Category: Structured Products and Derivatives

The Education of a Mortgage Bond Manager, Part VIII

The Education of a Mortgage Bond Manager, Part VIII

Posted on by David Merkel

I sat down this evening, thinking that I would finish the series this evening, and realized that I had left out some significant things.? As such, I expect this series to have two more parts after this one.

Traveling to Annapolis

When you are an actuary, and a good one, you have elements of being a jack-of-all-trades.? Knowing the math is not enough, you have to understand the business processes that the math summarizes.? That also requires some knowledge of the law.? From early in my career, I realized that the insurance company lawyers would not help me with reserving, investing, contract provisions, and other legal questions, so I had to go to the law library and answer the questions myself.? Not fun, but I ended up learning a lot.

While working on another project one day, I made a copy of the Maryland life insurance investment code.? I took it back with me, saying to myself: “It’s only eight pages, written in 1955.? Don’t you think you should know the details of what your local regulator allows?”

Dangerous question, and it led to the following: under a strict interpretation of the law, we were in violation of the law.? Here is the key question: are asset-backed securities bonds?? They trade like bonds, but by the old Maryland statute, they are not bonds — they don’t fit any categories of permitted investments, and as such could only be held if we had sufficient surplus, which we did not, and probably most life insurers in Maryland did not.

Thus the problem.? I discussed it with my boss, and we had a conference call with the legal department, who confirmed my view of things.? A few days later we had a chat with the Maryland regulators.? That was a tough call, because at minimum we wanted them to accept asset-backed securities as bonds, which the the law did not admit.? We suggested, “Why don’t we adopt the NAIC [National Association of Insurance Commissioners] Model Investment law?”? The response was curt, “Oh, you mean the Illinois Investment Law?”

True, Illinois was the only state that adopted it verbatim, but several other major states had adopted >90% of it.? I said, “Tell me what you’d like to take out of the Model Investment Law.”? The main thing the Maryland department wanted was to avoid speculation through derivatives.? So I happily cut that out of my proposed law; I thought that was a good idea.? There were a few other minor things that they wanted, and I trimmed/added those as well.

After a lot of work between the lawyers and me, we sent the proposed bill to the Department of Insurance.? Then the conference call — would they go for it?? As it was they went for it.? They found it reasonable, and it codified what insurers were doing, and provided structure, such that present practices were approved, but bad extensions beyond that were forbidden.

But then we asked, “Are you not opposing us, or are you supporting us?”? They replied, “We are supporting you.? We know we need to modernize, but this statute meets our needs and yours.? Well done.”

(Note: all quotes here are summaries of what was said.? Most of it was not exactly the way I wrote it here.)

So, we hired an expert attorney who was skilled in getting bills through Annapolis.? He told us what we would need to do to get the bill passed.

So, a few weeks later, we were there in Annapolis, before the Assembly Finance Committee.? I can’t remember why, but I was not at the table before the Assembly Committee.? I sat a few feet behind my boss, our internal lawyer and our expert attorney.

The Assembly Finance Committee had a hard time with the bill.? Part of it was that there was no one to oppose the bill.? Opposition sharpens the minds of legislators.? As a result, the Committee remanded the bill to a study session, so that they could better understand the implications of the bill.

A week or so later, we appeared before the Senate Finance Committee, and I was on the panel this time.? Instead of the disorganized questions of the assembly, they asked three “simple” questions:

  • How will this law prevent Procter & Gamble?
  • How will this law prevent Orange County?
  • How will this law prevent Long Term Capital Management?

This was the reverse of the Assembly, because I answered all of the questions, and my partners were silent.? I could not have expected that.

As it was, I explained that P&G could not happen because the statute forbids using derivatives for speculation.? With Orange County, I explained that existing law required cash flow testing, so that we can’t invest in volatile mortgage derivatives or else we will fail our asset-liability management tests.

As for LTCM, I explained that the risk-based capital regulations would never allow us to take on that degree of leverage, and that the forbade speculation through derivatives.

And then, after a mercifully brief session, they let us go.? (Note: I had to sit through a couple sessions where we might be called, but weren’t.? Dull, but I brought work to do.? Also, I learned that Johns Hopkins, my Alma Mater, owns the state of Maryland.? Anything they ask for, they get.)

That left one more hurdle.? So on one early morning we met with the Assembly Finance Committee.? It was just my boss and I, because they were trying to understand what the bill meant.? (Technical subjects are tough for many state legislators.)? We met with them for two hours, and finally we convinced the Chairman of the committee that this was a good and honest deal.? (We both did good work here,? and the absence of the lawyers was a plus.)

That left the final voting, which was unanimous in both chambers.? And then, two months later, the signing ceremony with the governor, dressed like a Mafia Don, with a dark suit, and black shirt with thin white stripes.

So what did I accomplish here?? I reshaped Maryland’s Life insurance investment laws to be among the best in the nation.? I did it while working with many parties that had different goals.? I calmed and instructed many legislators that it was a good bill.? Finally, I set the company that I served on firm legal ground.? What could be better?

The Education of a Mortgage Bond Manager, Part VII

The Education of a Mortgage Bond Manager, Part VII

Posted on by David Merkel

1) One place where being an actuary and being a financial analyst melded well was with Affordable Housing and Historic Tax Credits.? In all of these investments, it made a great difference as to what the Statutory, Tax, and GAAP accounting bases.? When I described my methods of working through the free cash flows, AHIC [The Affordable Housing Investors Council] wanted me to speak to the whole regarding my methods.

I never gave the talk because we were full on tax credits, and I was too busy managing the portfolio of Fidelity & Guaranty Life.?? The moral is: watch free cash flow.

2) Probably the ugliest incident in managing money for Fidelity & Guaranty was when the management of F&G decided to try to buy the structured settlement liabilities of Confederation Life.? Big block, five potential buyers.?? St. Paul had a rule: we don’t outsource asset management.? Sadly, the chief actuary, against our admonitions allowed for reinsurance treaties that outsourced asset management.

During the conference call to legitimate the offer that we would make, several things happened:

a) F&G management accused St. Paul management of being bureaucrats, not businessmen.

b) St. Paul management told F&G management that they were ignoring the rules.

c) I informed both sides that we were all gentlemen here, and that the tone of discussion was not worthy of real businessmen.

d) The CEO of F&G eventually broke off the call, calling the St. Paul folks bureaucrats, rather than businessmen, and saying that they killed a good deal.

Personally, I think he said this to save face with his employees.? Also, the deal was marginal at best.? We would have had to take a lot of risk to make the deal work.? But F&G would not listen to us.

3) I liked buying seasoned bonds, because they were more predictable.? Problem: you could not buy them in size.? Buying bonds in the aftermarket is typically picking at scraps.? Face it — most bond buyer want to hold their bonds for a while.? Aside from the few that sell for a quick profit, most bond investors hold on for a long time.? But I would pick up scraps.? Enough scraps, and you have some decent positions.

If you do find a seasoned bond selling at a reasonable price, buy it in, subject to the advice of your credit analyst.

4) Regarding mortgage bonds, remember that default and prepayment are dual.? Debtors divide up into three groups: a) Very solvent, they will easily pay off their debts, and if there is an opportunity to refinance their debt, they will take it.? b) Solvent. They don’t have a lot of margin, but they can pay their debts if nothing serious goes wrong. c) We did not deserve the loan.? We will fail with high probability in the next year.

Ideally, if you want the best yield out of a bunch of consumer lending assets, you want a lot of the middle group.? Not the highest credit quality, but likely to pay off, and not so likely to prepay.? There is a hierarchy:

  • Best: pay,
  • Next best: prepay,
  • worst: don’t pay.

5) So as I learned about CMBS, I wondered about the interest only strip that many of the deals held — from my own testing, it had the credit properties of a BBB tranche at best, and a Single-B tranche at worst.? Sadly, because they had no principal to pay they were nominally rated AAA, and so the firm I worked for (not my area) crammed them into Stable value plans.? Because I had done the credit stress testing, I knew this, and resisted their use in my own portfolios.

But this is another example where accounting rules have led us afoul.? Nominal principal should be implied to “interest only” obligations.? “Principal only” obligations should have implied interest.

That’s all for now.? I will finish up in the last segment, probably on Monday.

 

The Education of a Mortgage Bond Manager, Part III

The Education of a Mortgage Bond Manager, Part III

Posted on by David Merkel

In this irregular series, you can see that I wrestled with the concept of credit quality.? I built my own models.? I did not trust the rating agencies.

Why did I not trust the rating agencies in 1998-2001?? What great errors had they committed?? They had not created many errors at all… but I knew my job was to uncover value, and take risks where they were warranted.? Ratings will not help you there.

That said, many of the rating agency writeups and presale reports were quite erudite.? As our saying goes,”Ignore the rating, but read the writeup.”? After all, the rating agencies are “inside the wall,” unlike most, and often disclose bits of insider information that are no longer totally insider.? The rating agencies offer valuable information; the problem is that their ratings are less than golden.

In 2000, I remember going to a CMBS Conference where there was a young woman from Principal Financial, who ran their CMBS portfolio.? She said something to the effect of, “Because we know that defaults in CMBS are unlikely, we buy all of the mezzanine and subordinated tranches of most deals.? It’s free money.”? We had a different opinion.? We knew that liquidity had value, so we rarely bought non-AAA bonds.? You could not easily trade bonds that were not AAA.

Once I became the CIO in 2001, I decided that we would look at older deals where? wanted to sell BBB bonds.? I would subject them to my usual standards, and analyze the properties in depth.? I didn’t buy much, but what I did buy was quality.? Though markets were tough, all of them paid off.

An example was when JP Morgan did what they called a “kick-out” deal.? All of the properties that the B-piece cartel had refused to finance were in that deal.? The spreads were very wide, and I bought all of the AA & A-rated tranches.? I did a lot of due diligence, and I knew that the taint of the collateral was more than compensated for from the amount of subordination.

That was one of my lessons — be willing to buy things that are tainted in the eyes of many, so long as you have adequate protections, and a decent yield.

At the Life Insurance Conference

Though I was not a bond manager at the time that I went to a Life Insurance Conference in 2006, there were several themes in play.? Here are two of them.

1) Odd Types of Collateral: there was the sense that new and odd types of asset backed securities [ABS] should be bought with abandon because the past experience has been so great.

I did not buy that idea.? Most ABS requires a steady cash flow stream, and many industries don’t have that.

2) One guy said AAA bonds never default.? I stood up and told him? that AAA bonds that I had bought in franchise loans did default, so it was not true.? That said, losses were not large.

At the conference, I managed to speak to the CEO of Principal Financial, and tell him that he faced considerable credit difficulties in his CMBS book.? He was a big guy, tall and muscular, so he looked at me, average guy that I am, and told me he would consider it.? The look on his face disdained me, but I am used to that.? My appearance has never been my leading attribute.

Manufactured Housing ABS

In 2001, I came up with the idea that the Manufactured Housing ABS market was bifurcated.? Current deals were lousy in their credit metrics, so we stopped buying any current deals.? But older deals from GreenTree were seasoned and would likely deliver value.? Lehman Brothers shared with me their default database, and I built my model, and it told me that deals from 1998 would allow tranches A and above to get their money back.? It also told me that deals from 1997 and prior would allow tranches BBB and above to get their money back.

This proved to be true, but it meant that those that held the securities to maturity had to endure a time when the offered prices for the securities were far less than par, though all paid their principal and interest to maturity.? I don’t feel bad about my purchases, because I looked long-run, and knew I had a strong balance sheet behind me.

Now in late 2001, the new CIO came to me and said, “I’m taking over the CMBS, MBS, and ABS portfolios.”? I told him, “They are yours now, do what you like, do not care for my own preferences, do what you think is right.”? As it was, he panicked, and sold many things that would later be money good, and he blamed me, according to friends.

So what? I have my own share of blame here, because you never want to buy near par something that will test your willingness to hold it. Though what I bought went through the valley of the shadow of death and came out whole, there is a cost to making everyone worry; and many in the same situation would sell and take losses that they should not have.

All of the Big Boys know you should never trust a rating

When I was a mortgage bond manager, I did my own work.? I did not trust ratings, but did my own due diligence. I would analyze loss statistics where I had them, and some up with my own risk assessments.

