StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



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  • Mortgage Bailout Politics May Be Far More Difficult Than They Seem   5 years 26 weeks ago

    I am just curious about how these fluctuations affect the lending houses? I mean, there are hundreds lending fha loans and all, but how can the weather the storm that is brewing? They've got to be seeing some huge drops in business.

  • Stabilization Bill Was Just Released. Enactment Late Next Week Is Almost Certain.   5 years 26 weeks ago

    for the reality check.

    It's looking less and less like there will be any profit for the taxpayer. The shoe is dropping in Europe (bank failures), market futures tanking this morning.

    This bailout bill could turn out to be "too little, too late".

  • Financial Rescue Plan Agreement Will Be Announced Soon   5 years 26 weeks ago
    That's the original Dodd proposal from last week, not the version they agreed to Sunday afternoon.
  • Stabilization Bill Was Just Released. Enactment Late Next Week Is Almost Certain.   5 years 26 weeks ago

    I don't think you understand either the problem or the proposed solution if you think taxpayers will make a profit. But I do know a bridge in Brooklyn that you might want to consider buying...

  • Debate First Reactions   5 years 26 weeks ago

    Stan: Yes, on McCain's tie! I was wondering, how could his advisors let him go on TV with a narrow-striped, "strobe effect" tie?!! And how could they have coached him to never look at Obama when he spoke? It made him look like a babbling, grumpy, yet robotic-like (old) man... with a glowing, strobing tie... Not good visuals at all.

  • Stabilization Bill Was Just Released. Enactment Late Next Week Is Almost Certain.   5 years 26 weeks ago

    The manipulation possible with mark-to-market is worthy of note. Read "The Smartest Guys in the Room".

    The problem with so much of this toxic mortgage security stuff is that THERE IS NO MARKET that is realistic to "mark to". When Lehman goes down and sells their stuff for pennies on the dollar it forces every institution holding these to immediately "mark to" those fire sale prices -- even though the price on these same securities might be twice as high in a month or two or three or whatever.

    With this initial $350 billion the treasury can "make a market" in this stuff, and that immediately helps all the bank balance sheets.

    And it's likely that, if the economy improves, the taxpayer will make back all of that $350 billion, and perhaps even make a profit.

  • Financial Rescue Plan Agreement Will Be Announced Soon   5 years 26 weeks ago

    "Requirement to establish mandatory insurance/guarantee program at no expense to the taxpayer. "

    No. The Treasury will establish a VOLUNTARY program that gives firms the ability to purchase insurance on troubled assets, rather than selling them.

  • Stabilization Bill Was Just Released. Enactment Late Next Week Is Almost Certain.   5 years 26 weeks ago

    Any bill that establishes a zero percent fractional reserve banking system while getting rid of that tiresome mark to market concept is just what we need to continue fooling the rest of the world. They'll never understand our banks are bust so long as the wizards of Washington keep the wool pulled so firmly over their eyes. Well, at least it should be good for a day or two.

  • What's True of the Whole Need Not Be True of All of its Parts   5 years 26 weeks ago

    You are right. Wall Street as we knew it is gone. Kaput. None of this $700 billion (or whatever it ends up to be) is going to Wall Street banks (even though the popular press calls it a "Wall Street bailout" to rile the uneducated masses and get eyeballs). As a friend (who worked on WS for many years) said today, "there aren't any WS banks left. Merrill was bought out by BOA, Morgan Stanley by China, Lehman is dead, and Goldman got a $5 billion (and can be up to $10 billion with his options) infusion from Warren Buffet."

    He said banks can also get bought out by Middle East or Asian sovereigns in the future (and some will no doubt become very attractive investments), and of course that means the bill isn't paid by US taxpayers.

    Most of this taxpayer money will go to propping up middle America so we don't head into GD II. The intent is to unfreeze credit markets so that we don't lose millions of jobs (the bottom line outcome of frozen credit markets).

    Fortis going down today.

    Wachovia shareholders will probably take a hit if they make a deal to be bought out by Citigroup.

    And I'm not convinced that this plan, as written today, will work.

  • Financial Rescue Plan Agreement Will Be Announced Soon   5 years 26 weeks ago
  • What's True of the Whole Need Not Be True of All of its Parts   5 years 26 weeks ago

    Isn't that what's happening now? The owners of Bear Stearns lost about 90%. AIG shareholders could be in the same boat. Lehman's bankrupt. WAMU's executives are probably out of work and the shareholders probably get zip.

  • Another Good Op-Ed from Bruce Bartlett   5 years 26 weeks ago

    For the 21st century reader, Bruce said it better.

  • The New Face of Counterinsurgency   5 years 26 weeks ago

    I have found over time that I can get the students to learn more if I try to teach them less.  So stochastic dominance and derivatives other than options have been jettisoned in favor of a slower, more deliberate pace. 

    It is no disrespect to the current students to say that they appear to me to be no smarter or better prepared intellectually for Dartmouth than those of a decade ago.

    Thanks for reading the blog and your kind comments.  You should drop me an e-mail to let me know how you are doing.

