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Who Is John Paulson, And Why Should The Globe And Mail Care?
They say that the simplest analysis is always the most powerful one. That appears to certainly have been the case with our presentation of global banks' Tangible Common Equity ("TCE") ratio to total assets from last Thursday, and specifically our observation of the glaringly obvious, namely that of the 30 most undercapitalized banks in the world, Canadian ones represented a whopping 33% of all. Note: this was not an attack on Canada, this was not some hedge-fund inspired start of a bear-raid on the Canadian banking system, this was nothing but an attempt to warn our readers of, again, what is out there for anyone (who is not blinded by cognitive bias) to see for themselves. Alas, the reaction to that post, particularly in the Canadian media, has been swift and severe, provoking such respected publications as The Globe And Mail to pen not one but two responses, one being the by now so-oft discredited attempt to ignore the message and target the messenger (Who is Zero Hedge, and why should we care?), followed by a more coherent attempt to debunk the claim that a painfully low TCE ratio is never a good thing (Is Zero Hedge looking at the wrong numbers?). The argument of G&M's Boyd Erman boils down to the statement that TCE is not a fair indicator of balance sheet stress and instead one should focus on a "Tier 1" approach of risk estimation, one that includes Risk Weighted Assets. Here we could provide the reference to Lehman's Tier 1 ratio, which was well in the double digits on the day when it filed for bankruptcy, even as the bank's true leverage was about 40x, a number which eventually brought on the biggest bankruptcy in history. We could but we won't, instead we will ask, rhetorically, who is John Paulson, and why should the Globe and Mail care?
Because while those "oddballs" at Zero Hedge may be hyperventilating or whatever the verb du jour may be, the (one time legendary) hedge fund's opinion probably should count for something, even in the G&M's esteemed opinion. And specifically his take on the whole Tier 1 vs TCE debate...
Back in March 2009, John Paulson (when he still was actually making money for his LPs, perhaps because he was rightfully quite bearish on the financial system, and wasn't running the world's smallest mutual fund) and JPM's Chairman of China Equities, Jing Ulrich, sat down and discussed the then-imploding economy, in a Q&A which we are confident is about to get much more airplay over the next several weeks. What is most notable about this discussion, in addition to what a difference two years can make to a person's P&L and outlook on the world, is that it was Paulson himself who chimed in, well in advance of the current debate on TCE vs Tier 1, with his personal thoughts on the issue. We present them below as we preemptively answer the rhetorical question posed above with a resounding yes.
Jing Ulrich: Things seem to be getting worse in the financial services area – how much worse is it going to get? Do you think we now know the true extent of the underlying problems?
John Paulson: The problem with financials is that they are very leveraged and don’t have enough tangible common equity to absorb anticipated losses. Large American and European banks have on average 40:1 leverage, defined as Total Assets / Tangible Common Equity. The Tier 1 capital ratios commonly used by banks present a misleading picture as to the capital adequacy of banks. The Tier 1 ratio includes preferred stock, hybrids and subordinated debt as capital and then risk weights assets, leading to a risk weighted asset number that is much less than the total asset number. This can lead to a situation where banks have high Tier One Ratios but very low tangible common equity ratios (see graph below). As a common shareholder, we only care about tangible common equity.
Hence, while we are confident that McKinsey is more than capable of putting together any analysis goalseeked as per the paying customer's demands (because at the end of the day, consultants and rating agencies are the same: they both tell their clients what they want to hear, and somehow this is only now being discovered for S&P and Moody's), we will go with the facts, as per what the world's (once upon a time) most vaunted investor had to say.
So while we relegate this simplistic debate over whether TCE or Tier 1 is more appropriate (best to just ask Dick Fuld) to the compost heap of legacy media click-thru monetization attempts, we leave our readers with the following far more fascinating interview with John Paulson, which provides some much overdue flashbacks to why he was, at one time, one of the world's most respected asset managers. Something tells us the topics discussed in it will become yet again quite salient in the immediate future.
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And let us not forget Olympia and York.