This is why I don’t favor the prosecution of the rating agencies.? The rating doesn’t matter, and if people are willing to trust a ratings scale, rather than a description of the business of those that are rated, they deserve the bad result.

It is utterly puzzling to me why the government is going after the rating agencies, because they just did their jobs.? Yes, their models were flawed, but many ignored them in the insurance industry and elsewhere.? Ratings are not guarantees, they are opinions, and so the Supreme Court will rule eventually.

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Central Banking

 

  • Records Show Fed Wavering in 2007 http://on.wsj.com/SgLPoG 4 all of their vaunted intelligence, the Fed was worried, but clueless in 2007 $$
  • Three Stages of Fed Grief: Key Quotes From 2007 http://t.co/X4ygwdqU Slowly realized the economy they overlevered was getting worse $$ Jan 18, 2013
  • Fed Concerned About Overheated Markets Amid Record Bond-Buying http://t.co/wDckfD77 The sourcerer’s apprentices note there is a problem $$ Jan 17, 2013
  • Paul Moreno: Gold, Greenbacks and Inflation: A History and a Warning http://t.co/75M1jNRo Ppl forget the degree the Fed has debased $$ Jan 17, 2013
  • Once you turn base money into short-term debt, can you go back? http://t.co/pG3gxBwA @interfluidity ideas getting deserved attention $$ Jan 16, 2013
  • First Shots Are Fired in Global ‘Currency War’ http://t.co/y6GJi0V5 Japan leads “race 2 the bottom.” Who will b first 2 stop sterilizing? $$ Jan 16, 2013
  • Currency Moves? & Central Bank Bravado http://t.co/zt7BI1As Posit that the yen is falling due to war risks & Japan biz risks in China $$ Jan 16, 2013
  • Abe Rocket-Start Lowers Sony Risk With Market Fuel http://t.co/J4cLgQKJ Loose monetary has spillover benefits 2 indebted corporations $$ Jan 16, 2013
  • I’ll grant this: the government always has some role in money, even commodity money like a gold standard… http://t.co/QtVI3oeC Jan 12, 2013

 

Rest of the World

 

  • Pressure Rises on China to Scrap One-Child Policy http://t.co/iDfZ0Ssl No better way 2 have a demographic crisis; change long overdue $$ Jan 18, 2013
  • Default Alarm Rings as Trust Loans Jump Sevenfold http://t.co/2tr1vFnq China is so messed up that it makes the Eurozone look good $$ Jan 17, 2013
  • Singapore Curbs Industrial Property Sales to Avert Bubble http://t.co/vZQhsdya Increases bid-ask spread; can’t fight fundamentals $$ Jan 17, 2013
  • Mongolia?s Erdenes TT Halts Coal Exports to Biggest Buyer China http://t.co/hoTHAxxZ Probably either gross malfeasance or bribery $$ Jan 17, 2013
  • European Dividends Tumble to Four-Year Low as CEOs Hoard http://t.co/D6YdzVqD Favor European Exporters over their Domestic companies $$ Jan 17, 2013
  • Euro at 10-Month High Poses Economic Threat, Juncker Says http://t.co/bk0FsVEE The #currencywars continue. Rule: Beggar thy neighbor $$ Jan 17, 2013
  • Russia Says World Is Nearing Currency War as Europe Joins http://t.co/OvVu0ZMH Accept export slowdown? Monetize debt? Stupid QE-like stuf? Jan 17, 2013
  • Rio Tinto CEO Steps Down http://t.co/lqWyRPES Every CEO should have etched on his wall: “Paying up 4 scale acquisitions is dumb” $$ $RIO Jan 17, 2013
  • China Capital Flow: Foreign Direct Dis-Investment http://t.co/V8erkuxL Foreign inv’t inflows falling, domestic inv’t outflows rising $$ Jan 17, 2013
  • China Starts Losing Edge as World’s Factory Floor http://t.co/pG7uOFqX SE Asia benefits as China becomes more expensive 2 operate in $$ Jan 16, 2013
  • Norway Sees Deeper European Job Pain as Default Fears Recede http://t.co/ztbfvp0H Rising NOK makes exports less competitive &fewer jobs $$ Jan 16, 2013
  • Often when FX vols spike it means something might break, like the SNB not able continue its EUR peg. But if… http://t.co/fydAlRSX Jan 16, 2013
  • HSBC needs 2 end its Ping An silence with simple answers http://t.co/8xVAWiHD much alleged insider deal information has been circulating $$ Jan 14, 2013
  • Mainland alchemists turn damaged zinc into solid gold http://t.co/W4zu69k7 An example of how Chinese banking system papers over bad debts $$ Jan 14, 2013
  • Rumor: large backlog of Chinese companies want to IPO, but having hard time slowing the required 2 years of rising earnings $$ Jan 14, 2013
  • Neighbors Grow More Wary of China http://t.co/aYMUvLs2 Ex-pat Chinese moving in, looking a little graspy w/respect to resources, etc $$ Jan 14, 2013
  • Mineworker Debt Mounts as South African Lending Booms http://t.co/hTkXyCTc There are few places in the world without debt overages $$ Jan 14, 2013

 

Market Impact

 

  • Deutsche Bank Derivative Helped Monte Paschi Mask Losses http://t.co/PeqTdPBT Bad investing led to losses 2 hide. Enter Deutsche Bank $$ Jan 17, 2013
  • reaching for yield http://t.co/zFaWCA7h @researchpuzzler notes tight junk spreads, but + Ed Meigs & Dan Fuss r ?naysayers on junk credit $$ Jan 17, 2013
  • Short-term Debt and Financial Crises: What we can learn from US Treasury Supply http://t.co/UG1RvuHm Qty issue ST fin’l sector debt->crisis Jan 17, 2013
  • 22 Insights From The Most Successful Investors In History http://t.co/4u3QVRJL Very nice assemblage of quotes from the best investors $$ Jan 16, 2013
  • [Will] the Bond Bubble Finally Burst? http://t.co/1c7hOX4W Synthesis of a variety of views: Yes, but not in the short-run… $$ Jan 16, 2013
  • FINRA to brokers: know your high-yield securities http://t.co/DJHC5NvT Intelligent words from FINRA; b able2show clients all possibilities Jan 16, 2013
  • The High Yield Market is “Completely Out of Control.” http://t.co/GBUfGOa9 Watch risky debt buyers; c if they need things 2go right2survive Jan 16, 2013
  • Gold Forecasters Splitting on Peak for Bull Market http://t.co/EIEgk2Al Most-accurate gold forecasters>price will probably peak in 2013 $$ Jan 16, 2013
  • Whatever Happened 2 Good, Old-Fashioned Accountants? http://t.co/aFofQ4Mv @retheauditors explains y basic blocking&tackling go a long way $$ Jan 17, 2013
  • Yale May Buy More Hedge Fund Assets After Favoring Cash http://t.co/D0cP9LDV Timing feels wrong here w/credit spreads tight & vol low $$ Jan 16, 2013
  • Baupost Group Sitting On 116% Return From Madoff Claims http://t.co/u4MYuhJI Bankruptcy judge said ?seller?s remorse,? denied his effort $$ Jan 16, 2013
  • Leeway on Repo Rules Is Cut Back http://t.co/B16EXZfR “…we’re basically saying all repos should be accounted for as borrowings,” $$ Jan 16, 2013
  • Inside the Self-Driving Index Funds That Finish First http://t.co/XPEfHyE4 @jasonzweigwsj $BLK low fees, shares sec lending revenue $$ Jan 15, 2013
  • How2use Twitter & Facebook 2 make $$ from shares http://t.co/lXXw321E Just watch: this causes the next ‘flash crash’ h/t: @abnormalreturns Jan 14, 2013
  • KRS Spin Machine Is Smearing The Truth Again http://t.co/VGGSkxHX Kentucky Retirement Systems does not use RFPs -> “pay to play” @ KRS $$ Jan 14, 2013
  • US Not So High Yield Bonds : “It’s Starting To Feel A Lot Like 2007” http://t.co/QUGhAMqC Will supply grow, or will misfinancing start? $$ Jan 14, 2013
  • SP500 Revisited – Testing 1484/1500 zone and reversal after? http://t.co/8TMktTjD Argues for a correction in stocks in the near term $$ Jan 14, 2013
  • Hedge-Fund Leverage Rises to Most Since 2004 in New Year http://t.co/rwFVhRmz H0: flexible $$ overallocated to stocks now> correction due Jan 14, 2013
  • 39% of Fund Managers Beat the S&P in 2012 http://t.co/xRx3Juik It was a growth year & not a value year. 48% would b the 10-yr average $$ Jan 13, 2013

 

Billionaires

 

  • I suppose Bloomberg could write a book about hidden billionaires, and call it “The Billionaire Next Door.” http://bloom.bg/WN9Jo8 ?#yeah $$
  • Erie Billionaire Hagen Revealed as Car Premiums Surge http://t.co/BsMEp8gu $ERIE interesting company w/a unique asset-lite biz model $$ Jan 17, 2013
  • Hidden Billionaire Milking Saudi Dairy Fortune in Desert http://t.co/XAoRKBRp Bloomberg likes ‘outing’ obscure billionaires like this $$ Jan 14, 2013

 

Personal Finance

 

  • Why you can?t avoid dumb 401(k) mistakes http://t.co/fffPsn0k Plan sponsors chase hot managers & avoid passive options $$ Jan 16, 2013
  • Behind the indexed annuity curtain http://t.co/Qo7RdSX9 Avoid. Surrender charges r long & high 2pay commission; opaque int crediting $$ Jan 16, 2013
  • One in four savers has 401(k) ?leakage? http://t.co/TRBsFfwx Retirement seems far away, but $$ needs r near, so ppl tap their 401(k)s Jan 16, 2013
  • Seven Resolutions to Get Your Nest Egg in Shape http://t.co/cqNqpxJF Good basic advice 4 ordinary people taking care of the nest egg $$ Jan 16, 2013
  • E-Filing and the Explosion in Tax-Return Fraud http://t.co/9SAE6oPL Identity theft; 1 reason y I do it myself & file on paper $$ Jan 14, 2013
  • Housing Problems: Where To Get Help http://t.co/3hrCyQFy @retheauditors gives advice to those having issues with foreclosures $$ #goodstuff Jan 13, 2013

 

Banks and Investment Banks

 

  • More Ideological Excuse Making for Bad Banks http://t.co/0wjkQq3n It takes two to tango; it takes two to make a loan. Both deserve blame $$ Jan 17, 2013
  • A tempest in a spreadsheet http://t.co/W2mwYeHO A reason y having robust “smell tests” r needed when mathematical models get complex $$ Jan 17, 2013
  • Mortgage Nanny Added to Lender Job Description http://t.co/nRRonPBL Caveat Emptor:May make probs worse by creating illusion of safety $$ Jan 17, 2013
  • Wells Fargo to Start Jet-Leasing Venture http://t.co/a0FwgcNn FD: + $WFC | I like the fact that theyr starting small #organicgrowth $$ Jan 17, 2013
  • Jefferies Sets Table in Pay Clash http://t.co/s6utAuEy Or, they could jump 2 $JEF soon 2b $LUK. $$ motivates better, but conflicts occur Jan 16, 2013
  • Bankers Get IOUs Instead of Bonus Cash http://t.co/fKrpWXZL Will tie employees more tightly, unless they jump to related industries $$ Jan 16, 2013
  • Report of $JPM Management Task Force Regarding 2012 CIO Losses http://t.co/i7x0Ifi4 [132pp PDF] If interested in $JPM, summary in 17 pgs $$ Jan 16, 2013
  • Municipalities Should Ditch Wall Street Derivatives Deals http://t.co/Jqmgjllk If Wall St is on other side of table, watch your wallet $$ Jan 16, 2013
  • Banks say new agency’s oversight is slow, costly http://t.co/aHIGFRUh Banks pine away over the regulatory laxity they had 6-10 years ago $$ Jan 16, 2013
  • Goldman?s ?Secret? Team Shows Volcker?s Folly http://t.co/fovIyDRf Difficult to stop prop trading, better 2 remake I-banks partnerships $$ Jan 14, 2013
  • Bank Deal Ends Flawed Reviews of Foreclosures http://t.co/7DoTN8yA absurd, $$ will b distributed w/little regard 2 who was actually harmed Jan 13, 2013

 

Economic Policy

 

