• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

How To Capitalize On The Upcoming Irrationally Exuberant LBO Bubble

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Sat, 03/20/2010 - 13:31 | 270935 Attitude_Check
Attitude_Check's picture

Fake Tyler again?

 

Are you priming the pump for the blood-funnel?

 

Sat, 03/20/2010 - 13:41 | 270937 Mercury
Mercury's picture

Why not buy calls on the equity of identified likely candidates instead? There is way more counter-party risk in OTC CDS than OCC-cleared US equity options.  You might even be able to finance the calls in part by shorting the bonds in the same companies or shorting the equities of the less likely candidates.

I don't really know the CDS market - is it that liquid and efficient in smaller US companies?...and again, how common are couter-party problems? Clearly -these days- when insiders want to initiate a last-second position before market moving news hits the tape they reach for the equity calls.  Might as well stay where the action is...

Sat, 03/20/2010 - 13:33 | 270938 Fritz
Fritz's picture

Goldman is a bucket shop.

Buyer beware.

Sat, 03/20/2010 - 13:38 | 270940 williambanzai7
williambanzai7's picture

This is a fine example of the kind of post I expect to see on this site and only this site.

Sat, 03/20/2010 - 14:11 | 270947 merehuman
merehuman's picture

I am not as knowledgeable as most of you, nor am i a trader.

Harrys take on the market.

1Last week gold dropped leaving me insecure

2friday market dropped  more insecurity

3 this next monday will be a market down day.

4 only safe refuge for money is...USA treasury auction

Herding in progress as i see it and i am definitely an outsider, a boob regarding the financial scene. If i am correct in this assesment then surely others smarter than i will see it too. Therefore next auction will be a failed auction.

I would dearly love a response. Do i get an A?

Sat, 03/20/2010 - 16:24 | 270990 Frank Owen
Frank Owen's picture

The professor is no longer grading. He comes in, puts the notes on the board then leaves. There is no Tyler. There is no Marla. There is only Zuul. :)

Sat, 03/20/2010 - 16:56 | 271001 Attitude_Check
Attitude_Check's picture

Zuul was a babe -- if not also evil.  I wonder who will play the part of Mr. Stay-Pufft?

 

When will the wake be held for the OLD ZH, Tyler and Marla?

Sat, 03/20/2010 - 18:32 | 271033 Frank Owen
Frank Owen's picture

ZH has gotten a lot bigger and we can assume (since Marla said so) that there are many Tylers. I would think that even at it's inception it was not necessary for Tyler, Marla, and the real space monkeys to be together to run ZH. Content could be uploaded from any location. I wonder if Marla came to the conclusion that there was little benefit in coming down to the basement because frankly, most of the basement space monkeys were... a little uneducated, unruly, and perhaps best left to hopefully find enlightenment in the content. I also wonder if the "hang the bankers" type of rhetoric pissed her off so much that she just doesn't want to get into the moshpit anymore. Still great content and mostly great comments so...

Sat, 03/20/2010 - 19:12 | 271047 Attitude_Check
Attitude_Check's picture

Yeah I assumed Tyler was publishing more than a single person could, and was a nom-de-plum for a number of folks.  I have noticed a change in "flavor" and "style" by Tyler's posts.  There seems to be a slow encroachment of the Tout TV crowd with something to sell.

 

OH well all things must change I guess.

Sat, 03/20/2010 - 19:43 | 271051 Frank Owen
Frank Owen's picture

Yes, the encroachment has been noticed but I doubt it will be put up with by most here. It is impossible for there to be only one Tyler. Marla will guard her anonymity tooth and nail, and has perhaps felt it's too dangerous to say too much. Maybe all the cloak and dagger was too much for her. Maybe her and Project Mayhem are on a beach somewhere... who knows. Miss her and Radio Zero... Marla would be my top pick to have a fight with, and lose. Rarely in the real world (for most of us) do we get to spar with someone so agile. I finally found a half decent church that I could believe (somewhat) in, and then god stopped talking. This site is of course for professionals which most of us aren't, but I continue to enjoy it as it's a good place to find others who have awoke from the dream into the nightmare of reality.