Thanks for the reminder. Those stodgy Canadian banks have never been caught in the euphoria of their own making. /sarc
BMO bought AIG's life unit in 2008. Now thats risk adverse, buying shit off of AIG
glad to see that being stodgy and hide bound and stuck in the RE rut can make them as prone to error as the others. I have no hidden agenda in their favour. There are many ways to the down path. Being risk aversive is a relative notion about the perception of what constitutes "risk".
Hey Tyler
What was it M. Ghandi said?
First they ignore you, then..........
Paulson probably should have asked Ulrich what he thought of Sino-Forest...
A few penguins at BNN regularly take credit for stuff on ZH. Kim this means you.
FWIW, Zerohedge made the Business News Network up here...
http://www.bnn.ca/Home.aspx
Look for this video yesterday
Canada's Banks: Next Dominos to fall? [08-19-11 2:20 PM]
I watched it, but wasn't too impressed by the response from the guy from Duke University.
Snowy
Perhaps our esteemed Globe and Mail should pay some attention to the big 5 Canadian banks OTC off-balance sheet derivative exposure (over CAD 13t during Q3 2009!) - then publish up-to-date findings. But... that might ruffle our shy, retiring, polite demeanor a bit much, eh?
Surfeit.
HAHAHA i just said that, great minds, .....we should be scared shitless of 13 trillion in those things, they should be legislated out of existence,
Those dour old Scots who actually once did run responsible banks, are long gone, and likely glad of it looking at this breakfast.
Canadian Banks are going to get fcuked because anglo-saxons are the best in the world at fckuing up high-level financial systems
Awww, did mean Tyler stomp the Canadian banks' feelins with muddy army boots, making the thenthitive cheerleading parrots with the Globe and Mail cry?
Pass the wound salt, please...
When the first attack is ad hominem followed by one using gamed numbers you know you have drawn blood.
"When a true genius appears....all the dunces are in a confederacy against him."
Hey Boyd, where's your pointy cap?
The best that can be said about the mainstream media is that it's kind of funny, although unintentionally. It's hard not to bust out laughing at some of the establishment propaganda. The sad thing is how many people believe every word of it without question.
Thank God for 'oddballs' like ZH.
Boyd Erman responds to Zero Hedge's latest:
now, you're 0-for-2!
as a 50+-week "registered" zH, there was a 34-week hiatus after your first 3 string-engagements. you have posted on 12 strings, 4 today!
TROLL TROLL TROLL
ALERT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Slewie, the problem is ZH is blocked at Buckner but thanks for caring (and counting).
You seem wise beyond your years, perhaps you have a blog where I and perhaps others could become fully 'submersed' in your thinking.
1) this "buckner"? Buckner International, making life better for orphans, vulnerable children and families listen, asswipe, if you're interested in communicating, here, do not expect others to do the heavy lifting as the other trolls doo-d00, you little twit-twat
2) whatever it is, why tf did they let you out, 2-3 weeks ago? huh?
3) i am anon-y-mouse, and altho i do blog elsewhere at times (poor bastards) i have abt 4,000 entries here on zH in a bit over (?) half the time you have been "here" and if you google my handle, you will see that they have covered my posts since Day 1, for some reason
3.5) kinda hard to reckon why you wouldn't research my ideas here, imo. why tf is "checking me out" away from zH coming up at this point? huh?
4) how old do you think i am? i have posted a ton of biographical info here, including my age, many times, and some of the things i have done. so far
5) as you see, flattery is not very becoming to ignorant asswipes where slewie is concerned
thank you for playing, and please go away now or at least stop tying to be "active" here until you finish getting yer head outa yer ass and yer eyes and ears become more accustomed to zH. thanks!
you're an idiot
i know!
you are an asswipe shitforbrained troll; once again, thank you for playing and now, for being brief and more nicely flattering, too!
Of course, SDR's. George Soros pet project. I think George was asking 1/2 % to get the deal off the ground.
And if you allow for the currencies to exist, more opportunity for the bankers to gun down/up the markets.
Debt is CASH NOT YET EARNED. Much of the global western world is in this upside down condition i.e. loads of debt and not enough cash. Will it surprise anyone that as this debt unwinds, CASH will be king? It is only AFTER the defaults and frozen banking system, every nation will have to decide whether or not to destroy their currencies by printing new cash to paper over bad debt. If they print massively, hyperinflation will result, otherwise deflation will rule. Thus far we have only had a proliferation of DEBT or IOU's. It is only when this debt is monetized, that the potential for further currency destruction increases.