  • Portfolio Manager Creates Dazzlingly Deep Presentation On What’s Really Going On With The US Economy http://t.co/vcRHWwEe Long but good $$ Jan 17, 2013
  • Obama Finds Path to Congress Deals Goes Through McConnell http://t.co/B763HV1u Give him his due; has a nose that can sniff out deals $$ Jan 16, 2013
  • The Next Tax Increase http://t.co/7beI2QUO What the US Govt has belongs 2 the US Govt. What belongs 2u is subject 2 negotiation $$ Jan 16, 2013
  • Swap the Debt Ceiling for a Rule That Makes Sense http://t.co/NVYjvTD8 Maybe limit total liabilities of US Gov’t to 2x GDP? Way past that Jan 16, 2013
  • Why U.S. might be ?a nation of deadbeats? http://t.co/UuOHrKlt Consumers have been paying down debt, but walking away from more $$ Jan 16, 2013
  • A Credit Downgrade Warning Both Sides Should Listen To http://t.co/TbB3Gbdn Rating agencies r more honest than US Govt. Fitch may d/g US $$ Jan 16, 2013
  • Treasury Bill Rate Curve Inverts Amid Debt-Ceiling Showdown http://t.co/0KOQqC7A Bill curve showing some inversion due 2 debt ceiling $$ Jan 16, 2013
  • Money-Printing Will Lead to an Inflation in Another Guise http://t.co/erqP71P7 Debt overload & slack capacity short circuit credit growth $$ Jan 16, 2013
  • Two Warning Signs for Treasuries http://t.co/BdAcNkHE “yield curve btw 2&10 years is starting to steepen” Resistance 2 neg real rates up $$ Jan 16, 2013
  • TIPS Implied Inflation 4 2018-22 rose over 2012; flat now http://t.co/R28O77bX 2014 Inflation rising http://t.co/VCfupYLT $$ Fed target 2.5% Jan 16, 2013
  • US states flirt with major tax changes http://t.co/EnZmtggx Red states moving toward sales & away from personal/corporate income taxes $$ Jan 14, 2013

 

States & Municipalities

 

  • California, Unsaved, Speeds Toward a Wall of Debt http://t.co/pyrObgbr Constants in life that r not comforting: gimmicks in CA budget $$ Jan 17, 2013
  • California Could Be the Next Shale Boom State http://t.co/r0QChYDh Energy could flow from the Land of Squandered Advantages $$ Jan 16, 2013
  • Pension Funding Gap Widens for Big Cities http://t.co/a76JAJT0 Expect 2c many fights where bens cut 4 new, active & retired employees $$ Jan 16, 2013

 

Companies

 

  • Suitors Interested in H-P’s Autonomy, EDS Units http://t.co/AXdvxjei Wouldn’t put 2 much into this; $HPQ won’t get good prices $$ Jan 16, 2013
  • Genworth Shares Soar Amid Plan for Mortgage Insurer http://t.co/Jqmgjllk $GNW moves deck chairs on the Titanic; rewarded for now $$ Jan 16, 2013
  • Chevron Signs Deal for More Oil Exploration Acres Off China http://t.co/Yqb7yY7g FD: + $CVX smiles as it rides the tiger $$ #risks Jan 16, 2013
  • My Favorite Tobacco Stock Is Intel? http://t.co/Wupvh1qk @CharlesSizemore explains y it should deliver returns, amid hatred $$ FD: + $INTC Jan 16, 2013
  • TNT Left at Altar Gets No Immediate FedEx Deal http://t.co/QSdDHarC “FedEx in a good position to wait this out & let TNT come to them.” $$ Jan 16, 2013
  • Latest IPOs Arrive In The Form of New MLPs http://t.co/cq7XuIKv All of the new MLPs r energy-related $$ Jan 14, 2013
  • ARM CEO East Says Phooey to the ?Transistor Cliff? http://t.co/wfiIeQau Cost, speed, & power use r the key factors 4 logic chips $$ Jan 14, 2013

 

Miscellaneous

 

  • Davos Pitch for Dynamism Rams Into End-of-Growth Debate http://t.co/1bNvkwD7 I don’t think growth is ended, but bad finances interfere $$ Jan 17, 2013
  • Global Piracy @ 5-Yr Low http://t.co/YgJlRQSh 2012: Pirates boarded 174 ships globally v 439 in 2011, people taken hostage 585<-802 $$ Jan 16, 2013
  • NRA Labels Obama Hypocrite on Guns for Child Protection http://t.co/DqIsubsA Administration doesn’t like the argument; hits close 2home $$ Jan 16, 2013
  • Kidnap insurers eye sales as euro crisis bites http://t.co/w5CfiwOe Stable rates: More competition, & armed guards 4 sea transport $$ Jan 16, 2013
  • Mathematicians coming of age to become the most sought after professionals http://t.co/thXJdgsS Nerds of the world unite! Big data 2analyze! Jan 16, 2013
  • The Margin Debate http://t.co/zE6p5oO1 Labor share of US GDP has fallen because growth in the global capitalist labor force, wages fall $$ Jan 13, 2013

 

Financial Blogging

 

  • Your guide 2the financial blogosphere http://t.co/9mkoln2n Comprehensive list of finance bloggers. I’m listed under “Trading & Investing” $$ Jan 14, 2013
  • What are the 100 Top (Anglo-Saxon) Finance Blogs? A Pseudo-Scientific Study http://t.co/I9UU32zP I ranked higher than I expected 🙂 $$ Jan 14, 2013
  • The purpose of this site http://t.co/Bp4sqw5o @reformedbroker ‘s excellent piece on how his blogging helps him think & invest better $$ Jan 14, 2013

?

Painting Kate Middleton

 

  • @judehere Perhaps this then? http://t.co/hstcUqPq Jan 16, 2013
  • @judehere That’s okay. You say he painted the Queen? That’s interesting. Is there an image of that out on the web? Jan 16, 2013
  • ‘ @judehere She seems to be a nice lady, so I wouldn’t be a fan of that. But Freud died in 2011, so the possibility is not there. Jan 16, 2013
  • But this portrait of Kate Middleton is worse in my opinion http://t.co/LBMKplpo No wonder only 19% like it. (2/2) $$ Jan 16, 2013
  • Learning to draw, I copied a photo of a friend w/pencil. Another friend said “You took a very pretty girl, & turned her in2 pretty girl” 1/2 Jan 16, 2013

 

 

Michael Pettis

 

  • Pettis: What I will watch in 2013: 10 things: hard commodity prices, trade numbers, Spanish Bonds, Target 2, & Japan (2/2) $$ Jan 14, 2013
  • Pettis: What I will watch in 2013: 10 things: China growth, Debt trajectory, financial scandals, bank activities, inflation (1/2) $$ Jan 14, 2013
  • Pettis: Imbalances can continue for many years, I argue, but at some point they become unsustainable & the world must adjust by reversing $$ Jan 14, 2013
  • Pettis: Policymakers do this by shortening their time horizons &managing from crisis2crisis, rather than sorting out the underlying problems Jan 14, 2013
  • Pettis: policymakers… taking steps that protect them from the consequences of the crisis but that also make the crisis worse. $$ Jan 14, 2013
  • Pettis: It is interesting that policymakers are so pleased by an end (temporarily, I assume) to the financing crisis. $$ Jan 14, 2013
  • Pettis:We ended 2012 in a burst of optimism for Europe, w/everyone cheering Mario Draghi 4having ?saved? the euro, but I am deeply skeptical Jan 14, 2013

 

Wrong

?

  • Wrong: How to Find a Fund Manager Who Can Beat the Market http://t.co/2Nq1Z9b2 Doesn’t understand difference btw correlation & beta $$ Jan 15, 2013
  • Wrong: US Budget : Federal finances continue to improve http://t.co/HKzv6pLK It is a *spending* problem that started w/Bush 43, not revenue Jan 15, 2013
  • Wrong: Municipal Bonds May Not Be Safe From Income Taxes http://t.co/MnIQIdor Would be a big shift, hit blue states hard. Won’t happen $$ Jan 14, 2013
  • Wrong: Chris Hayes’ Brilliant Explanation Of Money Is One Of The Best Things We’ve Ever Seen On TV http://t.co/e0kxN5oZ #goldstandard $$ Jan 13, 2013

 

Comments and Retweets

?

  • Good night. Blessings to all. Jan 18, 2013
  • @cogent_rambling Think of judges in a court. No one will forgive a man for doing wrong in one area, because he has done good in others Jan 18, 2013
  • @cogent_rambling It’s not a question of weakness but wrong. Divorce your wife for no good reason, cheat at your craft, all amounts 2 wrong Jan 18, 2013
  • @cogent_rambling Good question. God created Lance with a weakness. If Lance had trusted God, he could have overcome it, but he didn’t. Jan 18, 2013
  • @cogent_rambling Not those that are God-given. Mt 5:48: “Therefore you shall be perfect, just as your Father in heaven is perfect.” Jan 18, 2013
  • @cogent_rambling One last point: in the view of Jesus is there is no balancing. The least amount of evil poisons any good. Jan 18, 2013
  • @cogent_rambling Read some of the writings of Kahneman & Tversky. Bad things have 3 times the force of good things. Good doesn’t erase bad Jan 18, 2013
  • @cogent_rambling Okay, I get it. But doing good things does not erase bad things. Doing things that are notably bad tarnishes anything good. Jan 18, 2013
  • @cogent_rambling I have heard the word as a part of popular culture, but have no idea what it is beyond a phrase. Jan 18, 2013
  • @cogent_rambling Okay, I’ll bite. His charitable endeavors, but what else? Jan 18, 2013
  • @sallyeastman1 Well said Jan 18, 2013
  • My view: Lance Armstrong is best ignored. Close the browser window, change the channel on the TV, he will go away. I don’t care about him $$ Jan 18, 2013
  • @AboveAvgOdds Off to meet w/u & Chris Mayer in downtown Baltimore Jan 17, 2013
  • Endorse. I have read over half of these $$ RT @TheStalwart: The 22 books that Dylan Grice says you must read. http://t.co/QSOWvuBc Jan 17, 2013
  • @graemehein good point, but most simple models have obv intuition. Complex models have more potential 4 error b/c of 2nd+ order effects $$ Jan 17, 2013
  • @cate_long Others that did the same in 1994: Piper Jaffray’s Institutional Gov’t Income & FPA’s Fundamental US Gov’t Strategic Income funds Jan 17, 2013
  • @cate_long Combined w/levering them, and not having the mathematical savvy to price them right http://t.co/5vkUxgO6 Story near the bottom Jan 17, 2013
  • @cate_long Cate, you’re right, I’m wrong. At the time, David Askin & those like him were notable. W/Citron it was mostly structured notes Jan 17, 2013
  • @kirstensalyer Sorry, that honor belongs to the first quantitative hedge fund manager, Ben Graham, who was doing that in the 1920s Jan 17, 2013
  • @cate_long Also used complex RMBS. There was kind of a contest 2c how much negative convexity one could absorb in exchange 4 yield Jan 17, 2013
  • RT @maxrudolph: #unintendedconsequences when pension regs set up EA designation cut off practitioners from ALM development. Still catchi … Jan 17, 2013
  • Well done $$ RT @LaurenLaCapra: Jim Chanos talks to @Reuters about Herbalife & whether Ackman or Loeb will win out: http://t.co/sV7B604o Jan 17, 2013
  • @finsovet @prieur @vitaliyk Honored 2b included in such a group Jan 17, 2013
  • Think this analysis is correct, but uncertain $$ RT @mickwe: 3D printing is a lot of hype and it’ll never go mainstream http://t.co/8wkr5oxp Jan 17, 2013
  • I just left a comment in “7 gut checks before the stock market?s opening bell” http://t.co/MrSqVXZF Jan 17, 2013
  • @niubi If so, good for him. He revolutionized my economic thinking with his last book. Looking forward to the next one. Review copy coming Jan 17, 2013
  • +1 RT @dpinsen: Paging @TomFriedman: comment on How a ‘model’ employee got away with outsourcing his work to China http://t.co/wukYAV8T $$ Jan 17, 2013
  • +2, scrap IFRS RT @Alea_: +1 Britain should scrap IFRS accounting standards, MPs told http://t.co/woWmyC2v Jan 16, 2013
  • @oddballstocks very different mindsets; marketing and operations r different from finance, which is still different from investing Jan 16, 2013
  • @oddballstocks I did that as well from 1992-1998. Tried very hard to select non-name-brand mgrs w/durable competitive advantages Jan 16, 2013
  • ‘ @ClayNickel It depends on how equitylike the bonds r, & the financing composition of the holders. If the bonds r financed w/sig debt.. $$ Jan 16, 2013
  • RT @Matthew_C_Klein: The big deal about the German gold story isn’t that they’re taking some of it out of NY but that they’re moving *al … Jan 16, 2013
  • RT @Matthew_C_Klein: @izakaminska has a thoughtful take on the base money debate between @interfluidity and @NYTimeskrugman http://t.co/ … Jan 16, 2013
  • ‘ @joshuademasi Good point. After all, most nations would love to swap for Norway’s economic situation. $$ Jan 16, 2013
  • @earwulf Good insights both. We live in “interesting times” in the full meaning of the Chinese curse Jan 16, 2013
  • @ReformedBroker Rieder is a bright guy, as is my friend Ed Meigs at First Eagle; HY is okay for the short run, but 2 years out… $$ #Boom! Jan 16, 2013
  • @earwulf Yes Jan 16, 2013
  • @earwulf No, I don’t really find them persuasive. I do think that some Central Bank will stop sterilizing asset purchases, start new phase Jan 16, 2013
  • @JacPatterson I thought about that too, & think he really meant “English Language” Finance Blogs Jan 15, 2013
  • “But that also means you have to keep more $$ around if the puts get exercised, which Buffett had & many don’t.” http://t.co/uEIRn5i3 Jan 15, 2013
  • @joelight @spbaines the paragraph that starts ‘To screen out such “closet indexers,”‘ is factually wrong, does not understand statistics Jan 15, 2013
  • @joelight @spbaines I’m not arguing w/R2 as a proxy for active share, though there r better measures; article says correlation, means beta Jan 15, 2013
  • +10 Mmmmm… RT @dpinsen: Bresaola, lemon, olive oil, Parmesan, and basil joining forces for a great sandwich. http://t.co/pMMVmoI5 Jan 14, 2013
  • @abnormalreturns I’ve run into a *lot* of people trying to do this. Some are cleverer; not sure how it will work out… Jan 14, 2013
  • @JayLeonard but gold does control inflation and limits the government’s ability to use monetary policy for its own ends Jan 13, 2013
  • @JayLeonard Much of the difficulty is not gold vs not gold, but how banks were regulated — short liabs carrying long assets Jan 13, 2013
  • @GuldbergPeter Thanks, though I have heard that Canada *may* have issues. Jan 12, 2013
  • RT @GuldbergPeter: “@AlephBlog: Is there anyplace in the world that hasn’t overlent on real estate? Sweden, Canada and actually to some … Jan 12, 2013