Sat, 03/20/2010 - 22:44 | 271113 Oracle of Kypseli
Oracle of Kypseli's picture

Merehuman,

If you want to sleep at night, here is an example; $100k of assets to invest.

keep $30k in physical gold.

keep $25k in 500euro notes in a safe. (That will be approx 18 notes)

keep $25k in 20 dollar bills in a safe.

keep $20k in a checking account in a local safe bank.

There are asbestos fire blankets that can withstand 3000degrees f. even more than a safe. Or use a blanket inside the safe, or multiple hiding places. 

http://www.thefirestore.com/store/product.cfm?pID=3031

 

Sat, 03/20/2010 - 23:52 | 271155 Nikki
Nikki's picture

Take 5% of that 100k and buy 1 shotgun, 1 handgun and 1 ak47 + ammo. Water, mre, canned meats, veggie seeds, heater, generator, kerosene. Then go to nwtmint and get more physical gold and silver.

Get some maps too... Maybe some firewood.

Good luck..

Sat, 03/20/2010 - 14:46 | 270962 AnonymousAnarchist
Sat, 03/20/2010 - 15:19 | 270963 AccreditedEYE
AccreditedEYE's picture

This is probably stupid to even mention but..... Wouldn't the lazy man approach be to buy calls on a basket of the publicly traded AI firms and select financials that will provide the deal financing? Higher mgmt./performance fees/IB fees are a sure thing as opposed to trying to game the next buyout. Return would be inferior but at least you could sleep.

Sat, 03/20/2010 - 15:04 | 270969 sgt_doom
sgt_doom's picture

Super post, TD!?

And to those who haven't quite grasped it yet, the primary driver in rising prices in artificial markets is securitization, leveraged buyouts (which fully utilizes securitized financial instruments, e.g., CLOs, CFOs, CDSes, etc.), and hedge funds (again, wich fully utilizes securitized financial instruments.

More LBOs inevitably means greater unemployment, rising prices, greater consolidation, fewer functioning and efficient companies, reduction in tax bases and, of course, more of those debt-financed billionaires.

Sat, 03/20/2010 - 18:18 | 271027 rawsienna
rawsienna's picture

Nice to see the FED helping out the Private equity evil doers.  The idiots that buy the debt will lose tons. Given health care reform and all the new taxes, we are certain to have high unemployment and weak growth for years

Sat, 03/20/2010 - 22:41 | 271114 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

After the 2012 elections, barrys boys will attempt to steal the election through fraud or claims of disenfranchisement.

The reaction to this will be violent.

Barry will attempt martial law.

The military will refuse to kill their fellow citizens.

Things will settle down and we will try this democracy experiment again.

Sun, 03/21/2010 - 00:03 | 271160 Nikki
Nikki's picture

You are too young to remember Kent State. The military will shoot civilians. They are the meanest and dumbest of the sheep and will follow orders for 3 square and $16k a year. They are even led to believe you can do a college degree on line.... Those who have been screwed by stop loss at least know a contract isn't worth shit in the USA.

Sun, 03/21/2010 - 00:28 | 271174 Rick64
Rick64's picture

 Plenty of examples of this in our history.

Sun, 03/21/2010 - 19:50 | 271724 Attitude_Check
Attitude_Check's picture

Niki,

Kent State was an example of why ill trained reservists being used as a police force instead of a military force is a bad idea.  I've seen the videos and pictures (wasn't there myself) and the anarchy and stupidity on both sides was pretty extreme.  PLENTY of blame on both sides there.

Sun, 03/21/2010 - 01:51 | 271198 sheeple
sheeple's picture

LBO => Levered (on taxpayer to) Bailouts

 

Sun, 03/21/2010 - 02:36 | 271209 williambanzai7
Sun, 03/21/2010 - 09:13 | 271284 doolittlegeorge
doolittlegeorge's picture

sounds like there's a HOG for sale.  must say didn't see that as the LBO.  How about all of you anonymous types?  Still too CS to take  your goofy masks?  What's that saying?  "A man wear's a mask so he can finally be how he thinks people should look at him."  Never understood why a woman needs a mask must say.

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