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  • Tuesday Outlook: Commodities, Emerging Markets
    YR Dog,

    Yes, I must be The Insider Shill who drove up the entire market 5% on large volume after the close on Friday. I am also Jack the Ripper and the Easter Bunny.

    Stupidity always hits a nerve with me. I can assure you that if I had access to insider information which I could lawfully use, I would use it without hesitation.
    Nov 11 11:00 am |Rating: 0 -5 |Link to Comment |View article
  • Tuesday Outlook: Commodities, Emerging Markets
    We have laws against trading US securities based on non-public information about these companies to which the insider trader has access. There is, however, no law against trading such securities based on advance knowledge of the actions of a foreign government. It is perfectly legitimate under US law for people close to the Chinese or any other foreign government to use such government information for their advantage in trading US securities.

    It may be "crap", as you call it, but it's part of the game. Insiders are not there for you to "trust" (or mistrust); they are there to make money off you. They play under exactly the same set of rules as you do, but armed with more information than you have. Live with it or find a new profession.
    Nov 11 07:28 am |Rating: 0 -6 |Link to Comment |View article
  • Bailout Cost, per Taxpayer, by Income
    Nicely put, Smarty_Pants!

    However, keep in mind that most of the losses have already been accounted for due to mark-to-market principles, so anything paid above market value will appear as a profit on the next quarterly report for the company.

    Also, normal supply and demand rules still apply, so when the Treasury starts buying $850B of these toxic assets at market price, this market price will rise sharply.


    On Oct 02 02:17 PM Smarty_Pants wrote:

    > Purchasing bad debt won't eliminate the losses that it represents.
    > At best it will transfer them.
    >
    > Three cases:
    >
    > A) Treasury buys toxic securities at original values - original owner
    > avoids losses, taxpayers take them.
    >
    > B) Treasury buys toxic securities at true value - original owner
    > forced to realize the loss NOW, taxpayer avoids loss.
    >
    > C) Treasury buys toxic securities between full value and true value
    > - original owner forced to realize partial losses NOW, taxpayer gets
    > partial losses.
    >
    > No matter what, any schedule 3 asset that is not bought at full value
    > will put an immediate loss in the company's bottom line (which is
    > the fact we're trying to avoid right?). This still leaves the original
    > owner with the same problem NOW instead of later.
    >
    > Any other option requires the taxpayer to take the hit instead.
    > Blather about "holding until profitable" is just that, Blather.
    > If that were truly the case, Warren Buffett would be buying level
    > 3 assets instead of loaning money to Goldman and GE at 10% interest
    > with warrants.
    >
    > The reason Warren Buffett isn't buying toxic assets is that there's
    > no way to make money on them without risking a huge loss.
    Oct 02 18:24 pm |Rating: 0 0 |Link to Comment |View article
  • Bailout Cost, per Taxpayer, by Income
    Good comment, JasonC! Nice to see someone who understands real life economics.


    On Oct 01 03:16 PM JasonC wrote:

    > The UST collects 20% of national income regardless of policies, tax,
    > spending, funding, investment, any of it. That is the econometric
    > reality.
    >
    > Therefore, the only question and I mean the only question on the
    > cost of this policy is whether it will raise or lower future GDP.
    > If it will raise it, it will pay for itself many times over. If
    > not, it will cost something.
    >
    > But a very modest something. Our actual collective wealth is not
    > the money lying around, or the inventories, or even all assets at
    > their current prices, let alone the prices they would fetch in a
    > general deflationary smash. Instead, it is our entire future income
    > stream, also known as the economy. Which is $14.3 trillion a year
    > and rising 6-7% a year forever.
    >
    > Nobody debating the subject is remotely sane or thinking like an
    > economist, and it show. One entry accounting and tendentious spin
    > is all you see.
    Oct 01 15:31 pm |Rating: 0 0 |Link to Comment |View article
  • Bailout Cost, per Taxpayer, by Income
    The whole discussion of coupon rate and Treasury cashflow is moot. The Treasury can opt to issue additional debt to cover payments and grow the deficit to any level Congress allows it. It can also, through the Reserve, control the inflation rate and change the real cost of payments to any value it is comfortable with.

    The question of total cost is relevant and important, but the issue of coupon rates and dates is pointless.
    Oct 01 13:51 pm |Rating: 0 0 |Link to Comment |View article
  • Bailout Cost, per Taxpayer, by Income
    Richard,

    This article is riddled with inaccuracies and misleading statements.

    Firstly, the 'bailout package' is an acquisition by the Treasury of one trillion dollars' worth of low-grade securities. The final net cost will be one trillion dollars only in the highly unlikely event that the securities bought are not worth a single penny. The previous US banking bailout returned about 75 cents on the dollar. If this is the case now, the actual cost will be $250 billion. Remember, AIG alone, now owned by the Fed, is worth around $200 billion under normal circumstances. There's no reason to think it can't be spun off in the future for a similar amount.

    Secondly, you seem to have forgotten that the largest taxpayers in America are corporations, both domestic and arms of foreign companies. Accounting for those changes the numbers dramatically.

    Thirdly, the top 5% of taxpayers make the bulk of their income from investments. They are, in fact, pushing to get this deal done, as it would save them far more than it costs. The rest of the taxpayers also make a significant portion of their earning from investments, be it their pension or their employer's profit sharing plan, but they may not realize that's the case.

    Like you, I also have my doubts about this bailout package, but it is important we present the facts truthfully.
    Oct 01 13:43 pm |Rating: 0 0 |Link to Comment |View article
  • Financial vs. International ETFs: Which Bear is Grizzlier?
    PAUL / SHARK,

    Put options on the DJIA with strikes of 6000 and 7000 are selling for pennies right now. How many have you bought? When your fantasies come true, you'll be a very rich shark! Or are you one of them Hollywood sharks that are meant to look scary but don't really do anything?
    Sep 03 15:56 pm |Rating: 0 0 |Link to Comment |View article

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