?

FWIW

?

  • My week on twitter: 40 retweets received, 1 new listings, 67 new followers, 65 mentions. Via: http://t.co/SPrAWil0 Jan 17, 2013
Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Who to Follow

 

  • #FF @researchpuzzler @newrulesinvest @felixsalmon @interfluidity @Alea_ I go through my follow list twice/yr & highlight those I respect $$ Dec 15, 2012
  • #FF @EddyElfenbein @ReformedBroker @smallcapanalyst @BarbarianCap @abnormalreturns @TheStalwart @The_Analyst @mickwe @marketfolly @bondscoop Dec 15, 2012

 

Stupid political things I have said

 

  • @jpgriffard When I say great, I mean “large.” I hate them both. Dec 15, 2012
  • @JoshForde Me too, thanks 4 interacting w/me Dec 15, 2012
  • @JoshForde Wrong time of year, and Congress is tied up with the budget, so I guess no. NYC mayor provoked me, demanding immediate action Dec 15, 2012
  • ‘ @JoshForde Yes. Unintended consequences. 9-11 and the wars it engendered r my leading exhibits there. The US messed up badly. Dec 15, 2012
  • @Borderscrossed No they don’t, have a good night. Dec 15, 2012
  • @JoshForde That I can agree with as well, w/rights come responsibilities, bigtime. Dec 15, 2012
  • @JoshForde Second-order effects; our policy usually omits those. Example: the Fed & Central Bank freedom; what if they act irresponsibly? Dec 15, 2012
  • @trmcloughlin I would agree with that also Dec 15, 2012
  • @incakolanews I would agree w/that Dec 15, 2012
  • @JoshForde Okay, but I’ve said that before on other topics… this has been a general position of mine on a wide # of issues, not just guns Dec 15, 2012
  • Auughh! Blam! Drones r another ethical issue that I hate $$ RT @Borderscrossed: @AlephBlog NSA has logged our tweets. Drones on the way. Dec 15, 2012
  • ‘ @jpgriffard He has two great achievements PPACA & Dodd-Frank Dec 15, 2012
  • @Borderscrossed Wait, you said “Obama” & “do something” in the same tweet. Isn’t that illegal? 😉 Dec 15, 2012
  • @JoshForde I’m willing to consider… what was insensitive? Dec 15, 2012
  • ‘ @ross_marketment I agree, freedom requires some laws, and here’s one to consider… liability for not securing your gun. Dec 15, 2012
  • Behind every economic view there is a political view. Unavoidable. All I know is that I get more grief from writing on politics. $$ Dec 15, 2012
  • @laGiocondaVinci That’s fine hope u do well Dec 15, 2012
  • My politics r complex; I am mostly a libertarian: I was against Iraq 1 & 2, Afghanistan. I did not like Bush 43, don’t like Obama either $$ Dec 15, 2012
  • RT @dpinsen: @AlephBlog The same people who now regret the TSA, the PATRIOT Act, etc. rushed through after 9/11 want to rush through mor … Dec 15, 2012
  • ‘ @Borderscrossed I am just saying 4 all legislation consider the second order effects; never act in heated emotion, consider all effects $$ Dec 15, 2012
  • ‘ @ross_marketment Again, 9/11 is my best example. It has harmed Americans more than our enemies. I have been against all our recent wars $$ Dec 15, 2012
  • @streetbrief Take care Dec 15, 2012
  • @ross_marketment Not sure. I am saying is consider wide range of effects from policy change; we do not typically do that & we get bad policy Dec 15, 2012
  • I’m willing 2c intelligent limits on firearms & some degree of liability 4 those that don’t secure them, but rushed policy is bad policy $$ Dec 15, 2012
  • @ross_marketment Problem: there may be fewer murders, but in the UK they have more “hot robberies” than we do; robbers have more 2fear in US Dec 15, 2012
  • ‘ @trmcloughlin What we don’t know is how many lives have been saved by firearms. We don’t hear the sound of one hand clapping. #2ndorder Dec 15, 2012
  • No doubt; I have 8 kids; 5 adopted – I feel sorry 4 the parents; grief RT @ross_marketment: and for the minority as well. 26 today Dec 15, 2012
  • And we get salvation through a plethora of ineffective statutes RT @JamesMarsh79: our society demands intervention $$ Dec 15, 2012
  • ‘ @ross_marketment I don’t own a gun, probably nevr will. I serve the Prince of Peace. I know that a few people ruin freedom 4 the majority Dec 15, 2012
  • So after a really ugly event like the killing of 6-7 year olds, we need to mourn, leave policy decisions 4 a calmer time, weighing +s/-s $$ Dec 15, 2012
  • 2 many people react 2 an ugly event saying, “This must never, Never, NEVER HAPPEN AGAIN!!” w/o considering what 2nd order effects will b $$ Dec 15, 2012
  • After 9/11, we made many policy decisions in haste that left us less free. Part of being a free culture –> we must accept some disasters $$ Dec 15, 2012

 

Wrong

 

  • Wrong: Former HP CEO Shifts Blame for Autonomy Deal to Chairman http://t.co/p8xH0BoR No deal can get done w/o sponsorship of the CEO $$ Dec 14, 2012
  • Wrong: As Dollar Loses Reserve Status Central Banks Diversify http://t.co/lfq2UGNW Bad as the $$ is, no other currency is as investable $$ Dec 14, 2012
  • Wrong: Canadian Exceptionalism in Compensation http://t.co/Q6VDqm5P France is no exemplar in paying bureaucrats a lot of $$ a % of GDP Dec 14, 2012
  • Wrong: Our Hero, Ben Bernanke: Why Central Bankers (Not Politicians) Are Saving the Global Economy http://t.co/BawbK79N First do no harm $$ Dec 14, 2012
  • Wrong: Mozilo Unbowed Says Countrywide Was ?World-Class Company? http://t.co/6pzQQyos Big, yes, but horrible underwriting, 2much debt $$ Dec 14, 2012
  • Wrong: Bernanke Wields New Tools to Reduce Unemployment Rate http://t.co/M3GXZomh No new tools, only wishful thinking $$ Dec 13, 2012
  • Wrong: Oil at $60 or $120 Doesn?t Prevent US Supplanting Saudi Arabia http://t.co/sWB1CqEa Decay curve 4 fracking means short advantage $$ Dec 13, 2012
  • Wrong: Krugman, Krauthammer and Their Implied Authors http://t.co/seOKbPdg U r what u write; Just another aspect of your personality $$ Dec 11, 2012

 

Companies

 

  • And with that, I sign off Twitter 4 the evening (aside from robotic posts). One note b4 I go, $HPQ has not filed its 10-K @ its due date. $$ Dec 15, 2012
  • Apple Falls as UBS Projects Growth Slowdown http://t.co/f7Gi1Wwm Size is an enemy of growth. Channel check indicates slowdown 4 $AAPL $$ Dec 14, 2012
  • Hurd was an accounting manipulator; he boosted asset accrual items to paper over flagging profitability. $$ http://t.co/ubjkmR9C $HPQ Dec 14, 2012

 

Energy

 

  • Alberta-Quebec Oil Pipeline Reversal Study Done by June http://t.co/CkqBZul2 Let Quebec find its own oil then $$ Dec 14, 2012
  • Refiner Phillips 66 would support U.S. crude oil exports-CEO http://t.co/lvKXNlcg More important: infrastructure 4 LNG exports FD: + $PSX Dec 14, 2012
  • Tokyo Steel Shifts Output as Power Costs Rise Post-Fukushima http://t.co/jYPrhUDA There r real costs to doing w/o nuclear power $$ Dec 14, 2012

 

Federal Reserve & Central Banks

 

  • We would b better off in the long run if the central banks of the world stopped QE & low rates & let us work out bad debts 4 a decade $$ Dec 14, 2012
  • Houston We Have a Problem – The Abe Approach http://t.co/V9XlZ7pw Fed adopts an approach similar 2 the proposals of Shinzo Abe $$ #FTL Dec 13, 2012
  • Inside the Risky Bets of Central Banks http://t.co/rKRwTgb9 They talk together, but the central bankers of the world share ignorance $$ Dec 13, 2012
  • Biggest Opportunity Will Be Shorting the Bond Market: Dalio http://t.co/GdGIGNkQ Shorting bonds is tough b/c of negative carry $$ Dec 13, 2012
  • RAY DALIO: The US Economy Is Facing A Rare Set Of Circumstances That Will Be Bad For Markets http://t.co/7lgVsmRR Bull mkt 4 cash & gold $$ Dec 13, 2012
  • BoE’s King warns of growing currency competition http://t.co/zTsohWHT “Beggar thy neighbor” characterizes Central Bank policies globally $$ Dec 13, 2012
  • “Economists at the BIS, meanwhile, have grown more skeptical about the central bank tilt.” http://t.co/Fje7WTFI All lean the same way $$ Dec 13, 2012
  • “There is a lot we don’t understand,” said Donald Kohn, the Fed’s former vice chairman. http://t.co/Fje7WTFI You can say that again $$ Dec 13, 2012
  • Most interesting move of the day was watching long Tsy bonds sell off after Fed said it would buy more http://t.co/wk4ZFhAR “Et tu, QE?” $$ Dec 12, 2012
  • PS: long a little bit of $TLT 4 me & bond clients, short a little bit of $SPY for hedged clients Dec 12, 2012
  • Love the DJ reporter asking about Fed forecast accuracy. The answer is they missed financial crisis, & have been shocked by slow recovery $$ Dec 12, 2012
  • Love those reporters who assume monetary policy can do anything, & that monetary policy can change unemployment w/a snap of the fingers $$ Dec 12, 2012
  • Change since September in Central tendency of Fed funds Fed forecasts 2013-2015 & longer run: 0.01%, -0.20%, -0.32%, -0.15% $$ Dec 12, 2012
  • Change since September in Central tendency of PCE inflation Fed forecasts 2013-2015: -0.08% -0.08% -0.05% $$ Dec 12, 2012
  • Change since September in Central tendency of Unemployment Fed forecasts 2013-2015: -0.27% -0.18% -0.05% $$ Dec 12, 2012
  • Long Treasuries not liking the Fed Statement, even w/the promise of additional buying FD: long $TLT Dec 12, 2012
  • Change in Central tendency of GDP Fed forecasts since September 2013-2015: -0.07%, -0.16%, 0.08% $$ Dec 12, 2012
  • Steve Liesman actually asks a decent question, wow. Dec 12, 2012
  • Here’s one year forward, one year inflation implied from TIPS over the last 40 days: http://t.co/dmzjrO9W moving up, currently @ 2.01% $$ Dec 12, 2012
  • Using TIPS, the figure for inflation between one and two years ahead is already 2.01%. Fed did not do its homework, again. $$ Dec 12, 2012
  • Fed Seen Pumping Up Assets to $4 Trillion in New Buying http://t.co/YkZo23sl Doing same thing over & over & expecting different result $$ Dec 11, 2012