Arrogance killed Dick Fuld at lehman, plus those good looks and the prehensile forehead, but, the overriding characteristic was just plain fucking narcissistic arrogance.
I think this succinctly describes Canadas fatcat banks, an arrogant oligopoly, 5 vampire squids at Ottawas neck, headed up by this slippery l Goldman Sachs guy Art Carney at BoC..
Art, get ther fuck out of my country while the going is good. Get the fuck out of here with your vampire squid morals and get the fuck out of my Central Bank, and go back and bloodsuck with your Golden Sacks buddies.Go home.
It's not Art Carney. It's Mark Carney. Art Carney was on the Honeymooners - Ed Norton - Ralph and Alice's neighbour, LMAO. Come to think of it - I think it is Art Carney. Just took his hat off. Never mind.
Disobey.
hahaha, thank you, my sense of humor can be abstruse, Art was kinda funny, but this guy, well, not so much
Tyler,
Go after those 14 million in derivatives, and the wisdom of having ten times canadas Gnp at risk in five financial institutions.
@vamoose
err... that would be 14,000 million, eh?
h/t www.greatponzi.com (but info is a bit 'dated')
Oops, i drop my g' s and sometimes my t 's. Hey, at least its not a quadrillion!!! No problem.
Hahahaha! Love it. Absolutely love it. This article, this website, gives me hope for the future. Thank you TD. Let freedom ring!
Soap-on-a-rope (attached picture /relevant)
http://www.allposters.com/IMAGES/153/FightClubGiant.jpg
Or, in other words, Sunday OP-ed cold ice bath for the Globe & Mail, coupled with the last third of a rather violent assault on JP this week [HP included] which would drive any lesser man [or one using/losing his own money] to drink. Although reading the comments section of the G&M was duly depressing, you can imagine the online editor's amazement when a finance article racks up over 500 responses: "Who is ZeroHedge, and why is it so great for our ad revenues?" .
Odds of 6-1 that the G&M attempts a MSNBC style aping of fight club, and fucks it up royally.
I'm a canuck and I'm not worried. We've cornered the World Markets in maple syrup and Presidential Buses.
Yup, and the 'High 5' are waiting at the trough for our man with the dead-eye stare of a dairy cow in a blue cardigan, via 'Pinnochio' Flaherty, to shovel another $75? 150? 'stabilization' billion into their grubby paws. Unwitting Canadians taxpayers will need to bail out the CMHC for generations, after their $30b(?) backstop is exhausted - to cover losses on 'guaranteed' real estate bets made from sea to tarnished sea.
Right on, for Ontario, think Buffalo, on second thought dont, close your eyes and keep driving.
Probable sequence: 1) US consumers stop buying 2) China tanks 3) Canadian real estate and energy sectors tank 4) Canadian banks tank 5) Canadian QE and depression begins
It's quite funny that proponents of the system, never see the other shoe dropping. Even when they see it dropping, they still can't believe it.
Because Wall Street is all about how many of the herd believe the currently accepted sophistry.
TD comes along and smacks them up the side of the head with what they have so far overlooked, Canada, and suddenly all their work goes down the drain as it is rendered useless given there is at least another flock of black swans flying in they hadn't accounted for in their forecasts, estimations, models, etc.
Of course when you don't like the message, do the gratuitous, attack the messenger. Which they did.
Then use more of that long held sophistry to cling to and try to reinforce the now debunked sophistry, this time being tier 1 in favor of tangible common equity.
Oddball? Yeah because saying it's odd that a site that digs past the bullshit is truly odd is a knock on ZH? Guess in a roundabout way they actually pointed to their own (and the industry's) idiocy, and said ZH was special.
Nobody is perfect, but if special being they are right as often as such mainstream sophistry fucktards are wrong is special, then different and oddball they are.
Besides, being geeky, or oddball, is cool these days. So it's not exactly like anyone should fear such a word anyways, even if it was true, which it isn't, in the implied connotation. Of course the unimplied connotation is spot on, to the detriment of ZH's competitors.
