Risk Management

Tyler Durden's picture

Chris Whalen Welcomes Our New Tyrannical Overlords, Prepares For The Taxpayer Funded Mortgage Insurer Bailout





Chris Whalen's latest Institutional Risk Analytics is a must read letter as it highlights yet another aspect of foreclosure fraud, one which finds various analogues in the way the MBS originating banks took advantage of AIG, knowing full well it was stuffed to the gills with worthless pieces of paper and taking out enough insurance on it to require a federal bailout when mark to fraud failed and mark to market finally worked for a very short period of time. Now, it seems, it is the mortgage insurers turn: "So today the MIs are still operating, though they are not providing insurance because they can't. Observers in the operational trenches tell The IRA that virtually no MI claims are being paid - even if the claim is legitimate. The MIs are very undercapitalized and still bleeding heavily. But they get continued business because the GSEs demand MI on high LTV loans. Lenders are forced to use the MIs and consumers are made to pay the premium. Thus the auditors of the GSE continue to respect the cover from the MIs, even though the entire industry is arguably insolvent." The question is how many CDS have Goldman et al purchased in bulk in anticipation of the imminent wholesale MI Event of Default, which will force Geithner to once again use the Mutual Assured Destruction wildcard and force taxpayers to bail out those holding MI insurance, especially if the originators and servicers end up being one and the same...

 


Tyler Durden's picture

Chris Martenson Interviews Mike Shedlock, Discusses Deflation, The Fed, Gold And Other Subjects





The inaugural Chris Martenson "Straight Talk" contributor is Mike Shedlock, author of Mish's Global Economic Trend Analysis, one of the most visited and respected economic blogs on the Web. Mish is an outspoken deflationist and outlines his rationale for being so in his answers to our questions. He is also a registered investment advisor representative for SitkaPacific Capital Management.

 


Reggie Middleton's picture

Goldman is Ratcheting Up VIE Risk!!! More So Than the Top of the Bubble! Many Thought the Enronesque Days of “Hide the Sausage” Accounting Games Were Over





“Goldman, unlike the rest of the street and practically the rest of the I banking world, is ratcheting up VIE risk!!! Is BoomBustBlog the only one inquiring as to WHY??? We have a few reasons in mind… And to think, many thought the Enronesque days of “hide the sausage” games have come to an end…”

 


Reggie Middleton's picture

Wall Street Responds to My Roadmap of the Derivative Meltdown





Wall Street responds to my missive on the potential of concentrated derivatives risk blowing up the banking system. Traders, salesman and financial engineers chimed in, and made some cogent points. Of course, I must rebut. It is the actual rebuttals that are probably more stinging than the original article - particularly the one concerning hedge funds. Please read on and feel free to chime in. Don't forget to bring the "Fiery Sword of Truth!"

 


Tyler Durden's picture

Guest Post: Here’s the Proof Day Trading is Dead





Lately I’ve heard a lot of heated conversation about the day trading industry. There’s an intriguing debate with opinions ranging from “it’s a great way to make a living” to “it never worked in the first place” to “we’re now in the midst of the great shakeout.” But the bottom line is: day trading is DEAD. Two-thirds of the rhetoric focuses on the idea that day trading is a firmly entrenched part of markets with a somewhat stable future ahead. I disagree. More realistically, a much larger change is taking place with market structure. Like the extinction of human beings roaming the floor of the NYSE, this evolution presents a bleak picture for the day trading community moving forward.

 


Tyler Durden's picture

Despite Raising VaR To Record, Morgan Stanley Revenues Are A Bloodbath





A few months ago, before it became a staple MSM topic, we speculated that the dereliction of capital markets by both equity and credit traders would mean a complete collapse in Wall Street sales and trading (aka hedge fund proxy) revenues, now that investment banks rarely if ever perform traditional IB activities like advisory and underwriting work. As the latest battery of Q3 bank earnings has confirmed, we were correct, however nowhere more so than as pertain to Morgan Stanley: the bank's Q3 revenues were an abysmal disaster, with total sales and trading revenue collapsing from $3.7 billion in Q2 (and $4.1 billion in Q1, $3.2 billion in Q3 2009) to just $1.8 billion. The drop was especially pronounced in Fixed Income S&T, which plunged from $2.3 billion to $846 million. Yet what is scary is that this plunge did not occur in an environment of moderating risk management: oh no. In fact, the firm's aggregate average trading and non-trading VaR in Q3 2010 was the highest on record, coming at $189 million! Meaning the bank had to stretch and put massive amount of risk on the books to eek out even these pathetic numbers. It also means that one day, as MS and others once again start raising their VaR in pursuit of that elusive last HFT dollar, another market crash will result in billions in trading desk losses in a span of minutes.

 


Tyler Durden's picture

Atlanta's Dennis Lockhart Joins Doves Begging For QE2





On the wires:

  • Fed's Lockhart says leaning in favour of more monetary stimulus, decision not clear cut

Somehow this will lead to even more QE "pricing in", even though by now it is "priced in" about 150%. Of course, this is no surprise as Lockhart has long been in the opposing camp of an ever increasing group of hawkish Fed presidents such as Hoenig, Bullard, Kocherlakota and to some extent, Fisher. That only one of them is a voting member is irrelevant. After all at the end of the day, only one madman has the launch codes.

 


Leo Kolivakis's picture

Mercer Quits US Public DB Investment Consulting





Looks like Mercer's little Alaska problem had a big impact on its US DB investment consulting business...

 


Reggie Middleton's picture

The Research In Motion Forensic Valuation and Analysis is Released to the Public





Now that Research in Motion has reached our valuation target and offered the opportunity for material gain for our subscribers, I have decided to released the full 45 page professional Forensic Valuation report to the public. It is quite extensive, and has been quite accurate to date…

 


Tyler Durden's picture

Guest Post: Consumer Deleveraging = Commercial Real Estate Collapse





There is a Part 2 to the story of Consumer Deleveraging that will play out over the next decade. Consumers will deleverage because they must. They have no choice. Boomers have come to the shocking realization that you can’t get wealthy or retire by borrowing and spending. As consumers buy $500 billion less stuff per year, retailers across the land will suffer. To give some perspective on our consumer society, here are a few facts...

 


ilene's picture

Scientists, Secrets and Wall Street's Lost $4 Trillion





What Wall Street bears no relationship to any longer is its primary mission in the U.S. economy: to be a fair and efficient allocator of capital to worthy businesses and innovators to propel job growth while also providing a medium for allowing investors to buy or sell stocks and bonds of those businesses at a fair price.

 


Leo Kolivakis's picture

Caisse Getting Ready for the Next Big Move?





The Caisse de dépôt et placement du Québec, Canada’s biggest pension fund manager, is going overweight commodities and energy...

 


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