 

US Politics

 

  • How to Keep All of Huck Finn in the Classroom http://t.co/rPo5syl2 We need 2 eliminate the pseudo-intellectual “common core” standards $$ Dec 14, 2012
  • Dispatches from the public pension wars: http://t.co/rvD9zmAU & http://t.co/oWgfJYGQ & http://t.co/EYvaGTJ2 End pension spiking $$ Dec 14, 2012
  • It really seems stupid to spend $151B to upgrade Acela when it only has revenue of $0.5B/year http://t.co/SNbmuXJW Slow trains r better $$ Dec 14, 2012
  • Whose job is it to stop an asteroid from hitting the Earth? http://t.co/dNFyVjJR Would need at least 2 years of lead time, preferably 5 $$ Dec 13, 2012
  • Big Banks Flunk OCC Risk Tests http://t.co/2f1veBS8 2big2b effectively regulated; left hand doesn’t know what right does, centipede-level $$ Dec 13, 2012
  • Pimco?s Gross Says Fed Policy Means ?Free? Debt for Treasury http://t.co/d7K7wHm1 Ah, seigniorage; it is good 2b king Dec 13, 2012
  • Amtrak Plans to Replace All High-Speed Acela Trains http://t.co/SNbmuXJW I like the Acela, but I can’t see how 2 recoup $151B 4 new trains Dec 13, 2012

 

Rest of the World

 

  • Islam in Egypt’s new constitution http://t.co/0oqRk11B Kind of interesting; gives u a feel 4 different types of Islamic casuistry $$ Dec 13, 2012
  • Assad Losing Syria, Say Russia and NATO http://t.co/rNeKVmhS Could Chavez & Assad lose their power in the same week? $$ Dec 13, 2012
  • EU Reaches Deal on Bank Supervisor http://t.co/YNFGjnjk A lot of the details have 2b worked out; will b interesting 2c it in action $$ Dec 13, 2012
  • China’s Economy – weaker than we think http://t.co/FwbPNviK The math is pretty clear: rebalancing will inevitably require lower growth. $$ Dec 13, 2012
  • What Mario Monti?s Exit Tells Us About Europe?s Debt Crisis http://t.co/Ak8zB6N4 Problems r cultural; politics can’t bring prosperity $$ Dec 13, 2012
  • ?Reckless, Wrong-Headed? Pension Rules Could Savage Europe?s Economy http://t.co/OP7xDSGM Key Q: how large is the equity prem over Tsys? $$ Dec 13, 2012
  • US Schoolchildren Lag Asian Peers on Academic Tests http://t.co/PEJufbTb Phonics & going back to the “old math” would help considerably $$ Dec 11, 2012
  • Argentine mom rescues hundreds of sex slaves http://t.co/9dz9sZw9 In rescuing her kidnapped daughter, gains a quest & rescues hundreds $$ Dec 11, 2012
  • Germany displaces China as US Treasury’s currency villain http://t.co/7giRsoJE Germany > China; biggest source of global trade imbalance $$ Dec 11, 2012
  • BIS: Policy measures and reduced short-term risks buoyed markets http://t.co/M4k5j2Oq True now, but will make eventual tightening harder $$ Dec 11, 2012
  • Honey Laundering http://t.co/x2Dl5sdr No way India is now producing so much honey. Imports from China, escapes duties, exports 2 US $$ Dec 11, 2012
  • Hitler Has a Following in India http://t.co/Mksfyv6R India dislikes the British enough, & desires a strong leader to save them, & thus $$ Dec 11, 2012
  • Sony Loses Science Talent as Student Resumes Go to Dairies http://t.co/dKJsVDIN Can’t obsolete food; shows caution among Japanese youth $$ Dec 10, 2012
  • Carson Block Goes Short Unafraid as Chinese Gangsters Chase http://t.co/QVRFxy1i Trying 2 hide information does not change negative FCF $$ Dec 10, 2012
  • China November factory output jumps to eight-month high http://t.co/Y0HNSoqp And consumer inflation bounced off 33-month lows $$ Dec 10, 2012
  • Chinese Group Buys 80% of AIG Plane Unit for $4.2B http://t.co/7YLMn3ro Good 2c $AIG simplify. I suspect the seller is the winner here $$ Dec 10, 2012
  • Raging Oil Price Will Burn OPEC http://t.co/xRnGN9Pa Suggests downward pressure on oil prices. Sell high-cost E&P, maybe $$ Dec 10, 2012
  • Slowing China Forex Reserves May Spell Trouble http://t.co/Bcy9KnW9 Suggests gold and Singapore $$ off of weakness & capital flight in China Dec 10, 2012

 

Other

 

  • Those Diabolical Anonymous Commenters http://t.co/hl7tGZJ1 If we have to sign our names to what we write, we will b more judicious $$ Dec 14, 2012
  • The five most disruptive technologies of 2012 http://t.co/AbNJyUSF Pretty fascinating, particularly power storage & cheap internet $$ Dec 13, 2012
  • Finally did it. Joined the cult of Warren the Wonderful http://t.co/8p67b2yl Now my clients & I can get a discount @ GEICO. FD: + $BRK.B $$ Dec 12, 2012
  • America’s Milk Business in a ‘Crisis’ http://t.co/ANb8xN6d Maybe if they got rid of the growth hormones, more people would want milk $$ Dec 11, 2012
  • Bloomberg Weighs Making Bid for The Financial Times http://t.co/E2r3t7hw Creating a more powerful Bloomberg, LP piece-by-piece $$ #FTW Dec 11, 2012
  • Green energy will come into existence without subsidies when crude is $200/bbl $$ http://t.co/Ufz0Kig2 Dec 11, 2012
  • They Know What You’re Shopping For http://t.co/MuBloNPi Interesting. Shows how auto dealers get data on you $$ Get “do not track” $$ Dec 08, 2012

 

US Politics & Economics

  • When the CPI is up, journos point at the bogus “core” figure. When the CPI is down, journos point at the CPI. Bias http://t.co/ODXMyo1V $$ Dec 14, 2012
  • The Myth Of Cash On The Sidelines Remains A Myth http://t.co/c6UKgvxV Also have 2 count the cash that collateralizes derivative positions $$ Dec 13, 2012
  • Mortgage Rates in the US Drop to Near-Record Lows http://t.co/ciJ8b4rd Attractive credit, if u can get it; hey, rhymes and scans $$ Dec 13, 2012
  • If u r a professional bond investor, researcher would like you 2 take survey on Investor Preferences for Climate Bonds http://t.co/NP4X0iPV Dec 13, 2012
  • Beef in America is plentiful & affordable, spun out in enormous quantities @ high speeds: bonanza w/hidden dangers. http://t.co/ZhYQcleo $$ Dec 13, 2012
  • States Faulted Over Teacher Pension Shortfall http://t.co/bMnCE92x (non) Payback coming to teachers 4 negotiating 2 high pension bfts $$ Dec 13, 2012
  • How Republicans engineered a blow to Michigan’s powerful unions http://t.co/pll6Uo1r Hidden in plain sight; careful planning achieved it $$ Dec 13, 2012
  • For-Sale Signs Sprout in Heartland http://t.co/Fs7sB8b4 Likely sustainable as there are low levels of debt used to effect buys $$ Dec 13, 2012
  • I care more for how a man weighs ideas & opinions than what he weighs. http://t.co/9Cf51G9e Dec 12, 2012
  • “Ferri’s reasoning only looks easy in hindsight. I agree with Barry’s reasoning, though. Consistent w/Q-ratio, etc. $$ http://t.co/I8MPtJlh Dec 12, 2012
  • Before the public pension crisis ends, some states will remove pension protections in their constitutions, & retroactively cut benefits $$ Dec 12, 2012
  • $822,000 Worker Shows California Leads U.S. Pay Giveaway http://t.co/YfcZsCWU People r finally getting how big this problem is $$ Dec 12, 2012
  • Social Security ? 2012 Results http://t.co/GgxzcD4q Social Security & Medicare get worse and worse; US Govt will not b able 2 afford them $$ Dec 13, 2012
  • Hawaii Real Estate Paradise Returns With Goldman Loan http://t.co/eMAJl5IM Japanese & Korean travelers driving hotel visits $$ Dec 11, 2012
  • LOOMING CRISIS: State Budgets Soon to be Under Siege http://t.co/IwGIK90g Cash payments r curving up rapidly 4 public employee benefits $$ Dec 11, 2012
  • Don’t forget the unforced give up of stricter bailout terms, made when $$ was impossible to get; $AIG deal… http://t.co/G9zwHuDV Dec 11, 2012
  • Please ignore special tax benefits given $AIG & unforced renegotiation of original deal. A loss in economic terms http://t.co/gShXtNIq $$ Dec 11, 2012
  • Better Gas Mileage, Thanks to the Pentagon http://t.co/rmVBspJ0 As w/the space program, rarely we get positive spillover from Defense $$ Dec 11, 2012
  • 13 Insights From Paul Tudor Jones http://t.co/BsAnkdgS He is not only a successful hedge fund manager but a very original & clear thinker $$ Dec 11, 2012
  • $GOOG Revenues Sheltered in No-Tax Bermuda Soar 2 $10B http://t.co/az2KrBhI Shock in Hamilton as NATO blockades, seizes shell companies $$ Dec 10, 2012
  • Hostess Maneuver Deprived Pension http://t.co/tyvhsCF2 Multi-employer pension trusts r weak; PBGC coverage is < single-employer plans $$ Dec 10, 2012
  • Climate Treaty Hinges on Obama Making Case: Ex-Aides http://t.co/zIA5j27p Obama doesn’t want 2 waste political capital on low odds win $$ Dec 10, 2012
  • Most Accurate Forecaster Sees Lethargic US Expansion http://t.co/e0nDazST Economic Lethargy girdles the globe, everything slowing $$ Dec 09, 2012
  • SEC’s Aguilar Warms Up to Money-Fund Overhauls http://t.co/mkLQNYAX Will destroy MMFs & won’t significantly help systemic risk $$ Dec 08, 2012

 

