PlanMaestro

Peter_Burke, sometimes I do not know what is your point. Maybe you are implying is that there are going to be greater fools, buying risky earnings with low TBV. I hope that is not your point, because I am not sure we want another crisis like this one for a long time. That heavy emphasis on earnings valuation was a key component of this mess. The easy way to grow earnings is increasing leverage. Lehman, Bear and all the IBs going from 15x to 30x. Some retail banks increasing loans/deposits to 120%, TCE ratios of2% and using fleeting brokered deposits. When you forget about TBV, you can be easy prey to risky bankers. Valuations have to be balanced against risk.

And that was a problem. We want a well capitalized banking system that can survive shocks, not only one that makes money. Bankers will do stupid things, Wells will do eventually, and we want a system that can survive that stupidity. ie: Irish banks were money making machines ... and that was not enough.

Parsad, just to continue the discussion. I am much more worried about overzealous regulators than all those other issues. They carry their own strong momentum and are limited in their damage. And after two years of improving on all those fronts, it might be time to give some thoughts, but only some, to the upside! (and I want a pony for Xmas)

Surprising how TBV per share has basically stayed the same since 2006 at $12.2. All these noise and movement all these years while capital/value has stayed the same. PTPP per share is also not much different from 2006.

Hey I even bought yesterday some of those B warrants. Some people never learn that the first rule is never to lose money.

Parsad, I would not cry victory on this one. The overall loan generation situation is still bad. They are getting flooded with deposits and not doing much with it yet. Banks have the worst Loans/Assets since at least 1992. http://variantperceptions.wordpress.com/2011/12/06/quick-review-q3-2011-balance-sheet/

From the latest Preez: Reduction in annual defined benefit pension contributions from $313 million to $120 million

You might want to see the cash flow and debt reduction over the last year

txlaw, there is an ABH thread. You might want to bring it there

There are many ways to loose money but if you want to explode so that you become famous and inspire the next financial best seller: Leverage

The problem is his argument against classical Macro. 1. Monetary Policy: He stretches some of the classical points to some absurd levels. This is a balance sheet recession so monetary policy will NEVER work at ANY level. Really? The problem is the size of what has been done and the lack of political will to do the levels needed. 2. Definition of Money: to include different financial instruments is not different from classical macro, (different Ms: M1, M2, M3, .... ) Macro 101 3. Emphasis on Aggregate Balances: It is almost as if he had not heard from the classical identity Sg+Sc+Sx=0. Macro 101 4. Advantages of borrowing in own currency: Ok, this advanced Macro. But I did assessment of balance sheet risks in my second Macro course in the MBA program. If an MBA can understand it, it is not so difficult (stickiness of foreign investments, central bank reserves, sudden stops, banking system fragility, balance of payment crisis...) I just don't get what is different or insightful.

Despite his lack of business experience, I liked very much how he handled being director of ADM during the scandal. I am surprised it was not mentioned in 60 minutes. http://www.amazon.com/Informant-True-Story-Kurt-Eichenwald/dp/0767903277/ref=tmm_pap_title_0

Somebody else wants to step in? I am not such fan of SB to do the detailed analysis and just want keep up with his general moves ... as moore_capital.

He did the Private Equity thing: paid himself/corporate a fat dividend from its subsidiary after increasing its debt. Of course, the debt is non-recourse.

I've put off reading this forever it seems (probably because the size of it and I always find other books that sound more interesting), but everyone who reads it seems to recommend it. Is it really a must read type of book? It is a bit of everything but specially a long novel (not a very good one though). But I tend to recommend it to people so that they realize the power of structured thinking (do you think in trees?) and technology but also on its limits. I imagine it had a big impact in the 70s and I would not be surprised that is the type of book that Steve Jobs liked to read.

isn't this the whole point of rules #1 and #2? delta financial, compucredit, cryptologic, RAIL, HNR, no cash, were risky plays. And while other picks were OK (PNCL, WCG) the market is relentless when you are bleeding as for example Berkowitz today (w/o wipeouts). And despite all that the guy is back. Can you be more specific with the graveyard comment?

Absolutely agree. His original philosophy was right, his picks were wrong. Too many cyclicals and small caps in his portfolio. Wipeouts are the consequence of bad picking not diversification.

It squares exactly as you say ... they were FORCED to slow down. And that is an important caveat, because when people talk about extend and pretend they are implying that the banks do not have the capital. They have the capital, they WANT to foreclose. It is not just the charts that are pretty, those key credit metrics are pretty too.

Some people may be too young to remember this, but in 1997 Fidelity Magellan's portfolio manager was fired when some large fund-holders rebelled when he decided to have a large % of his portfolio in corporate bonds ...

XRTX said they were having trouble keeping up with the orders after this catastrophe and the stock is cheap even after the recent runup. One thing to consider though is that they have a storage business that might suffer from this bottlenecks.

The problem is that there is so much crap out there that if someone makes a credible argument we might miss it.

That is the quality of VIC contributors? Maybe it was not so bad to be rejected if that is your average contributor. First point: Sustainable competitive disadvantages and Potential Run. Potential Run?what is he talking about, has he not seen the liquidity that BAC has? Has he not seen the last Qs deposit trends? It actually has TOO MUCH deposits and its problems is what to do with them. Some banks have actually started to charge for deposits ... they do not WANT them. And no competitive advantages? Has he not seen BAC's cost of deposits? Well I could not pass beyond this point especially where a skim of the rest did not show much in terms of facts. The way that he used a hand wave to dismiss the use of Countrywide's Ch11 as a negotiation tool and using as a matter of fact the litigant's claims ... Well, another wasted 5 minutes in terms of looking for a credible bear case.

I thought the same. I know for a fact that HTCH, a suspended assemblies supplier to Western Digital, had to close their plant and $WDC too. From the CC: "approximately 40% of all drives in the industry are produced in Thailand, with WDC being overweight at approximately 60%"

Krugman on this point: http://krugman.blogs.nytimes.com/2011/10/12/venn-in-the-course-of-economic-events/ I really don’t understand Koo’s position. I agree with him that a lot of people are debt-constrained, and cannot respond to lower real interest rates by spending more. But not everyone is in this position — if nothing else, by definition there must be creditors as well as debtors, so someone is able to respond to interest rates. In general, it’s almost always a bad idea in economics to assume that incentives of some kind don’t matter at all. And the diatribes against unorthodox monetary policy seem to me to come completely out of left field, not derived in any way I understand from Koo’s basic analysis. They have the feeling of arguments half-baked on the spot out of annoyance that people aren’t totally buying Koo’s insistence that fiscal policy is the answer; as you can see, I’m for fiscal policy myself, but see monetary policy as a useful supplement.

Josh, I have not heard anything. If I were you I would write an email to Stephen Taylor to see if there are any news and double check if Meruelo is making waves in the court system. $2.8 is the equivalent of $0.45 pre-POR when book value was around $2 per share. And I am sure you remember that there were several bids for even marginal properties at around book prices ... I think it is worth doing some work on it.