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HomeThe Fine Print of Nationalization
Posted by Larry Doyle on February 23rd, 2009 11:27 AM |
Many leading economists and market mavens are calling for the formal nationalization of certain banking institutions in our
country. There are numerous arguments for and against nationalization. While many of these arguments are philosophical in nature, perhaps it is the fine print in CDS (credit derivatives) contracts that are the major hurdle.
In a communication with a European derivatives expert this morning, I received some truly enlightening color on this fine print. From what is being shared with me, the contractual agreement embodied in standard CDS transactions addresses the nationalization topic. What occurs?
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Cerberus Revisited
Posted by Larry Doyle on February 23rd, 2009 10:33 AM |
With so many dramatic events happening so quickly in the global economy, it can be daunting to keep things straight. Banking, housing, autos, regulatory structure, global trade, employment. The stream of dramatic developments is breathtaking. In times like these, I think it is critically important to remain very focused and disciplined. The ability to compartmentalize is vitally necessary.
In that vein, I find it very interesting that the lead editorial in today’s New York Times, Why Can’t Cerberus Foot The Bill, addresses the topic I broached on December 11th, Who and What is Cerberus…?.
Private equity is not supposed to benefit from taxpayer bailouts!!
Our public representatives need to work a little harder on the taxpayers’ behalf.
It’s called capitalism. Let it work.
LD
Breaking News…Citi “National Bank??”
Posted by Larry Doyle on February 22nd, 2009 10:24 PM |
UPDATED from late last night . . .
I just proposed on LD’s Dollars and Sense the idea that the markets would force Citigroup into the government’s hands. I thought it would occur within a month. In just checking the WSJ newswire it appears that executives from Citi are negotiating with the government as I write this. The fact that Citi is looking to broker a transaction currently is effectively an admisson on their part that they are technically insolvent. While the U.S. Eyes Large Stake in Citi, the common shareholders in Citi would be seriously diluted. How would creditors be treated? At this stage I would guess that creditors will be untouched. I would imagine that if this transaction occurs, other banking shares will trade down in sympathy.
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Audio Recording: NoQuarter Radio’s “Dollars and Sense with LD”
Posted by Larry Doyle on February 22nd, 2009 9:15 PM |
In case you missed Larry Doyle’s Sunday evening radio show, just click on the Play button below for the audio recording. Once the playback has started, you can fast forward or rewind to any portion of the show by clicking at any point along the play bar.
It was a fabulous show, featuring the insights of Lynn Marshall. Lynn has years of experience in investment banking, community banking and agriculture. In addition, I also spoke with John Moynihan, of BERG Associates, to discuss the dynamics in the world of offshore banking.
Sunday, February 22nd, 2009
NoQuarter Radio’s Dollars and Sense with LD
Tune In to Larry Doyle’s “Dollars and Sense” on No Quarter Radio
Posted by Larry Doyle on February 22nd, 2009 5:22 PM |
Please join us this evening from 8:00 to 9:00 p.m. ET on No Quarter Radio for LD’s Dollars and Sense. These are truly historic times in the global economy. Let’s “navigate the economic landscape” without the pandering or nonsense found elsewhere!
We have two very interesting guests joining us. Lynn Marshall has one of the most unique backgrounds in the world of finance today. How does one develop a background that includes senior level experience in investment banking, agriculture, and community banking? Think Lynn has some amazing perspectives on the economy and markets? Don’t miss him.
Additionally, in light of the developments at Stanford Financial, we are very happy to have John Moynihan return to our show to discuss the dynamics in the world of offshore banking. Find out more than you could ever imagine by talking to these enlightened experts on LD’s Dollars and Sense, starting at 8 p.m. ET.
What are your questions and comments for me? Please share your questions and thoughts by calling in to (347) 677-0792, and also join our live chat room, which I’ll start up about 10 minutes before the show begins!
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Leading Wall Street Analyst Speaks
Posted by Larry Doyle on February 22nd, 2009 4:29 PM |
I worked in the mortgage business on Wall Street for 23 years. During that time period I had the good fortune of developing relationships with some of the finest minds in this sector. While I do not know Laurie Goodman personally, I can tell you that there is no one individual in the market today whom investors follow more closely when it comes to developments in this space. While Ms. Goodman does work in a business that is actively engaged with investors, I have always appreciated her perspectives as being untainted by bias and merely reflecting an extremely professional and honest outlook.
What does Ms. Goodman think about President Obama’s plans for housing? It would appear that there may be all sorts of unintended consequences and misaligned incentives in this proposal. Regrettably plans that are well intended often do not necessarily achieve their desired results. I strongly recommend you read Mortgage Plan Aids Liars About Income to gain a fuller appreciation of this proposal.
LD
More Legalized Bribery!!!
Posted by Larry Doyle on February 21st, 2009 6:43 PM |
Why do I believe we will see a wave of material on this topic? Well, whenever I see it I plan on updating my post Legalized Bribery so that Former Senator Chuck Hagel (R-NE) and current CIA head Leon Panetta are continually vindicated.
Who lived rent free for 5 years in the Washington townhouse of a CT Congressman, directed hundreds of thousands of dollars to that Congressman’s husband’s lobbying effort, served on the board of Freddie Mac when it stifled Republican overtures, and now serves one door away from the Oval office?
Did Rahm Emanuel declare that rent-free arrangement as income? Did he pay taxes on it? Did he share that arrangement with the Congressional ethics committee? Rahm’s ‘Rent’ Is Just the Tip of Ethics Iceberg.
Change? No, this Legalized Bribery has been going on for a while.
LD
Let’s Get a First Down
Posted by Larry Doyle on February 21st, 2009 9:10 AM |
Football fans know that ball control and time management are two very critical factors in determining outcome. While a coach may at times “go deep” in order to catch the opponent off guard, victory is determined by the hard work in the trenches and grinding out first downs. I know of no team that has ever established a winning discipline by “throwing Hail Mary’s.” The same can be said of investing. In the midst of these challenging markets, do not lose sight of your long range goals and the disciplines necessary to achieve them. Leave the “Hail Mary’s” for the gridiron entertainment.
The Wall Street Journal provides us with an excellent piece on this topic:
Desperate investors do desperate things.
A few months ago, most people were too terrified to do much more than wring their hands while sitting on them. But now, as the stock market takes another bullet every day and the yields on cash dwindle away, some investors seem to be flinging caution to the winds.
You can read the rest of the article at your leisure. Enjoy your weekend. – LD –
As Stock Losses Loom, Don’t Throw a ‘Hail Mary’
by Jason Zweig
illustration by Heath Hinegardner
The Wall Street Journal; February 20, 2009
Let’s Not Forget About Insurance Exposures
Posted by Larry Doyle on February 20th, 2009 11:47 AM |
While the markets and media are focusing predominantly on the banks and their capitalization needs, there are significant problems throughout the insurance industry as well. The primary exposures within insurance companies causing concerns lie within their commercial real estate holdings.
We have yet to see the actual defaults and foreclosures on a large swath of the commercial real estate market, but they are out there and they are coming. Let’s review the insurance industry along with some personal finance tips from an interview I had on my weekly No Quarter Radio program with an expert in these spaces, Sean D’Arcy. A lot of what Sean highlighted during his interview on January 11th is happening currently and likely will occur in the weeks and months ahead!!
You can listen to the archived audio of the January 11th interview on No Quarter Radio. In addition, I transcribed the interview in my piece “Got Insurance? 529 Plans? Financial Planning? Read On . . .”
LD
