I thought I had done my last post for the day, but I had to post this one:
I don’t think Wall Street was drinking alone.
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I read this in the Useless Today and one of the comments was if wallstreeters were drunk the Administration was the bartender serving the booze. Seems correct.
metro -
“Remorse,” says Igor (he must be sorry he put your #1 in the dungeon
)
He has been doing that to me lately. I keep wondering what\’d I say to tick him off?
Igor says stupid!
Metro-
I think Igor must have got up on the wrong side of his rack this morning- he just made me log in, which I usually only do on a strange computer.
He may have taken a dislike to your ISP- which he does now and again.
I had the same thought. The government brought the bottle when they were supposed to be chaparoning.
The revelers were legal adults, so they didn’t have an excuse- but we should never forget that the foolishness was a group effort.
The voters who put him in a second term were drunk. The Supreme Court justices who put him for the first term were stupid, drunk, and stoned.
OT but this article by my favorite business humor editor at the Denver Post has me freaked.
Barking Up the Wrong Securities:
Death of an auction-rate securities salesman
http://www.denverpost.com/busine…ness/ ci_9965677
Wachovia is implicated in this article but I understand it’s an industry wide problem (why do they call it that, what physical product do they make?)
Anyway, my mom was sold some muni’s by a “nice man” with Smith Barney last November. How can I tell if they are of this stink or not?
Sorry, I got an extra space in this link
http://www.denverpost.com/business/ci_9965677
This should work.
brucewho -
Here in Canada, many retail investors were clobbered when the ABCP market (subtly different than Auction Rate Securities, but the seize-up must have felt similar) froze over the weekend of 11-12 August 2008. That was the first part of world debt markets to freeze, and the unfolding story was not friendly for investors. Probably the shape of things to come for other asset classes.
Nearly everything in debt is frozen world wide now, although some essential parts are being kept on life-support through central banks providing liquidity. About the only bits of the debt market truly operating now are actual sovereign obligations like US treasuries and the GSEs’ senior debt (“agency debt”). The main part of today’s historic Congressional rescue package is to keep that last from going down.
John-
So my mom’s munis whether or not they are “auction rate” are siezed up now? Is this the magnitude you speak of?
Hey Twist, I finally got in. (Putting a space between first and last name helped!)
Too much alcohol on this thread for me, but kicking the US President when he is down is OK. That’s what our First Amendment is all about.
I’m still trying to figure out all that’s in the GSE legislation and I think, for now, Fannie and Freddie may be allowed to do what they do best (no snide comments) and bring much needed liquidity to the market.
Not clear how the new regulator and the current one will interact or how the new mortgage limits will play, with different (higher ones) in effect now.
It does look like Paulson may have prevailed, in the short term–against the WH ideologue neanderethals.
One thing about which I am adamant is, if either GSE takes a penny from the Treasury, they should lose their “GSE” status and just become a “G” institution, foregoing all of those private sector benefits, because it will mean they lost control of their company and couldn’t meet their obligations with current capital, assets sales, or raise new capital.
The latter development hasn’t occurred, yet, and may never happy, despite all of the hand wringing.
bruce (#9) -
Don’t Panic.
From where I’m standing things look grim, but I’m no expert and now that you mention it, munis really do deserve a sort of “all school, stadium, sewer, etc. … offerings are local” designation. One big Florida consolidated fund got in big trouble many months ago, and there have been rumblings from a couple of others, but your mileage will vary.
If the cash flow from the offering (school taxes supporting the school being built, say) is sound, the bond is sound. Where problems can occur could conceivably be, e.g., if the offering “borrowed” a high rating by paying premiums to a monoline insurance company to insure repayment of principal and interest. The biggest companies in that sector, MBIA and Ambac, have been having terrible trouble. It’s where municipalities tried to get cute that the debt might start having problems.
To reiterate, my knowledge here is very sketchy. I certainly don’t want to imply that your super-safe bond fund, fixed-income investment, or money-market account is insafe! Or safe for that matter. As reported a couple of days ago, PIMCO is very exposed to agencies, but this shouldn’t be a problem if Paulson’s dramatic bailout works.
Thanks John-
I need to research this myself. I have the names and need to google them to see what they are about.
Bill (#10) -
Thanks again for dropping by
I’m checking your blog on a regular basis, but please drop us an e-mail or pop a link here when you choose to post there. Don’t hesitate to reply to Debi’s posts or the comments, either. I think we disagree on almost all policy aspects of this story, but you’ve got to be America’s #1 expert on GSE political risk matters.
Bill-
I’m glad you and Igor have worked things out!
I doubt anyone has all the legislation figured out. It’s what? 700 pages or so? I worry Congress doesn’t have a clue. This seems to be “Pass it now- figure it out later.”
I’ll second John- stop by anytime. It’s true we’re a bunch of grumpy bears around here, but your perspective is welcome.
Bruce (#6) -
Each of your mother’s securities has a unique (for that security) CUSIP number associated with it. The CUSIP will help you determine whether the security has a fixed or varaible rate. Usually, on the purchase confirmation and monthly (or quarterly) statement, there will be a description of the security. You need to look for the word “auction” or an abbreviation such as or containing “AR”. Also, if it is a fixed-rate security the coupon rate will (usually) be listed just before the maturity date. (With ARPS, there is usually no maturity date given.
The reason ARPS were an industry-wide problem is because brokerage firms (including brokers) were paid more on the sale of these things than they were/are on money market funds and CDs. The firms touted the ARPS to the brokers as a safe, higher-paying (to the customers) alternative to money market, and the brokers turned around and gave the same line to their customers. I have been on a few conference calls with closed-end mutual funds (I own some of the closed-end funds for clients, not the ARPS) who issued ARPS, and it was all I could do to keep from falling out of my chair laughing as the customers/clients/buyers tried to pin blame on the issuers instead of the moron brokers who sold them the ARPS. Suffice it to say there is plenty of money locked up in these things that was thought to be highly liquid.
Mr. Maloni -
I wonder, is there any discussion on the hill of getting F&F executives on the government pay scale and off their ludicrous (for entities that have now fed at the public trough) private comp packages?