Retweets

  • To the main point: High speed rail is a boondoggle. Slow will do. RT @finemrespice: @AlephBlog http://t.co/UKb2A9hO Dec 14, 2012
  • Not indice, index $$ RT @weigu: Shanghai Composite Index is the 2nd-worst performing stock indice in the world this year, just after Spain. Dec 13, 2012
  • RT @randy_cass: Hint #1 that we’ve gotten conditioned to stimulus. Journalist asked question and referenced ‘$45 Billion a month’ as ‘a … Dec 13, 2012
  • Inertia RT @AsifSuria: Why does Best Buy still pay a dividend? $BBY Dec 13, 2012
  • Here’s a graph of it for those who don’t know where 2c it: http://t.co/G2P4kknG RT @TheStalwart: @AlephBlog tanked right at 8 PM ET $$ Dec 13, 2012
  • RT @Convertbond: Scary US Percentage of High Yield Bonds Trading ABOVE next Call Price 2012 40% 2011 30% 2010 22% 2009 0% 2008 5% 2007 … Dec 12, 2012
  • You said it RT @credittrader: umm benny – look at 5y5y fwds! come on man…. Dec 12, 2012
  • He can’t mean that $$ RT @davidgaffen: “I don’t think any policymaker, including the Fed, should respond to markets.” -BB 12/12/12 Dec 12, 2012
  • RT @Kathleen_Hays: CBS news guy asks Bernanke how does tying rate change to 6.5% jobless help economy? Bernanke says better communicatio … Dec 12, 2012
  • RT @LaMonicaBuzz: Where’s Chuck Barris? The Bernanke press conference is approaching the hour-long mark. Time for someone to ring a big … Dec 12, 2012
  • Muted response from $GLD, $TLT down, $SPY up/down since stmt RT @jamessaft: it is not the reporters who scare me, it is the investors $$ Dec 12, 2012
  • I assume we r both “persona non grata” there RT @cabaum1: @AlephBlog Use my name. It’ll get you a seat in the very back. Dec 12, 2012
  • You made me laugh; I applied to be in the press, they didn’t take me RT @cabaum1: @AlephBlog Be nice. He’s playing Helen Thomas. $$ Dec 12, 2012
  • RT @WildestFacts: Only 70% of people will understand the following: 2 + 2 = Fish. 3 + 3 = Eight. 7 + 7 = Triangle. RT if you get it. Dec 12, 2012
  • RT @tracyalloway: So long European aversion? Yankee bonds of European issuers now trading at pre-debt crisis levels, BarCap says: http:/ … Dec 11, 2012
  • Can’t make this up $$ RT @Alea_:[ pictures ]Mayan apocalypse: Chinese farmer builds survival pods in case of a disaster http://t.co/zWWNTWdr Dec 11, 2012
  • RT @MKTWBurton: What if the stock market is rigged? @abnormalreturns @felixsalmon @alephblog @bclund @nastrading: http://t.co/mkaMbNBE … Dec 11, 2012
  • +1 RT @fmanjoo: The University of California’s new logo is just unbelievably bad http://t.co/SFMdC22j Dec 10, 2012
  • Faith too RT @Mctaguej: It’s the growing number of collectivists among us that most concerns me. American individualism is in steep decline Dec 08, 2012

 

Replies

  • @e_d_sanders But once they are set up, most of the costs are incurred already, even the externalized ones. Dec 14, 2012
  • ‘ @JonathanProber My advice to all investors is to be wary of asset accrual items that seem too big relative to assets & profits $$ Dec 14, 2012
  • @JonathanProber I grew up on life insurance acctg, which is probably the most complex acctg of any industry, except investment banking Dec 14, 2012
  • @bundesbank Die Buba ist jetzt auf Twitter. Feiern Sie mit! Holen Sie sich eine Currywurst, Sauerkraut und ein Bier! $$ 😉 Dec 14, 2012
  • @finemrespice Living near Baltimore, idea of turning it in2a toxic nuclear waste dump could b an improvement. Better 40 miles SW, though $$ Dec 14, 2012
  • @quartznews Queen: “At least we don’t have to worry about whether this gold exists. Pity about the colonies & Fort Knox…” Dec 14, 2012
  • @Pedant_Bot This *is* Twitter, u know. Often we use less than optimal words 4 space reasons. Or, r u referrring to a blog post of mine? $$ Dec 14, 2012
  • @ritholtz I’m agreeing w/u, Barry – there is less cash available 2b invested than most think, b/c much of it is encumbered Dec 14, 2012
  • @ReformedBroker Thanks, Josh. You have my respect; it’s tough to put out quality content w/frequency, variety & regularity Dec 13, 2012
  • @SimoneFoxman “At least we don’t have to worry about whether this gold exists. Pity about the colonies & Fort Knox…” Dec 13, 2012
  • @finemrespice Got me to laugh. Yeh, hedge funds r the financial equivalent 2 alchemists. Let them propose alternative math, c who buys it $$ Dec 13, 2012
  • @finemrespice Alas, but mathematics is a tough foe. Let alternative mathematics try to make $$ by outcompeting traditional math 😉 Dec 13, 2012
  • @TheStalwart Not much in today’s trading… why, is something happening in Asia? Dec 13, 2012
  • @LaurenYoung The saints will laugh, the sinners will cry http://t.co/5cwaOtbH Dec 13, 2012
  • ‘ @Healey_trades I think the market is adjusting to the idea of higher future inflation, the Fed will not be able to maintain its policy $$ Dec 13, 2012
  • @OVVOFinancial I’ve never agreed with that — that would be why median CPI or trimmed mean CPI would be preferred Dec 12, 2012
  • @OVVOFinancial And if you use chained CPI vs chained PCE, they are virtually the same over the last 10 years Dec 12, 2012
  • @OVVOFinancial Over the last 10 years that would shave 0.2% off CPI inflation Dec 12, 2012
  • @OVVOFinancial I understand that Fed uses PCE $ TIPS r CPI-based, but there are no objective forward measures for PCE Dec 12, 2012
  • @cate_long Here’s 1-yr forward, 1-yr inflation implied from TIPS over the last 40 days: http://t.co/dmzjrO9W moving up, currently @ 2.01% $$ Dec 12, 2012
  • @cate_long Here’s a graph for that: http://t.co/dmzjrO9W Dec 12, 2012
  • @TheStalwart Ready at the criticism turret! Dec 12, 2012
  • ‘ @Kevin_Holloway As the market has run, $$ has grown, approaching max cash limit; 1.2x BV $BRK.B is below; well-run, difficult to replicate Dec 12, 2012
  • @WildestFacts 70% sounds high, but the process is simple, flip one and paste over the other for a picture Dec 12, 2012
  • “4 of 6 companies graphed are housing related. $CLGX is not an insurer. Maybe you need to revise?” ? David_Merkel http://t.co/vTGZv3i2 $$ Dec 10, 2012
  • Many thanks to my 6000th Twitter follower @syedasyraf4 . Wherever you are, I pray things go well for you. Dec 09, 2012
  • ‘ @muffiehbs05 @carney I guess you’re right, Muffie, much more than a fund http://t.co/78kXw5Rf A home 4 student & alumni moral decay $$ Dec 08, 2012
  • .@historysquared The slow corruption of the last set of strong balance sheets in the US. Leverage is being substituted for organic growth $$ Dec 08, 2012

FWIW

 

  • My week on twitter: 57 retweets received, 1 new listings, 54 new followers, 65 mentions. Via: http://t.co/SPrAWil0 Dec 13, 2012

 

Eliminating the Rating Agencies, Part 3

Eliminating the Rating Agencies, Part 3

Posted on by David Merkel

There’s one thing that is a little odd about me: occasionally as I am waking in the morning, something that I have been thinking about comes crashing in on me, and I get a moment of clarity where everything seems obvious for a complex question.

So to begin, I would like to say that I was utterly wrong in part 1 and part 2 of this series.? It won’t work.? Here’s why:

When is it safest to buy high yield bonds — when spreads are tight, or when spreads are wide?? Of course, when spreads are wide.? When spreads are tight, it is risky to buy corporates.? But my method for allocating capital would do the reverse: it would force a lot of capital to be allocated when spreads are high, and little when spreads are low.? That’s the wrong way to do it.

Second, most bond defaults occur because the borrower chokes on an interest payment, not a principal payment.? If you can make the interest payments, under normal circumstances, you can refinance the principal.? That indicates that the risk of a bond will grow less than linearly with maturity.? It may even be flat.

The upshot of this, is that you would want to assign capital counter-cyclically if you could, but no one would go for that, it doesn’t fit human nature.? So maybe a compromise works where there is a fixed amount of capital assigned across the cycle, and not varying by maturity.? So how do you make adjustments for variable riskiness?

For corporate bonds that have a public stock trading, a contingent claims model can yield good results.? Egan-Jones does that, though many of the major raters have similar models, that they watch as a check on their fundamental reasoning.

But many bonds have no publicly traded equity to give them estimates of value and volatility.? Whether private corporates or securitized debts, there is no way to accurately estimate risks, unless you have a cash flow database of the underlying properties/assets, and aside from CMBS, that would be hard to get.

That brings us back to the rating agencies.? Much as they failed on rating novel types of debt that the regulators should not have allowed regulated entities to invest in, the rating agencies did a good job in rating seasoned corporate bonds, both private and public, incorporating private data to sharpen their estimates of creditworthiness.

I know that Dodd-Frank has required Federal Regulations to eliminate the use of credit ratings.? What have they substituted? Management judgement, simplistic statistical tests, nothing, and the ability to use quantitative rating schemes.? My view is this: there will be a series of scandals out of this, and there will be a return to the rating agencies, where human judgment takes in the factors that can’t be crunched into an equation.

Thus I return to my opinions expressed in: In Defense of the Rating Agencies ? V (summary, and hopefully final). You can’t live with them, but you can’t live without them.

Redacted Version of the October 2012 FOMC Statement

Redacted Version of the October 2012 FOMC Statement

Posted on by David Merkel
September 2012 October 2012 Comments
Information received since the Federal Open Market Committee met in August suggests that economic activity has continued to expand at a moderate pace in recent months. Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to expand at a moderate pace in recent months. No change.
Growth in employment has been slow, and the unemployment rate remains elevated. Growth in employment has been slow, and the unemployment rate remains elevated. No change.
Household spending has continued to advance, but growth in business fixed investment appears to have slowed.? The housing sector has shown some further signs of improvement, albeit from a depressed level. Household spending has advanced a bit more quickly, but growth in business fixed investment has slowed.? The housing sector has shown some further signs of improvement, albeit from a depressed level. Shades up household spending.? Shades down business investment.
Inflation has been subdued, although the prices of some key commodities have increased recently. Longer-term inflation expectations have remained stable. Inflation recently picked up somewhat, reflecting higher energy prices.? Longer-term inflation expectations have remained stable. Shades up their view of inflation, blaming energy prices. TIPS are showing rising inflation expectations since the last meeting. (5y forward 5y inflation implied from TIPS.)
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. No change. Any time they mention the ?statutory mandate,? it is to excuse bad policy.
The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Emphasizes that the FOMC will keep doing the same thing and expect a different result than before. Monetary policy is omnipotent on the asset side.
Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. No change.
The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective. The Committee also anticipates that inflation over the medium term likely would run at or below its 2 percent objective. No change. CPI is at 2.0% now, yoy, so that is quite a statement.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee agreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month.? The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.? These actions, which together will increase the Committee?s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month.? The Committee also will continue through the end of the year its program to extend the average maturity of its holdings of Treasury securities, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities.? These actions, which together will increase the Committee?s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. No real change.

Does not mention how the twist will affect those that have to fund long-dated liabilities.

Wonder how long it will take them to saturate agency RMBS market?

 
The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will closely monitor incoming information on economic and financial developments in coming months. No change. Useless comment.
If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. No change.
In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases. The FOMC promises what it cannot know or deliver.
To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. No change.

Promises that they won?t change until the economy strengthens.? Good luck with that.
In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015. No change
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. No change
Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and preferred to omit the description of the time period over which exceptionally low levels for the federal funds rate are likely to be warranted. Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and disagreed with the description of the time period over which a highly accommodative stance of monetary policy will remain appropriate and exceptionally low levels for the federal funds rate are likely to be warranted. Lacker sharpens his hopeless dissent against a flock of doves.

?

Comments

  • No big changes.? The FOMC?s views on household spending and inflation have risen.? Note that the CPI is at their 2.0% line in the sand.
  • In my opinion, I don?t think holding down longer-term rates on the highest-quality debt will have any impact on lower quality debts, which is where most of the economy finances itself. When this policy doesn?t work, what will they do?
  • Also, the investment in Agency MBS should have limited impact because so many owners are inverted, or ineligible for financing backed by the GSEs, and implicitly the government, even with the recently announced refinancing changes.
  • The key variables on Fed Policy are capacity utilization, unemployment, inflation trends, and inflation expectations.? As a result, the FOMC ain?t moving rates up, absent increases in employment, or a US Dollar crisis.? Labor employment is the key metric.
  • GDP growth is not improving much if at all, and the unemployment rate improvement comes more from discouraged workers.