Glass-Steagall
Brilliantly phrase, jmc8888, brilliantly phrased!
"...Large American and European banks have on average 40:1 leverage..."
Jeepers, are these guys dreaming --- maybe such ratios might exist if all those off-balance sheet items had truly been put back on their balance sheets, as recent changes in regs are supposed to have dictated, but funny how they still manage to get around those, huh?
Try 100:1, and 1,000:1, hedge fundster doods!
Articles for the day:
http://www.businessinsider.com/moodys-analyst-conflicts-corruption-and-greed-2011-8
http://thinkprogress.org/politics/2011/08/18/298485/exclusive-goldman-sachs-vp-changed-his-name-now-advances-goldman-lobbying-interests-as-a-top-staffer-to-darrell-issa/
Peak
Sounds about right to me, who is going to buy Magna's dashboards. maybe Frank will. Do a deal.
Meanwhile the Canadian MSM is goading the populace to buy the already hyper-bubbled real estate; The reason, to take advantage of low interest rates due to global economic concerns.
The people have been misled to believe that they are insulated from the coming collapse by their super strong commodity based economy and super wise banks.
It's all contained. Bitchez.
Tell the asshats at the bloated, stodgy Globe and Mail I read the piece on CDN banks, bought Horizons Financial Bear ETF (HFD.CN) product at $8 and sold it Friday for $9...
thanks ZH+TD
Goldman Sachs to Open New Canadian Stock Exchange. Boyd Erman... Globe and Mail Thursday. Goodness me.
I mean, hahahahahaha, could you fucking make it up? Art Carney couldn't make that up.
Look people , lets just get on with it,
The Tenth Mountain Division is encamped in Fort Drum, northern New York State, twenty miles from Gananoque. And oriented north as well. They could take Canada in 15 minutes.
So lets blow reveille and get her done. Quit dicking around.
previous attempts to invade Canada (including one led by Benedict Arnold among others), during our Revolution, and again in War of 1812, didn't turn out well - something about the locals not appreciating the invitations. But sending them a GS alumnus to run their central bank -- kind of like WW1 Germany sending Lenin to imperial Russia, or maybe it's just that U.S. TBTFs are the counterparties to the soon to be Canadian TBTFs (remember AIG?) and want assurances about when the northern lights will be turned off.
We badly need to get that Golden Sacks bloodsucking squid fuckhead the jesus out of the bank of canada and hoist him out of this country, christ we are stupid to have permitted that.
It's simple, his fund became TBTM = Too bit to manage. Given its size, it's much harder to turn around on dime and change strategy, something JP is used to. The fund size also limits the investment universe making some of the investments less liquid. Volume has dropped and he got 'shrewed.'
The Globe/Mail
Why should I care? I don't.
They're obsolete, liberal, progressive, corrupt tools that wouldn't know investigative, honest journalism if it hit in the head.
The Globe & Flat
Precisely. For growing numbers who are able to think critically... they're simply irrelevant.
I'm part of the (large) Canadian group of loyal followers here who follow and support the site daily.
TDs post was excellent, G&Ms responses predictably reactive, ill informed, sophomoric.
I was surprised at the timing of the post given Rome seems to be burning and the domino we represent not so significant, but it made me think twice re possible Black Swan / butterfly etc.
Comments here seem to reflect the truth; we're as insecure as the next, have no special sauce, and given the chance would mess things up in our own little-brother way.
Final thought, the harsh and voluminous comments G&M received made my day.
Final-Final thought.... Air Force saying.... "If you're taking heavy flack, you're definitely over the target"
Well said.
Good comments!
PM Harper has something to think about over the weekend.
If the word 'think' even applies to such an unusual lifeform.
I channel Obamas' thoughts while giving a speech. With ZH on the right teleprompter and G&M on the left, I try to calm everyone's nerves regarding the financial state of the world, I think to myself.............................
Where's my sand wedge ?
The article did seem to shake some (me) out of their sense of complacency concerning the impact this clusterfuck will have in the Northiest of North America. The BofC has been issuing warnings to Canadians to be mindful of how much debt we incur based on a false sense of security provided by the low interest environment. Trying to save us from ourselves.
