Nobody wants to do a G7 or G20 deal. Here is why I think it will not happen… Fear! The same reason why banks are not lending with each other is the same reason why the Euro zone, or world cannot come to a single deal. They don’t trust each other. And if they don’t (more…)
The mathematics of shorting is not fair. And this is a serious issue.
Let’s say with all things being equal you decide to go long and short a 100 USD stock for a period of one year, and your starting capital is 100 USD. In each case we will calculate the gains or losses of each position with a movement of 10 USD. For calculation purposes the interest rate would be libor which will be 4%. If you are borrowing money it would cost you 4.5%, and if you want interest you will get 3.5%.
Wait Wait I need a rate cut… No Wait Wait I need more liquidity… No Wait Wait I need a common European approach… No Wait Wait I need capitulation…
Get the idea! When I hear these traders I just gag! I am not kidding here.
Whenever I tell people that I work in a bunker they think, "oh Christian you are working in a concrete basement and speaking metaphorically" No folks, I am speaking very seriously, I have a bunker! My buddy who visited also did not believe me, but when I showed him the doors and window doors he (more…)
Many people were complaining about how the central banks and Fed kept pumping in money. You know trying to keep things afloat. The reason has to do with confidence (which you already heard) and keeping credit moving (which you also already heard). Though when I hear these politicians sometimes I wonder. Let me explain the lending model a bit and you will understand why we have an increasing Libor rate
Many critique Wall Street on this mess. Well, folks, yes Wall Street bears some blame, but let me remind you the reader on what was a prime motivator. Read the blog, I really want you to. This blog entry was written in February 2007, just months before this mess was about to start.
Same payment with each scenario…except you’re able to buy $132,725 more home using a 40 year fixed over the 15 year fixed and $107,750 more home with the 30 year fixed mortgage. With an interest only product, such as a 30 year fixed rate with a 10 year interest only payment, the savings (or how much more home they could buy) would be even more substantial.
I hardly ever recommend 15 year fixed mortgages to my clients…unless they’re doctors or someone who makes so much money that their mortgage deduction is reduced and they all ready have all the investments they need.
Even if Christy and Tom’s case where they want to ”look around and buy the home where, if we’re lucky, we’ll grow old together”. Why pay off your mortgage and lose one of your best income tax deductions?
Christy, Seattle is not too pricey for normal people…your 15 year fixed mortgage is.
Time and time again I hear about how banning shorting, or restricting shorting is counter-productive and would require banning or restricting going long. I had a think about this over the weekend and have come to the conclusion it is not the same thing, but very different in two major aspects; psychology, and impact on the innocent.
You have all probably heard what Steinbrueck has said.. Steinbrueck criticized the United States for failing to adequately regulate investment banks and said free-market policies embraced by the United States and Great Britain that emphasized a short-term "insane drive for higher and higher profits" were partly to blame for the crisis. So what is his (more…)
Daily Kos is a left-wing political blog, but they have a pretty good writeup of what is happening with these “credit swaps” and AIG, etc. It reminded me of reading about mortgage-backed securities about this time last year, just as the shit was hitting the fan in the mortgage market. Now I’m learning about credit (more…)
A couple of days ago Cramer ranted on how the SEC should do something about shorting. On July 30 of this year I complained about naked shorting! I have had debates with many people on this issue. What the SEC has done is superb!
