Archive - Jan 2010 - Blog entry

If you accept situations such as AIG and other cases where Buy Side investors (and, indirectly, the US taxpayer) were defrauded through the use of OTC derivatives and/or structured assets as the archetype “problems” that require a public policy response, then the Volcker Rule does not address the problem. The basic issue that still has not been addressed by Congress and most federal regulators (other than the FDIC with its proposed rule on bank securitizations) is how to fix the markets for OTC derivatives and structured finance vehicles.

I have had a lot of problems with the way the last two adminstration have dealt with this financial crisis and Wall Street, but I must say "Kudos to Obama". Somebody had to do it. Call it politically motivated if you want to (he is a politician, isn't he?), nobody else bothered to contain the self reinforcing boom/bust risk cycle that is Wall Street.

...when volume support breaks, the cradle will fall.

I was not going to bother to comment further, but after hearing pundit after pundit attack Obama for the bank levy and Glass Steagal 'lite', after banks allegedly paid their dues... I just couldn't take it anymore. This short-term memory-itis is driving me nuts!

According to the SEC’s complaint against Gen Re, filed in U.S. District Court for the Southern District of New York, a foreign subsidiary of Gen Re entered into two sham “reinsurance” transactions with AIG in 2000 to improperly allow AIG to reverse the declining reserve trend and falsely report additions to both loss reserves and premiums written. Senior officials at Gen Re helped AIG structure the two sham transactions. The contracts show reinsurance transactions that appeared to transfer risk to AIG, but the transactions did not transfer risk.

Here is a glimpse at an internal debate between BoomBustBlog analysts on the merits of the China bubble short, and its comparison on the merits to a short in the EU and CEE contries. It appears as if the China bubble thing is about to heat up.

Forget the Isle of Man, Cayman Islands, Nauru, Liechtenstein, and like havens. The World Securities, Exchanges, and Financial Rules Commission is being planned by the Europeans and the Obama Administration. This is the theme of the World Economic Forum Annual Meeting in Davos.

A tidal wave of fiat paper currencies is now flooding the world financial system at an increasingly alarming rate. Pull a dollar bill out of your wallet and it’s as limp as ever. Linear growth in supply will get overwhelmed by a Malthusian, exponential growth in demand. The seventh in a series of seven on The Mad Hedge Fund Trader’s Annual Asset Allocation Review. (GLD), (DGP),(ABX), (SLV), (PALL)

Looks like private equity is staging a comeback but will it last?

Summary and my thoughts on a trio of Dr. Marc Faber's latest interview where he discussed his 2010 outlook on China bubble, sovereign default risk, stocks and commodities.

If this pattern reasserts, watch out over the next week.

The bull case for commodities, energy, food, and water. But skip natural gas. The sixth in a series of seven on The Mad Hedge Fund Trader’s Annual Asset Allocation Review. (FCX), (VALE), (RIG), (JOY), (CCJ), (FSLR), (UNG), (USO), (MOO), (DBA), (MOS), (MON), (AGU), (POT), (PHO), (FIW)

An all-out war on public pensions is brewing in Canada...

What a beating the Administration took tonight! I think this is a real life example of a Greek Tragedy. What does it mean? I think it could mean a lot.

Banks are giving up to 10x leverage to investors to buy MBS while foreclosures and unemployment are still on the rise against the backdrop of continuing diminishing home prices - all at interest rates that have nowhere to go but UP!

Are the regulators going to wait until after this blows up (AGAIN) or do something about it as it is blowing up.