who's holding the bag?

[jk]

thought i'd start a thread to collect information about the locale of impaired debt, broken cdo's, dodgy derivatives, etc.


randall forsyth summarizing some of robt rodriguez's tallk, available at:

http://www.fpafunds.com//news_070703...fear_print.htm

Underlying the rating of securities backed by these loans, Rodriguez relates, was the assumption by the ratings agencies that home prices would continue to rise ad infinitum. But a mere 2% decline in home prices would put the ratings of top-grade securities backed by these loans in jeopardy, one Fitch official admitted in a March 22 conference call with investors.


Banks have loaded up on CDOs that previously garnered triple-A rating, owing to capital rules promulgated by the Bank of International Settlements, which is the central bank for central banks. Rodriguez notes that banks have had to hold a mere 0.6% in capital against triple-A securities, one-eighth as much for triple-B securities. U.S. banks have invested 10% of their assets in triple-A rated CDOs, according to an estimate cited by the money manager.

[Mega]

Re: who's holding the bag?

Ben SEZ he thinks about $100 Billon............think we can add a zero to that!

With this+House hold debt+war debt ($565 Billion).......The Baby Boomers about to retire...................Crash & Burn for the $?
Mike

[jk]

Re: who's holding the bag?

more bagholders, from a post by a reader at bill fleckenstein's site:

Regarding FDC, the deal will get done, the question is will a bond/loan financing will be done in the public markets or will the banks will be on the hook to honor the financing commitments that they made. (BTW no one forced them to make the commitments, and they are mad at KKR b/c they pushing to have contracts honored). Pls keep me anonymous.. thx.

oops, its the same bagholders - the banks.

[Sapiens]

Re: who's holding the bag?

oops, its the same bagholders - the banks.

LOL, you don't get it. The banks are not the bag holders. You are thinking that monetary units are the wealth. The wealth are the tangible assets, after all it is said and done, the assets will be repriced and then more hamsters will be willing to jump on the wheel...

No, the banks are not the bag holders. The bag holders are the saps that will lose their homes and the saps that monetized their properties and placed the monetary unit claims into equities, those are the bag holders.

-Sapiens

[Tet]

Re: who's holding the bag?

LOL, you don't get it. The banks are not the bag holders. You are thinking that monetary units are the wealth. The wealth are the tangible assets, after all it is said and done, the assets will be repriced and then more hamsters will be willing to jump on the wheel...

No, the banks are not the bag holders. The bag holders are the saps that will lose their homes and the saps that monetized their properties and placed the monetary unit claims into equities, those are the bag holders.

-Sapiens

Bro, you of course do realize the other side of this bagholder equation is those that don't monetize their properities. Those that do monetize are a hell of a lot richer or at least for the moment, or at least have a hell of a lot more shit than I do. Maybe it's me being the idiot here. That's not how I've bet this game, but that is the other side of the coin and there are some real idiots living life a hell of a lot nicer than me.

[Sapiens]

Re: who's holding the bag?

Bro, you of course do realize the other side of this bagholder equation is those that don't monetize their properities. Those that do monetize are a hell of a lot richer or at least for the moment, or at least have a hell of a lot more shit than I do. Maybe it's me being the idiot here. That's not how I've bet this game, but that is the other side of the coin and there are some real idiots living life a hell of a lot nicer than me.

Tet, all depends what you want out of life. If you know the fundamentals of the game and can sell the illusion, more power to you.

As for me, I can tell you that helping your fellow human beings is a thankless job, and like Fred stated before, it is better for you to get paid for it.

I can die a happy man, since I have taken out of life everything I have wanted from it. I am just trying to decide what to leave to my kids, they have never known any hardships...

[Tet]

Re: who's holding the bag?

Tet, all depends what you want out of life. If you know the fundamentals of the game and can sell the illusion, more power to you.

As for me, I can tell you that helping your fellow human beings is a thankless job, and like Fred stated before, it is better for you to get paid for it.

I can die a happy man, since I have taken out of life everything I have wanted from it. I am just trying to decide what to leave to my kids, they have never known any hardships...

Give a man a fish and what have you done? Teach a man to fish and you have done plenty. The fish no longer bite on what my father taught me to use, nothing moral about this that I can see, it's you catch fish and eat or you don't catch anything and starve. I no longer live life for myself, it's for my children and yet to be born grandchildren that I live it for. My only concern though is just which bag to hand them. I somehow feel that the free education that I was given will not be the bag to hand them. Only the contrarians survive, there's no doubt about that. The road less traveled is the one to send them down. Money certainly will not represent anything close to what we've been taught. Charts won't work, fundamentals won't work the only thing that will work is to recognize being a part of the contrarian view. That is what to teach them.

[jk]

Re: who's holding the bag?

there are some real idiots living life a hell of a lot nicer than me.

there's a nice story in taleb's "fooled by randomness," about a similar situation: an idiot hedge fund player whose risky bets pay off for a period of years while his more cautious neighbor feels somewhat envious. i won't give away the punchline, but it's not hard to guess. of course, this story is an example of life being, somehow, ultimately, fair. and there's no assurance of that whatsoever. so perhaps what it is that makes life "a hell of a lot nicer" is worth pondering.