the credit pipeline, the underwriting criteria are substantively tougher (and, by the way, fully endorsed by the examiners); and the FHLB has been trumped by the flood of liquidity alternatives that the Obama administration is pouring into the banking system..for the most part, the FHLB system is a closed loop - and their own ability to raise cheap funds was quite impaired for awhile...the second point is that the district banks are always searching for a way to make a spread on their own borrowings (liabilities) vs the assets they hold (advances and investments)...look closely - the whole system is awash with cash...last time we checked, the yield curve just doesn't offer much in the way of return to be in cash...no advance growth/higher funding costs = pressure on the individual banks to invest in higher yielding bonds - sounds a bit like the sequel, doesn't it! We see this same configuration with the big mortgage GSEs and with the banks themselves...mmmmm, leverage and credit risk - all roads lead to Rome..."Morituri te salutant" is carved into the stone of the Colisseum of ancient times - or to translate the Latin cry of the gladiators, "We who are about to die salute you"...let's end this madness...ride that chariot, LD! LD – if a tree falls in the middle of the forest, does anyone hear it?..you are actually tackling two key issues at once – the intrinsic inconsistencies and asymmetry of the accounting model, and the serious position that the FHLB system holds in our “banking” system…I’ve commented before on both in response to your columns, but thought I might try a new angle tonight…have we ever thought that, on balance, most of us in business try to do the rational thing – i.e. something in our own self-interest and in behalf of the better interest of the shareholders if we are a public company…you truly cannot say the same thing about the federal government or the federal agencies..I find it quite curious that the FHLB advance book has shrunk some 12% quarter vs quarter…that speaks volumes on several levels – first of all, it tells us loud and clear that the “members” are either not borrowing as much, and/or have cheaper sources of funds in other directions…I think both of these conditions are true and both are frightening – there just isn’t that much of a demand from corporate America to invest/borrow from the banking system, and, despite all the jawboning to thaw out the credit pipeline, the underwriting criteria are substantively tougher (and, by the way, fully endorsed by the examiners); and the FHLB has been trumped by the flood of liquidity alternatives that the Obama administration is pouring into the banking system..for the most part, the FHLB system is a closed loop – and their own ability to raise cheap funds was quite impaired for awhile…the second point is that the district banks are always searching for a way to make a spread on their own borrowings (liabilities) vs the assets they hold (advances and investments)…look closely – the whole system is awash with cash…last time we checked, the yield curve just doesn’t offer much in the way of return to be in cash…no advance growth/higher funding costs = pressure on the individual banks to invest in higher yielding bonds – sounds a bit like the sequel, doesn’t it! We see this same configuration with the big mortgage GSEs and with the banks themselves…mmmmm, leverage and credit risk – all roads lead to Rome…”Morituri te salutant” is carved into the stone of the Colisseum of ancient times – or to translate the Latin cry of the gladiators, “We who are about to die salute you”…let’s end this madness…ride that chariot, LD!

]]> By: Aaron kramer http://www.senseoncents.com/2009/07/financial-cooking/comment-page-1/#comment-3017 Aaron kramer Sun, 05 Jul 2009 22:02:33 +0000 http://www.senseoncents.com/?p=7262#comment-3017 Larry you are spot on again. The reality is few want to honestly deal with the problems that we face and they think if we live in denial long enough things will be better. When the music stops we won't just be short of chairs, all of them will have disappeared. The FASB rule change is a pathetic attempt to keep insolvent banks afloat while holding toxic assets. Additionally the collateral given the Fed rots in possession and is bringing the FED closer to insolvency by the day. The banks are busted and the next leg of the crisis will be when Mr. Market enforces discipline on the FED and unfortunately all of us. Larry you are spot on again. The reality is few want to honestly deal with the problems that we face and they think if we live in denial long enough things will be better. When the music stops we won’t just be short of chairs, all of them will have disappeared. The FASB rule change is a pathetic attempt to keep insolvent banks afloat while holding toxic assets. Additionally the collateral given the Fed rots in possession and is bringing the FED closer to insolvency by the day. The banks are busted and the next leg of the crisis will be when Mr. Market enforces discipline on the FED and unfortunately all of us.

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