  • Another Good Op-Ed from Bruce Bartlett   5 years 26 weeks ago

    If Bruce thinks we should take the very expensive step of intervening in a crisis, then it makes a lot of sense to impose less expensive regulations that will avoid such crises in the future.

  • The New Face of Counterinsurgency   5 years 26 weeks ago

    ... still refer to my notes periodically.

    When you walk them team through option pricing theory, it might be interesting as a conceptual exercise to have them think about financial company equity AND debt sitting on top of the "government put".

    I also don't remember there being all too much discussion about the impact of credit/counterparty risk in the hedging discussion. That's certainly relevant for the decision to help AIG.

    And, on a personal level, I don't think I was ever smart enough to figure out how the section on first- and second-order stochastic dominance ever plugged back into the course (other than as a discussion about the risk/return utility curves). But I hear these Dartmouth kids are much smarter these days, so maybe they get it.

  • Another Good Op-Ed from Bruce Bartlett   5 years 26 weeks ago

    I checked the copyright date . . . written in 1873, so realized it should be available for free.

    And lo, it's on the internet for all to read:

    http://www.econlib.org/Library/Bagehot/bagLom.html

  • Another Good Op-Ed from Bruce Bartlett   5 years 26 weeks ago

    I just ordered the book. Looks great.

  • Another Good Op-Ed from Bruce Bartlett   5 years 26 weeks ago

    I wrote that column after rereading "Lombard Street" by Walter Bagehot, who said it better than I could.

  • Another Good Op-Ed from Bruce Bartlett   5 years 26 weeks ago

    along with the imprudent ones. There's no saving one part of the system only; the solution has to address the entire system.

    When a panic occurs the innocent get taken down with the guilty. The fire that started at Bank A quickly spreads throughout the system . . . it is a networked, codependent system. Banks are not stand-alone silos . . .

    They need to pass this bailout now, and then we need to all get down on our knees and pray that it works to unfreeze the credit markets.

    God Bless Mr. Bernanke. He's a man of uncommon courage.

  • Another Good Op-Ed from Bruce Bartlett   5 years 26 weeks ago

    The Bartlett article is pretty much the way I see it too. And, I think Robert Shiller--who correctly predicted the RE bubble--is also of this opinion, if I read him correctly last Thursday night in Seattle. Unfortunately, almost no one in the audience seemed to understand what is at stake.

    And, it's not just the public. I'm friends with a few of the economists who signed the 'just say no' letter. I didn't get very far with one of them, making essentially the case Bartlett is making.

  • Democrats And The Paulson Plan: Call The GOP's Bluff   5 years 27 weeks ago

    Arnold Kling, over at econlog, has posted a number of pieces questioning whether this plan is likely to help good borrowers to borrow. He thinks there's a high risk that it will not, and draws on his experience 1986-1994 as an economist for Freddie in explaining why. It's grim reading, but includes some alternatives which could be carried out within the banking regulatory system. He doesn't spare the enablers, including current Congressional leaders who must hope the voters have short memories.

  • Did The Debate Change The Subject?   5 years 27 weeks ago

    The Economy part of the debate was a bit bizarre. It didn't focus on the bail-out, its causes or a real solution. Instead that part of the debate focused on earmarks--huh??? I guess either Obama or Lehr should have brought it back on point. Shame on all for failing to debate the crucial financial meltdown issues.

    And McCain really does come across as the Get Off The Lawn Guy.

  • GOP Conservatives Delayed The Bailout, But They Can't Kill It   5 years 27 weeks ago

    No doubt we're in quite a financial mess.  The only good news is that the markets finished up a bit today.  The bad news is that Monday could be a disaster in the markets if the House fails to pass a bill by then.

    I share the frustration at having to bail out a lot of bad actors in the financial community, but, if we don't, the loss in jobs and economic growth would make us wish we had.  It's like World War II.  Most Americans were totally opposed to entering the war against Hitler.  Then, on December 8, 1941, we declared war on both Japan and Germany.  I hope we don't have to experience a financial Pearl Harbor before we act belatedly.

    If there's one thing we've proven, when the pendulum swings too far towards unfettered market and back towards government control, we lose on each end.  It's better to stay balanced in the middle.  That's hard to sustain.

  • GOP Conservatives Delayed The Bailout, But They Can't Kill It   5 years 27 weeks ago

    Rick Santelli did too. Takes a while for this to load.

    http://www.cnbc.com/id/15840232?video=868551308

  • GOP Conservatives Delayed The Bailout, But They Can't Kill It   5 years 27 weeks ago

    If the House Republicans would get that "public service in a crisis" message we could get off the dime on this . . . and I'm really not very nice. I yelled at my Republican congress critter today . . . one that keeps saying that the current crisis is the result of too much government intervention in the markets.

    I'm not kidding . . . hey, if only we'd allowed them to leverage even more and hand out more and bigger subprime loans, maybe we wouldn't be in such a predicament . . . honest to pete, some of these congress people are dumber than tree stumps, and that includes mine.



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