Comments on: Return to Aggbank http://alephblog.com/2009/02/06/return-to-aggbank/ Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control Fri, 25 May 2012 21:31:47 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: barryhttp://alephblog.com/2009/02/06/return-to-aggbank/comment-page-1/#comment-20905 barry Mon, 09 Feb 2009 04:27:43 +0000 http://alephblog.com/?p=1429#comment-20905 David, I enjoy your website and apologize if I am being argumentative. Bank X sells toxic wast to Agg Bank for $70. Bank X get $30 in Agg Bank shares. Bank X can spend the $70 on bonuses, commodes, what have you. Agg Bank sells the same toxic waste for $50. Bank X loses $20 in Agg Bank shares (assuming they stil have them and haven't sold them). Taxpayers are still out $20 if toxic waste declines in price. Sounds like a put option to me. David,

I enjoy your website and apologize if I am being argumentative.

Bank X sells toxic wast to Agg Bank for $70. Bank X get $30 in Agg Bank shares. Bank X can spend the $70 on bonuses, commodes, what have you.

Agg Bank sells the same toxic waste for $50. Bank X loses $20 in Agg Bank shares (assuming they stil have them and haven’t sold them).

Taxpayers are still out $20 if toxic waste declines in price. Sounds like a put option to me.

]]> By: Erich Riesenberghttp://alephblog.com/2009/02/06/return-to-aggbank/comment-page-1/#comment-20904 Erich Riesenberg Mon, 09 Feb 2009 04:07:49 +0000 http://alephblog.com/?p=1429#comment-20904 Have the naughty banks issue super senior debt instead of equity and it just might protect taxpayers! Though this may not appeal to the bankrupt banks, which is okay. Have the naughty banks issue super senior debt instead of equity and it just might protect taxpayers! Though this may not appeal to the bankrupt banks, which is okay.

]]> By: Jeffhttp://alephblog.com/2009/02/06/return-to-aggbank/comment-page-1/#comment-20903 Jeff Mon, 09 Feb 2009 02:59:34 +0000 http://alephblog.com/?p=1429#comment-20903 The latest news suggests renewed interest in price discovery for troubled assets, something we have both endorsed, I think. The exact plan is still not known, of course, but I hope they are considering proposals like yours. We shall see how the assets play out for value, a point where we seem to disagree. If we do nothing, the answer is pretty clear... The latest news suggests renewed interest in price discovery for troubled assets, something we have both endorsed, I think. The exact plan is still not known, of course, but I hope they are considering proposals like yours.

We shall see how the assets play out for value, a point where we seem to disagree. If we do nothing, the answer is pretty clear…

]]> By: John Shttp://alephblog.com/2009/02/06/return-to-aggbank/comment-page-1/#comment-20902 John S Sun, 08 Feb 2009 15:31:35 +0000 http://alephblog.com/?p=1429#comment-20902 David, I was wondering what your take was on Credit-Suisse's argument that the famous Debt-To_GDP chart is "analytically meaningless" (see link below). Although CS raises valid points, I find CS's arguments self-serving and misleading. http://paul.kedrosky.com/archives/2009/02/06/the_chart_that.html David, I was wondering what your take was on Credit-Suisse’s argument that the famous Debt-To_GDP chart is “analytically meaningless” (see link below). Although CS raises valid points, I find CS’s arguments self-serving and misleading.

http://paul.kedrosky.com/archives/2009/02/06/the_chart_that.html

]]> By: David Merkelhttp://alephblog.com/2009/02/06/return-to-aggbank/comment-page-1/#comment-20900 David Merkel Sun, 08 Feb 2009 05:10:15 +0000 http://alephblog.com/?p=1429#comment-20900 Barry, read my proposal. It is not a put option; if anything, the weakness is that banks get their equity diluted if the assets they sell prove to be worth less than they sold them for. Pretty neat, huh? Barry, read my proposal. It is not a put option; if anything, the weakness is that banks get their equity diluted if the assets they sell prove to be worth less than they sold them for. Pretty neat, huh?

]]> By: barryhttp://alephblog.com/2009/02/06/return-to-aggbank/comment-page-1/#comment-20899 barry Sat, 07 Feb 2009 22:32:38 +0000 http://alephblog.com/?p=1429#comment-20899 Bottom line is that this is another 'put option' sold below fair value with enormous risk to the taxpayer to accomdate the arrogrant,the imprudent, the venal and the stupid. The board of B o f A just approved the performance of Ken Lewis who, by an rational measure, was conned into buying an insolvent broker/delaer for the equivalent of $20 a share. If the board is happy with his performance, why should the taxpayers be troubled about the value of their shares? More to the point, unless securitzation is re-started, we will have more bailouts in the future. Bottom line is that this is another ‘put option’ sold below fair value with enormous risk to the taxpayer to accomdate the arrogrant,the imprudent, the venal and the stupid.

The board of B o f A just approved the performance of Ken Lewis who, by an rational measure, was conned into buying an insolvent broker/delaer for the equivalent of $20 a share.

If the board is happy with his performance, why should the taxpayers be troubled about the value of their shares?

More to the point, unless securitzation is re-started, we will have more bailouts in the future.

]]> By: Miguel Barbosahttp://alephblog.com/2009/02/06/return-to-aggbank/comment-page-1/#comment-20888 Miguel Barbosa Fri, 06 Feb 2009 21:44:49 +0000 http://alephblog.com/?p=1429#comment-20888 Hi, Great post.I agree with most of your positions on the bailout. Also, thank you for constantly delivering great content . I enjoy linking to your blog in my nightly investment links. Have a great weekend & take care. Best Regards, Miguel Barbosa Founder of SimoleonSense.com Hi,

Great post.I agree with most of your positions on the bailout. Also, thank you for constantly delivering great content . I enjoy linking to your blog in my nightly investment links. Have a great weekend & take care.

Best Regards,

Miguel Barbosa
Founder of SimoleonSense.com

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