It's like we've been living in a dark room, going about our days happily, feeling safe and secure and yes .... a little smug. Then some heartless, anonymous, smartass flips the switch to turn on the lights in the room and we see, clearly, for the first time, the filth and rot we've been living in. A few will say "Yeah, I thought something smelled funny."
I guess we should thank you for the enlightenment and heed the warning. Let's hope we all have a little more time than we think.
Disobey
This - real life - "drop anchor while underway" analogy works for me too: http://www.huffingtonpost.com/2011/08/20/cruise-passenger-drops-anchor_n...
Just the act - not the curcumstances (drunk) of the allged provocatuer.
Pete
Nobody in possession of their senses would invite a predatory Goldman Sachs alumnus to run their Central Bank. Its russian roulette with six bullets, ask the mayor of narvik, Narvik? yes narvik, their bankster probably took ski lessons, ask greece, ask ask ask ask, pick a fucking country on this godforsaken planet, and there Mr Golden Sacks will be, slick, smiling, and debating carotid arteries. Hmmm, left or right, or maybe both, im thirsty.
Everyone, Shhh!!!
There she is, the Winged Unicorned Moose!
Ahhhh!
Appears the leaders of Globe & Mail went to the same business school as the clown from the Illinois pension fund... uh - what's his name? Urbanek, yea thats it.
Illinois' Pension Fund Death Spiral Revisited: "10 Years Of Money Left"Submitted by Tyler Durden on 09/20/2010 11:19 -0400
Wakeup time for Canada. Good job Tyler waking up Canadians to the state of the big five banks. But it's worst than that. Canada is the only G7 country to have no gold backing for its currency!! I want to know where all the gold went and who is the moron responsible for this. Pitch fork time!!
http://investmentwatchblog.com/canada-has-sold-its-entire-holding-of-102...
HH:
Long essay... a bit dated... but well worth the read.
A brief history of where Canada's gold went, who did it, and why.
Canada’s gold cupboard is bare…not a 400 oz. good delivery bar in sight.
http://www.lemetropolecafe.com/Pfv1.cfm?pfvID=2612&SearchParam=Shamrock+Summit
ZH getting some free press LIKE A BOSS!
i am embarassed the g&m tried to tango with zh. must have been some bitter sino-forest holders who read it here first.
Rofl I haven't enjoyed seeing a smack down of Cdn media in a looong time. Smug supercilious bastards think merely being the media gives them believability never mind accuracy of what they publish. Ha! Canadian banks were as exposed to that toxic waste in '08 as anybody never saw the G&M publish that info. Was in fact, Tyler who did? LOL!!!
Beer o'clock now (real beer :neener:)
As a Canadian and long time reader of ZH I would say this is one of the best articles I have read here. I have been saying (to whoever will listen) for some time that canadian banks are not quite what the their PR machines are spinning. More importantly the Canadian economy is a whole lot of smoke and mirrors with extreme household debt, onerous taxation, a monstrous real estate bubble, low productivity, a hollowed out and dying manufacturing sector, unsustainable and dirty commodity exports, and most critically a smug attitude that we are "better". Everyone thinks I'm crazy for pointing out the obvious but I feel vindicated to read this and to know I am not the only one who sees it.
Pray for us.
On my grizzled knees sockeye, not everyone thinks youre crazy. yiou nailed it in one paragraph.
disobey
this article is about Canada, why bring up Australia?
We have always be reflections of a siamese twin. Although location and climate maybe different, the social make up, demographics, etc are all pretty much the same.
Tehehe! So true.
Eh! Some folks can't handle the truth eh?
One must also consider the equity that exsists in the outstanding bank mortgage debt. Owner's equity as a percentage of real estate (%) @67.33(Canada) Current Q1 '11
http://www.statcan.gc.ca/daily-quotidien/110620/t110620a2-eng.htm
AND compare it to the other Banks in the list. NO?YES
So housing "values" have shot through the roof but owners equity remains constant. What does that tell you?