A Statement to Dr. Bernanke:

More debt will not get us out of this crisis.? The Great Depression ended when enough debts were compromised, paid off, or cancelled, which from my study is 1941, before World War two started.

Your policies further aid the growth of the budget deficit, and encourage malinvestment in housing and banking, two things in a high degree of oversupply.? The investments in MBS only help solvent borrowers on the low end of housing, who don?t really need the help.? Holding down longer-term rates on the highest-quality debt does not have any impact on lower quality debts, which is where most of the economy finances itself.

The problems with unemployment are structural, not cyclical.? Labor force participation rates continue to decline.? There is greater labor competition around the world, forcing down wages on the low end.? There is nothing that monetary policy can do to change this.? You can create stagflation through your policies, but not prosperity.

When inflation does arrive, the FOMC is going to find it very hard to raise Fed Funds or shrink its balance sheet.? The banks will not react well as you try to shrink, and the long rates that you have held down will react violently.

You haven?t thought through all of the ?second order? effects of your policy.? Even the ?first order? effects, which favor the rich over the poor, seem to elude you.? Assets rise, helping the rich.? Interest rates fall, helping the rich who can borrow.? Commodity prices rise, harming the poor.

Insanity is doing the same thing over and over, and expecting a different result.? When will you realize that the policies of the Fed aren?t helping, and need to be abandoned?

Book Review: How To Really Ruin Your Financial Life and Portfolio

Book Review: How To Really Ruin Your Financial Life and Portfolio

Posted on by David Merkel

Before I start, a thanks to all of my readers who have voted on my reviews. Note: if you have voted on many of my reviews favorably, further votes won’t help.? Amazon limits the effects of fans.? Onto the book:

For those unfamiliar with Ben Stein, he has done a series of books on “How to Ruin…” for example: How to Ruin Your Life and How to Ruin Your Financial Life. I have not read either of those two books, but after a glance at the table of contents of each book, I can say that what he wrote there is right, even if it is short.

If you can avoid making wrong moves, right moves will occur on average.

But… most of this is simple commonsense stuff reported from a negative angle.? If you have read the personal finance category at my blog, you would know what he has written and far more, and it is free.

There is no bad advice in this book, if you understand that it is offering you bad advice.? By telling you you to do stupid things, it incites you to do what is right.

Quibbles

The book is not worth $12 to those with a reasonable understanding of the markets.? It is worth a lot to the uninformed who think they know something but don’t.? This is a book you give; it is not a book that you buy.

Who would benefit from this book: ? This is the sort of book that you give as a gift to your clueless brother-in-law.? It has value there, to raise the awareness of those who are destroying their financial lives.? If you want to, you can buy it here: How To Really Ruin Your Financial Life and Portfolio.

Full disclosure: The publisher sent me a hard copy of the book, without my asking.

If you enter Amazon through my site, and you buy anything, I get a small commission.? This is my main source of blog revenue.? I prefer this to a ?tip jar? because I want you to get something you want, rather than merely giving me a tip.? Book reviews take time, particularly with the reading, which most book reviewers don?t do in full, and I typically do. (When I don?t, I mention that I scanned the book.? Also, I never use the data that the PR flacks send out.)

Most people buying at Amazon do not enter via a referring website.? Thus Amazon builds an extra 1-3% into the prices to all buyers to compensate for the commissions given to the minority that come through referring sites.? Whether you buy at Amazon directly or enter via my site, your prices don?t change.

 

Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel

Hoisington Capital Management

 

  • . @paulnovell It will be public in a few days — they e-mail it out to friends & clients b4 posting it here: http://t.co/pZ4jJrQ1 $$ Oct 12, 2012
  • Prior tweets courtesy of Van R. Hoisington & Lacy H. Hunt, Ph.D. Whole thing will be posted here http://t.co/pZ4jJrQ1 in a few days $$ Oct 12, 2012
  • @wanderinggull Which? I don’t know. What was meant to produce “ever closer union” seems to be producing the opposite. Nobel = Pollyanna Oct 12, 2012
  • Until the excessive debt issues r addressed, the multiyear trend in inflation, & thus the long Treasury bond yields will remain downward $$ Oct 12, 2012
  • “During all of the Fed actions since 2008 the velocity of money has plummeted and now stands at a five decade low” Hoisington & Hunt Oct 12, 2012
  • A jump in daily essentials has a more profound negative impact on living standards in economies with lower levels of real per capita income. Oct 12, 2012
  • How the Fed expects economic traction from higher stock prices when rising commodity prices r curtailing real income & spending is puzzling Oct 12, 2012
  • These three studies show that the impact of wealth on spending is miniscule?indeed, ?nearly not observable.? Hoisington Oct 12, 2012
  • “Fed Chair Ben Bernanke and other Fed advocates believe the ?wealth effect? of QE3 will bring life to the economy.” Hoisington Oct 12, 2012
  • Prior Tweet a quotes Hoisington & “unintended consequence of these Federal Reserve actions, however, is to actually slow economic activity” Oct 12, 2012
  • QE3 is a tacit admission by the Fed that earlier efforts failed, but this action will also fail to bring about stronger economic growth. $$ Oct 12, 2012

?

Please Follow

 

  • #FF @japhychron @danprimack @treehcapital @insidermonkey @vitaliyk @herbgreenberg @tracyalloway @nancefinance @marykissel @diana_olick $$ Oct 13, 2012
  • Please follow Cato Scholar and JHU professor that I learned a lot from: @steve_hanke Oct 10, 2012

 

Market Dynamics

 

  • As an aside, there’s kind of a rule of thumb for Bermuda insurers on buybacks: >1.3x tangible book: special dividends. <1.3x TB buybacks $$ Oct 12, 2012
  • The Buyback Epidemic http://t.co/l9SvTwZM @reformedbroker notes that buybacks make less sense, the higher valuations get. I concur $$ Oct 12, 2012
  • New Regime http://t.co/L2JaQC2J @reformedbroker notes a sea change in the markets. I’ve been heading that way; still thinking about it $$ Oct 12, 2012
  • CNBC: Jim Rogers vs. Marc Faber (FULL) 10/04/2012 http://t.co/b5sEOEZb Faber & Rogers on the same segment? What a hoot! $$ $GLD $SPY $TLT Oct 12, 2012
  • Bubble-Era Financing Returns as Profits Falter http://t.co/yhxBEFxq Pay-in-kind bonds return, very nice. 2 years of rally left at most $$ Oct 11, 2012
  • Wrong: Bullish Sign for Stocks: Leverage Is Up http://t.co/1Qvcdkh9 What matters more is whether leverage will rise in the future $$ Oct 09, 2012

 

Rest of the World

 

  • Zhang Weiying: China’s Anti-Keynesian Insurgent http://t.co/TGNGlo9e Fascinating tale of an Austrian economist surviving in China $$ Oct 13, 2012
  • Hollande Robbed of Growth Engine as Companies Cut Investment http://t.co/ZGdrllIG Logical 2 invest less when EU & France r a mess $$ Oct 12, 2012
  • EU Wins Nobel Peace Prize http://t.co/VoTaN3ZK Nobel committee finally “jumps the shark.” The EU is unstable; a war waiting 2 happen $$ Oct 12, 2012
  • Spanish Bonds Risk Forced Selling as Rating Approaches Junk http://t.co/yO8XWNl4 The Rating agencies r flawed, but on credit they r honest Oct 12, 2012
  • IMF?s Blanchard: Healing From Crisis Could Take Decades http://t.co/NXYmLjU3 Crisis won’t b healed until total debt levels normalize $$ Oct 11, 2012
  • IMF Sees ?Alarmingly High? Risk of Deeper Global Slump http://t.co/B7Dg9Ah9 A stopped clock is right twice/day, $ the IMF is right now $$ Oct 09, 2012
  • Iran Low on Options as Hyperinflation Concerns Spark Gold Dash http://t.co/rYqDjinO Hyperinflations spawn currency substitutions: gold, $$ Oct 09, 2012
  • Chavez Win Called by BofA Sparks Selloff as Barclays Flops http://t.co/DNPxpVzO Sad that Chavez won, but the bonds reflected a loss $$ Oct 09, 2012
  • Why a U.S. buyout firm is investing in Greece http://t.co/26oB31e9 ht: @danprimack – Companies w/global markets insensitive 2 local probs $$ Oct 08, 2012
  • Sicily, a Portrait of Italian Dysfunction http://t.co/w3dn2JFe Core Europe is to Italy as Italy is to Sicily. $$ gone & hard work starts Oct 08, 2012
  • Cheapest Chinese Stocks Since ?97 Not Enough to Signal Rally http://t.co/rTEm2MNF Noneconomic actors compete & drive down future profit $$ Oct 08, 2012
  • The Iran Hyperinflation Fact Sheet http://t.co/bitjVaqn From my former professor @ JHU, Steve Hanke. Financial sanctions r biting in Iran $$ Oct 07, 2012

 

US Real Estate

 

  • OCC Forced JPMorgan, Wells Fargo to Write Down Home-Equity Loans http://t.co/qxXjXBoS FD: + $WFC – ’bout time. Recoveries poor on HEL $$ Oct 12, 2012
  • California Leading U.S. Out of Housing Bust http://t.co/oEaOG4nf I would be wary of “dead cat” bounces here $$ Oct 12, 2012
  • Tech Firms Become Real- Estate Trusts http://t.co/GrHU2bo5 Tech firms that own a lot of real estate take advantage of becoming REITs $$ Oct 11, 2012
  • Not New York Towers Rise With Embrace of Yield http://t.co/3MKpRdVi When vacancy rates r this high, ordinarily rents fall. Y not now? $$ Oct 08, 2012

 

Agriculture

 

  • Milk-Cow Drought Culling Accelerates as Prices Jump http://t.co/WvHEturP Anything involved in animal husbandry is having tough time now $$ Oct 11, 2012
  • Midwest Drought Claims Poultry Producer http://t.co/9K4cL3Gx Many firms involved in the meat biz r having a rough time now. $$ Oct 11, 2012

 

Other

 

  • I’m not much of an #Orioles fan, but don’t you have to love a team of nobodies who can challenge the highly paid #Yankees? $$ Oct 12, 2012
  • The UN has declared today as the International Day of the Girl Child http://t.co/L0nS6wtd Sex selection abortion kills the most girls $$ Oct 11, 2012
  • If Only T. Boone Pickens Had Died http://t.co/tpXYGeCV Score: TB Pickens 0, Wealthy donors 0, Oklahoma State Univ. 0, Life Actuaries 1 $$ Oct 08, 2012
  • Musk?s SpaceX Launches Craft for Space Station Deliveries http://t.co/Z3MH68Ud Space age begins as governments r less of a factor $$ Oct 08, 2012
  • California Facing $5 Gasoline Stirs Brown to Relax Rules http://t.co/uQUPOz8f There is a pain point 4 everyone, just found 4 CA gas $5 $$ Oct 08, 2012

 

Comments

?

  • “Good post, Josh. You have identified many of the best. No one of us covers it all; it’s a strong list” ? David_Merkel http://t.co/3Qg6WWZk Oct 10, 2012
  • At this rate, growing tobacco should be prohibited. Oh, wait, we tried that with alcohol. Never mind. $$? http://t.co/hU9nI6l2 Oct 09, 2012

?

?

On Angela

?

  • @PavChyt @matinastevis Her *former* husband. She kept the name b/c it was good politics. She did not keep him. Oct 08, 2012
  • @PavChyt @MatinaStevis I received the name Merkel at birth. Angela got it from her 1st husband. At least people r spelling it right now $$ Oct 08, 2012

?