Canadian household debt at 150% of income. That is all.
you just opened the "Canadian Pandora's box". These folks will stop at nothing to discredit anyone who they feel have tarnished their brass. They had world hockey tournament in Buffalo, NY last year in which Canadians booed any team playing team USA. They were fighting in the stands, poor tippers at local establishments and provided lots of drunken foolery. When the local Buffalo paper wrote of this in what would have appeared to be the kindest way, Cathal Kelly of the Toronto Star felt implied to respond (or defend) his fellow countrymen. The main point of his whole article was Buffalo was poor and should feel gratious that Canadians, with their "steroidal economy", would come to spend their money there.
I would advise Cathal Kelly to open his eyes at the housing price surge in Canada (yes, in Ontario too!), the construction surge in Canada, the surging personal debt levels and define what is steroidal economics and what is a bubble ... eh?
"It's like we've been living in a dark room, going about our days happily, feeling safe and secure and yes .... a little smug. Then some heartless, anonymous, smartass flips the switch to turn on the lights in the room and we see, clearly, for the first time, the filth and rot we've been living in. A few will say "Yeah, I thought something smelled funny."
LOL! Looks like you've just descried the European situation perfectly! And now with the Swiss Franc going up in the sky a large part of Eastern Europe sees the brown matter hit the fan (to use a ZH expression).
Oh peuchère...
Must See Video:
Must See Video: Michael C. Ruppert calls upon the world's artistic and musical leaders to take part in the global generational revolution taking place right now. He pulls no punches as is apparent in the title, "SAY MY FU**ING NAME" ...http://goo.gl/2vFgp
Pure irony: Why would mainstream media get so agitated if they considered the source of the information basically irrelevant. Scary when such 'respected' media outlets start losing their professional journalistic sovereignty.
No wonder, though, the diverse blogosphere increasingly offers valuable insights that at least let interested readers put some questions marks to what is conveyed to the general public.
Anyway, I guess ZH readers come here to get such prescious pieces of analyses and very much appreciate it. In contrast to mainstream media, ZH neither intends nor would it be capable of creating dubious collective beliefs.
Tyler - You're probably aware of this but just ine case.... It appears there's a graphic which was intended to be at the bottom of your story which is missing. I'm getting a bicycle with moving wheels and the word "Rendering".
Love your website but am sorry to see it get so popular. These are the good old days. All the best!
Then again? / BUG SPRAY/ (works)
When the Canadian real estate crashes (it will), the oil price crashes (it will), natgas crashes (it will), I think the Canadian 'geniuses' will be running out 'weighting' ideas. Weighted shit is still a shit.
How about these credit cards, and home equity lines of credit - eh? How about the loans to the oils sands companies - eh?
I consulted for the Canadian banks throughout 90s - fucking morons!
You sir are 100% correct. When China goes things will get really ugly really fast. Think we will make it one more year?
Did anyone notice BNN's chosen commentator on TD's piece of 'yellow journalism', was from the FUQU??? School of Biz @ Duke.
amazing
A couple of months ago i talked with a business reporter from the globe. I suggested that they should stop reporting old regurgitated shit, cut and pasted from manipulated news from other cut and pasters. I suggested spending a bit of time on zerohedge for real news. Needless to she was a tad upset. So i'm thinking they did spend some time here at ZH and realised i was right when i said the real news starts here. Should rename the paper to the Globe and Fail. TD, these guys are just jealous.
Globe 'n Fail -- LOL! +1
Canada is a stupid place to live. It's way too cold.
In the 12 months I have read ZH daily I have acquired a greater financial awareness by at least one order of magnitude. My ability to decipher TD's view-point and tweese sarcasm is becoming almost fluent. I am particularly grateful for to those whi comment on the threads that speak to the issues and color the thrust of the issue with meaningful discourse, as this allows even greater understanding of the topic and often explains issues in which I am ill-versed.
The humor is also appreciated in it's more elemental forms. As I become more familiar with the minutiae of the academic discussion, even the tongue-in-cheek can be discerned and enjoyed.
I now read the larger national dailies and see the lies, or perhaps more importantly, the half-truths and the false attributes of market and world financial moverments.
I hope that I am not to late to the awareness to save myself and my family.
Thank you tom the entire ZH community.
If you weren't aware by 2004 and planning since then, you are definitely too late.
Unkind! ... and untrue, unless he is sitting on higly leveraged declining-in-value assets.
John Paulson?
Is he still Alan Greenspan's employer? Along with the Bank for International Settlements?
I must really keep track of where that guy is employed?
"I like turtles." - The Zombie kid
Canadian news and the Globe and Mail. A warm fuzzy regurgitation of all that is lame and innane -how often has the Globe and Mail sought John Nadler's views on gold? All the way since he was calling it a bubble at $600. I guess the canadian content laws apply to analysts, regardless of how ridiculously, absurdly wrong their track records are.
Canuck News'll nicely slip the ad hominem attack between your shoulders, and then tell you they agree to disagree.
Canada's about to see that its insipid poco stupidity is unsustainable.
Here is one more canadian who's bashing ZH for the anonymity and for not understanding that the Candian government can cover all the losses, through CHMC, in case of a real estate downturn, while in the same time he's keep saying for 3 years already that the Canadian real estate bust is around the corner and will wipe out 30% to 50% of the current prices (I'm wondering how's the government going to cover all of that?): http://www.greaterfool.ca/2011/08/19/yikes-2
He's name is Garth Turner.
Canadian residential mortgage arrears (over 90 days) are a fraction of one percent of outstanding mortgages, 1/10th of what U.S. levels have been since 2007. The data is available at the CBA website. Given the average equity behind those mortgeges, I can't see CMHC as having signicant potential liability.
nope, and who could blame ya, ken!
is canada the US? as long as canada keeps having that nice, growing GDP, and property values keep going up, b/c, after all, they aren't making any more land, are they?, and the banks don't get caught up in an innocent little paradigm shift of valuation, too, ...
...no problemo, amigo!
you are saying that the banks are solvent, right? well, we'll all sleep better tonight, i'm sure, knowing that, won't we, tho?
oh, wait! you didn't say that abt the banks, did you? you said the CMHC was solid as the rock 0'gibralter, right? not that the banks are actually solvent...
I would suggest that Goldman, JP Morgan, Geithner and Bernanke decided to "take out" Lehman by deciding amongst themelves that they wanted to eliminate competition. Lehman was not offered a bailout and the other TBTF banks were. At the time, it did not look as if Lehman was in any worse shape than the others who were required to mark to market (oh right, after deciding to toast Lehman, mark to market was eliminated which made TCE irrelevant).
Banks create money out of thin air. They create money out of thin air and then lend it to each other. They create money out of thin air and lend it to each other to buy each others' equity, directly or indirectly. To claim that the banks did not have the tools to save each other without bailouts is ludicrus once mark to market it abandoned. At the time it looked like a scam and today it looks like a scam.
All the talk of TCE and tier 1 capital is B/S as long as banks have the infinite ability to create fiat and debt and the infinite ability to turn fiat/debt into equity. It is more a question of who is inside the club and who is outside the club.
"The Club" and who's not in it, here: http://www.youtube.com/watch?v=acLW1vFO-2Q&feature=channel_video_title
Hey Tyler I am Canadian and I applaud your genius. I say to you a thousand thank you's and I encourage you to keep writing about this very subject that I have been screaming at the right Honorable (a complete hypocritical oxymoron where politicians are concerned) James Flaherty (Minister of Finance and the Honorable Mark Carney recently pegged as the worlds only honest banker by the Readers Digest. What little hope Canadians had of weathering this financial storm in good fashion was destroyed by these so called leaders back in 2007 when they dropped the BOC interest rate to near zero in the first leg of the credit contraction simply reblowing the bubble here in Canada and adding 55 billion in stimulus which ballooned to 125 billion as governments are so very good at sticking to budgets. All those years of sacrifice and cutting back to balance books were wiped out in a foray into massive debt and asset price appreciation by Canadians who now find themselves just as indebted (and perhaps more so) than their US counter parts were. We know that the CMHC (Canada's government backed mortgage insurer) is more leveraged than Fanny Mae or Freddy Mack were prior to the 2007 market implosion that bankrupted both entitities. All that has sustained Canada's so called good times is Credit expansion. Nothing more. Much like the US the powers that be want a soft and gradual decrease in asset price. What they will get is the same thing the US got which is a horendous crash wiping out billions of wealth that never existed in the first place and job loss in the industry that supported it all. Housing. Shorting Canada's banks is a great idea and one that will pay off handsomly for those wise enough to follow Zero hedges advice. Very few seem to think Canada is the last house of cards and that it is stable. We'll see about that in the next leg down. As a footnote we don't have the worlds recerve currency to print our way out of trouble either so this should be fun to watch. Sad and predictable, but fun. If these guys knew anything about addictions (to cheap, easy, cash) they would be quaking in their loafers right now.