Retweets

 

  • RT @MuniCredit: Citi Muni Presentation: http://t.co/ONrQe9gA #muniland h/t: @bondgirl Oct 12, 2012
  • I appreciate retweets RT @LSilverspar: Not enough for the value of your posts. If you value the retweets, I will do so far more often. $$ Oct 12, 2012
  • My week on twitter: 22 retweets received, 22 new followers, 16 mentions. Via: http://t.co/SPrAWil0 Oct 11, 2012
  • RT @danprimack: Every time people get all worked up over a national presidential poll, I wonder if the electoral college was eliminated … Oct 08, 2012
  • True of many notable CEOs w/earnings 2 smooth RT @rcwhalen: GE’s Jack Welch Knows All About Cooking the Books http://t.co/5vJeRux6 $$ Oct 08, 2012
  • RT @Convertbond: “Markets are increasingly distorted by Central Banks, attempts to squeeze drops of growth from overindebted developed w … Oct 07, 2012
  • Shock! $$ RT @BarbarianCap: Revised Greek GDP figures show recession deeper than thought http://t.co/FCspv2gU. > data released friday night Oct 06, 2012
Sorted Weekly Tweets

Sorted Weekly Tweets

Posted on by David Merkel
  • My week on twitter: 34 retweets received, 1 new listings, 33 new followers, 40 mentions. Via: http://t.co/SPrAWil0 Sep 27, 2012

 

Energy

 

  • Natural Gas Cars Are On The Road; Potholes Remain http://t.co/T9KxgbCa Optimistic that CNG & LNG will get enough distribution 2b viable $$ Sep 29, 2012
  • United Airlines will study Delta’s refinery bid http://t.co/iHEuWvfp This will not end well; fundamentally different businesses $$ $UA $DAL Sep 29, 2012

 

Rest of the World

 

  • Japan Data Show Recession Risk Growing http://t.co/UArgdWd4 “Find someone who is optimistic about the economy & ask them how they can b” Sep 29, 2012
  • Shanghai Bonded Copper Stocks May at Record, Survey Shows http://t.co/MMrqmsmi Glut of gluts, what will China do with a flat economy? $$ Sep 28, 2012
  • Toyota Unplugs Electric Car Hype http://t.co/s36gMkcZ Indeed it is hype, better 2 run cars on Natgas or gasoline $$ less waste 4 now Sep 28, 2012
  • China Bankrolling Chavez?s Re-Election Bid With Oil Loans http://t.co/y3tAN7WF China wants oil, Chavez wants $$ , a match made in… Sep 28, 2012
  • SNB Disputes S&P Estimate of Bond Purchases http://t.co/eC1AxRkc Well of course they would dispute it, harms their policy credibility $$ Sep 28, 2012
  • Spanish Bonds Slump as Marchers Plan Further Protests http://t.co/Sq3eiO1n Eurozone is a political construct, will agreement persist? $$ Sep 28, 2012
  • Why Asian Airlines Reign Supreme http://t.co/yNcjYfce It is amazing how great service drives the rankings $$ Sep 28, 2012
  • The real extent of China?s economic hard landing http://t.co/n6g2jBCP By one measure, China’s real GDP growth rate is 1.6% $$ Sep 24, 2012
  • Is China Burning? http://t.co/PxfPOebV China stirs up anti-Japanese hatred to divert attention away from the weakening economy $$ Sep 24, 2012
  • India Bids for ConocoPhillips Assets in Canada http://t.co/cIc6wlut Spidey sense says India will get the worse of it $$ FD: + $COP Sep 24, 2012
  • Aussie Debacle Flags China Hard Landing as Iron Market Melts http://t.co/8PKnupSl China sneezes, the Australians catch a cold $$ Sep 24, 2012
  • How weak must the Danish economy be, for them to do this? Are their banks in that bad of a shape? $$ http://t.co/vNR7Utt5 Sep 24, 2012

 

Credit Markets

 

  • Junk Bonds in US Poised for Biggest Retreat in 4 Months http://t.co/rIqU3rjt 2 early 4 a washout; no significant defaults on the radar $$ Sep 29, 2012
  • U.S. 30-Year Mortgage Rates Fall to Record Low of 3.4% http://t.co/EB2UZaic Those that r not inverted can refinance; tough 4 rest $$ Sep 28, 2012
  • Mortgage-Bond Spreads Cap Biggest Weekly Drop Since December ?08 http://t.co/cjGISver Anticipates Future Fed buying, doesn’t help much $$ Sep 22, 2012

Central Banking

 

  • Money For Nothing: Inside the Federal Reserve http://t.co/QoHuWfGb Independent, non-partisan, non-conspiracy-theorist documentary comingsoon Sep 29, 2012
  • Bernanke Put: Beware of Easy Money http://t.co/bPsdilQM The lure of free money brings out the worst in all of us. $$ Sep 28, 2012
  • Plosser Says QE3 Risks Fed Credibility, Won?t Boost Jobs http://t.co/ffkpU2Jh Right; once we r @ the zero bound the Fed is impotent $$ Sep 28, 2012
  • Fed Helps Lenders? Profit More Than Homebuyers http://t.co/CYz6O8r0 Offering 2buy RMBS benefits existing holders more than anyone else $$ Sep 28, 2012
  • Sean Fieler: Easy Money Is Punishing the Middle Class http://t.co/Lg2yzUCs Who gets benefits of productivity improvement? Ppl or Govt $$ Sep 28, 2012
  • A time of hoarding and inflation fears, 1930s edition http://t.co/wOkNf0Uj @izakaminska tells us about inflation worries in the 1930s $$ Sep 25, 2012
  • Signs Of The Gold Standard Are Emerging From Germany http://t.co/YPLrNcvz Not likely; would be interesting 2c Germany go Euro -> Gold $$ Sep 24, 2012
  • ‘Free’ Checking Costs More http://t.co/QXxPaQCH Another casualty of Fed policy, which disproportionately hurts those less-well off $$ Sep 24, 2012

 

US Politics

 

  • U.S. Unease Over Drone Strikes http://t.co/Hlc2djCz This is yet another reason y much of the Muslim world hates the US $$ Sep 28, 2012
  • US Ties Libya Attack to ‘Powder Keg’ in Mali http://t.co/998UPNLd When did the Obama administration know this, y wasn’t it disclosed? $$ Sep 28, 2012
  • Ryan at the AARP http://t.co/ZgXiPrkr He didn’t trim his ideas and still won applause. AARP leaders more liberal than members $$ Sep 24, 2012

 

Market Dynamics

 

  • Where stock market will be in fall of 2016 http://t.co/AolvDXon Seiver’s model indicates a flat market for the next four years $$ Sep 29, 2012
  • Wrong: An Easy Strategy For Bulking Up On Yield http://t.co/HYbdXqzT Better to buy companies w/strong dividend capacity than high divs $$ Sep 28, 2012
  • New Wave of Workers Tries Novel Approach: Save More http://t.co/sE9pp03d Everything old is new again; save $$, do not rely on returns Sep 28, 2012
  • Ken Fisher: Bull Market Is Halfway Done http://t.co/xDEa0MXq I am a moderate bull now, but I find that large cap leadership could fail. $$ Sep 28, 2012
  • Are financial advisers worth their fee? http://t.co/HdRYJ3ak Gamma: value of protecting an individual from buying high & selling low $$ Sep 28, 2012
  • Prospects for Stock and Bond Returns Are Dim http://t.co/IYAVPFAU The performance difference will depend on inflation vs deflation $$ Sep 24, 2012
  • Pension Crisis Looms Despite Cuts http://t.co/9ZW8eUeR Eventually state constitutions will be amended 2 roll back existing benefits $$ Sep 22, 2012
  • Borrowing Against Yourself http://t.co/kB7IVuN2 Debt against investments is usually a bad idea unless ur a specialist in the business $$ Sep 22, 2012

 

Miscellaneous

 

  • Auto-Insurance Cost to Rise 2.8% to $839, Group Says http://t.co/8XLCC4CE Insurance companies pass costs & reduced interest through $$ Sep 28, 2012
  • Scientific Reproducibility: Begley’s Six Rules http://t.co/8EkCDsMP Following the 6 rules would reduce the # of articles published $$ Sep 28, 2012
  • Gordon Moore’s journey http://t.co/PHYlU3Nq Long Q&A w/a founder of Intel; An accidental entrepreneur who knew his weaknesses $$ FD: + $INTC Sep 24, 2012
  • Bronte Capital?s short waves http://t.co/EHhxTO4j Do not underestimate John Hempton; bright guy. Very good @ spotting bad ideas/frauds $$ Sep 22, 2012
  • Yale Versus Norway http://t.co/aSF8PEZR Worth a read. My sympathies r w/Norway here, but I fear they r tooting their horn @ a bad time $$ Sep 22, 2012
  • Cheating Upwards http://t.co/UtDtRjSD Children r less ethical now than 35 years ago, who were less ethical than 35 years ago, who were… $$ Sep 22, 2012
  • Push to Let College Students Carry Guns Picks Up Steam http://t.co/ke6zM1Si Who is responsible for my protection? Me or the Govt? Me $$ Sep 22, 2012
  • How to Stop Hospitals From Killing Us http://t.co/QKOsAOpy Should b known: going 2a hospital can kill you. 6th leading cause of death $$ Sep 22, 2012

 

Responses

 

  • @AOverheard Could b a good move, would have to review the Stat statements. I sold my shares at a split-adjusted $290. Buying debt:no-brainer Sep 29, 2012
  • @historysquared In the process of raising 8 children (5 adopted) I have seen 1) those w/limited abilities expand them 2) those w/great + Sep 29, 2012
  • @historysquared abilities waste them. 3) those w/great abilities improve them, & 4) those w/limited abilities improve only a little Sep 29, 2012
  • @groditi Of all the companies that I own $SPLS worries me the most. Stronger than bricks & mortar competitors, but can they beat $AMZN? $$ Sep 28, 2012
  • @munilass I think both of those insights r correct; algorithms r only as good as the problems they r applied 2; most people don’t like logic Sep 28, 2012
  • RE: @bloombergview Well reasoned.? No arguments here. $$ http://t.co/ChJ9BDib Sep 26, 2012
  • RE: @bloombergview “Luck” happens when preparation meets opportunity, There are exceptions like Sixto in South Africa? http://t.co/JmFQSDFB Sep 26, 2012
  • @volatilitysmile All financials, or just depositary financials… would agree if it is the latter. Sep 25, 2012
  • @pjackson @LaurenLaCapra @_tpr @japhychron As an example, consider the tax reform act of 1986; almost all tax preferences lost. $$ Sep 25, 2012
  • @pjackson @LaurenLaCapra @_tpr @japhychron Or prepare for the day of the “grand bargain” where everyone’s ox is gored 4 the good of all $$ Sep 25, 2012
  • @pjackson @LaurenLaCapra @_tpr @japhychron I think you have to plan for the day of crisis, so that you can be ready to say, “Do this.” $$ Sep 25, 2012
  • @MerrittJennifer @LaurenLaCapra It would not be immediate, but housing prices would fall, & so would refinancing $$ Sep 25, 2012
  • @pjackson @LaurenLaCapra @_tpr @japhychron Lauren asked what we would do, not what was possible. Only a crisis will see actions taken $$ Sep 25, 2012
  • @japhychron @LaurenLaCapra @_tpr so that Medicare covers less: cheap fixes & palliative care; state rtees: deal to reduce all benefits $$ Sep 25, 2012
  • @LaurenLaCapra @_tpr @japhychron Hard to fit into a tweet; phase out GSEs & Int ded, shrink FHA, ag lending, scale back SS, redo Medicare + Sep 25, 2012
  • @LaurenLaCapra @_TPR @japhychron Ultimate Q is how many things we *can/should* subsidize, particularly w/GSEs, entitlements, state rtee bens Sep 25, 2012
  • RE: @bloombergview When the government or Fed buys the securities of companies, it plays favorites. We should make th? http://t.co/3ndyaApd Sep 24, 2012
  • @GregorMacdonald Re: gold, have u seen this? http://t.co/5rPvqfEz Re: solar, have u seen this? http://t.co/tZiaP5mV Wonder what it costs? Sep 22, 2012
  • @abnormalreturns Stocks r correlated w/inflation expectations. Gold is negatively correlated w/real rate of interest. Facts. $$ Sep 22, 2012
  • @etpxp Hard to do a real test. Sep 22, 2012

 

Retweets

 

  • In praise of all-cash compensation. RT @EpicureanDeal: Defending the Indefensible http://t.co/a7pGhqLr featuring @LaurenLaCapra Obvious $$ Sep 22, 2012
  • RT @volatilitysmile: “a failed president is running slightly ahead in the polls of a challenger who has a real CV but is so politically … Sep 24, 2012
  • At low OASs?! No $$ RT @PIMCO: Gross: How many Treasuries you own is not the question. How many 3 and 3.5% 30 year mtges is. Own mortgages Sep 24, 2012

 

Theme: Overlay by Kaira.