Show a little respect. Canada has been ahead of the curve in every major scam of the C20th, and there's no reason to believe than it can't trade upon it's reputation in this one - for every Enron they had a Bri-X to light the way...heck, Camp X in Oshawa trained no less than 5 CIA directors in dirtydeediness...Banks? Oligarchies? Lawless plunder? (S)cayman islands bitchez...now button up or Baron Barracuda gonna do his "Lord Black" imitation on yur pension fund!
Three things come to mind when reading this.
"They say that the simplest analysis is always the most powerful one." Obviously untrue. The analysis that works is the most powerful one. Over the years analysts have evolved more and more sophisticated tools because they work. If you could beat the markets with 1 or 2 simple ratios no one would bother studying further.
Second, this statistical tidbit tells us one thing. How much can the bank lose before it goes broke?
It is incredible that some seem to think this means they are going broke now and ought to be sold short. Maybe, maybe not. This one bit of information tells us nothing about that.
What typically happens when banks get in a jam? Someone bails them out, that's what happens. Typically a government agency.
So this bit of data means practically nothing in trading terms.
Third, there is one thing it does tell us. By comparison, the Canadian banks are weaker in this regard than they were in 2009. This disturbs me. If Canadian banks really are as conservative and well managed as we all thought then they should have taken a warning in 2009 and strengthened their position.
So, I am not that concerned about the health of Canadian banks right now but I no longer regard them as quite so rock solid as I used to. To put it another way, I now feel they will bear watching where before I had more confidence.
Not good news but nothing to go nuts over.
Sorry but Tyler ... you know nothing of the Canadian banks. The next shoe to drop will not be Canada's banks... they are some of the most regulated financial firms in the world.
Move on here ... there are bigger issues going on that are about to take down global economies ... Canada is a place I would rather have my money.
Sorry but Tyler ... you know nothing of the Canadian banks. The next shoe to drop will not be Canada's banks... they are some of the most regulated financial firms in the world.
Move on here ... there are bigger issues going on that are about to take down global economies ... Canada is a place I would rather have my money.
Maybe Q1 2012, maybe sooner a 70% discount, if, as it presently appears, a crash looms.
Dome Petroleums Jack Gallagher
best damn geologist this cowtown ever knew, and threw
the best bashes beyond belief,
lucky enough to have gone to
a few, my partner worked for that company. I've lived through
the collapse of alberta in the
80's and lost everything with
most others. We rebuilt, and
so did the province. What are you afraid of? so what if the
houses collapse 70-80pc, work becomes almost impossible to find, prices
of almost everything will plummet as they did in the
80,s. Houses were bought
slowly for 65K-100 in prime areas and we learned alot
of very valuable lessons most
of which has paid off handsomely. From the collapsed economy came
creativity, new work vigour
the Olympics and alot of
character.
I'm not afraid of economic
collapse, I'm more afraid the
generation before us does not
have the ware-with-all to make
it through the scary times we
could all be headed for. I love this country and the cool catz that live here. The people here are incredibly
talented and a joy to know.
Bank in the co-op banking system here as we do if your
so worried. B.t.w, many
of us have been screaming
for 5 years about the big 5
and the realestate bubble,
not new news.
gah.. that guy from duke makes me sick.
I'd bet my left nutt that he:
A) Doesn't manage his own investments, and has NFI about risk taking outside of a textbook.
B) Has never traded or invested with leverage.
Academic jerks like him caused this problem. 'Leverage isnt dangerous when you invest in high quality assets' ... ya.. whatever.