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Captain Coma

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Everything posted by Captain Coma

  1. In a nutshell, dstars. A little light relief from yesterday's City Spy: "Venture capitalism, Enron-style. You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Caymans company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option to buy one more. You sell one cow to buy a new President of the United States, leaving you with nine cows. The public then buys your bull." Any advances?
  2. London & County Securities, Triumph Investment Trust, Dalton Barton, First National Finance "and many more" ... But all fringe banks; does that count? Ahoy-hoy
  3. That's why we are here, many of us listening attentively to what you, RB and some others have to say. I agree about the MSM although there are some (I'm thinking of Anthony Hilton, Ambrose Evans-Pritchard) who try to say as much as they can without ending up on the editor's spike. Editors aren't allowed to scare the straights; that's business. Thank goodness for HPC Forum.
  4. "I really shouldnt have to be spelling this out but I also really think it's getting out of hand tbh." Pompous ass - who made you a moderator?
  5. With LIBOR where it is (who knows? As high as infinity if the banks won't lend to each other), the BofE will make itself objectively irrelevant if it doesn't raise rates to a semblance of market reality. Therefore I predict a hold as evens. But with the previous poster's eminently wise remarks about pleasing the sheeple, I'll give 3 to 1 on a .25% drop: if the BofE now realises it's irrelevant and circumstances are slipping out of its control, then what has it got to lose? - might as well get some good short-term PR as it goes down the plug hole. Ahoy-hoy
  6. “The system has just completely frozen up – everyone is hoarding,” says one bank treasurer. “The published Libor rates are a fiction.” Good god, they are even higher than admitted?
  7. Agree. People don't understand the difference between an asset and a liability. An asset produces an income stream and a liability costs you money (a car is a liability even if it is necessary to secure wages from a job). A house is always a liability apart from the rare periods when the increase in its value outstrips the costs it incurs, including interest on a mortgage, maintenance and so on. Even so, realising an increase in the value of a property is difficult, because unless you move somewhere cheaper or smaller, you'll pay a similar premium on your next pile of mud and straw. In the meantime, mistaking a house as an asset encourages people to borrow against the "profit" they think they are making, thus increasing their liability. This seems so obvious and simple to me that I can't believe ... oh, hold on.
  8. Exactly. The incentives are there purely to keep the price up for the record, otherwise why not just sell at the real price? (Although some buyers probably think they are getting the extras gratis.) Mind you, what do we think of a deal on a new car that includes "free" insurance and road fund licence?
  9. Mmmh. Not enough jail cells to lock up all these fraudsters, huh? Think it might get nasty in Cleveland (oh, and everywhere else)? Ahoy hoy me hearties,
  10. This guy was posting on Victor Niederhoffer's blog (I like Victor but he's strictly a speculator and a bull). Seems wrong to me but tell me what you think: "For several years now, I thought UK property was grossly overvalued and primed for a fall. However, using a gross simplification I have recently formed a new model of the UK housing market. My thinking is quite simple. Over the long-term, house prices seem to keep up with inflation (let's say two to three percent per year). Current net yields in the UK are around four percent. As a long-term investment, it may make sense to accept a low yield on the rental because of the long-term inflation hedge component. Thus the rental yield should perhaps be compared to the real interest rate, not the nominal rate. On this basis, houses in the UK may be fairly valued. I wonder whether Joe Public is walking around with such a model in his head?" (http://www.dailyspeculations.com/wordpress/) E.g. current net yields 4%? Ahoy hoy
  11. Here you go - from the horse's mouth in the States: "The pain in real estate land is increasing. Some of my developer cronies are hurting; taking 30 cents on the dollar loans against raw land they hold in reserve, with 90-day buy backs, to get cash to service ongoing projects because their credit lines are getting pulled. Brutal. Many won't be able to meet the 90-day buy back unless, ironically, they come up with a development plan for that land that the hard money guys will fund. The scramble is on and the domino effect may begin soon as it did in the early 90s, the last time I saw this. Then I watched guys worth 100 million on their balance sheets go broke in 12 months." http://www.dailyspeculations.com/wordpress/
  12. I remember (early-mid nineties) hearing on the radio a story about a couple of likely lads who fibbed on a mortgage appl form to raise the cash to buy a house (it was one of those large Victorian townhouses on Denmark Hill, south London) with a view to doing it up and selling it on. They reckoned they could cover the payments while they were renovating and then pay off the loan and make a good profit. That's exactly what they did. The property was indeed successfully sold on, the bank got back its money double quick ... and the poor s*ds went to prison. Those guys must be gnashing their teeth now. If they were incompetent hedge fund managers the BoE would be bailing them out ...
  13. Very good piece by Ambrose Evans-Pritchard in the Daily Telegraph on this subject, nailing the complacency of the central bankers, worth reading: http://www.telegraph.co.uk/money/main.jhtm.../ccbanks121.xml Ahoy-hoy
  14. Fabulous, Tuffers - no matter how good your life was before, now it's going to be even better on a scale of one to fun! Mine's just turned two - now I've got to really watch the little rascal.
  15. Something else that might be worth thinking about ... In the USA (don't know about the UK), if you default on the mortgage, you hand over the keys and walk away and that's it - the lender has to be satisfied with what he can get for what he lent money on, i.e. the property only. Lender eats the loss/neg equity. BUT if the householder has altered the terms of the original loan (second mortgage, MEW etc), then the lender can pursue the defaulter for the full amount of the loan and oustanding interest forever until the full amount of the original debt is recouped. So I understand, at any rate. Anybody know what the case is here? It would make the upcoming deflation even more of a bloodbath if so, no? Or am I wrong?
  16. Exactly. Which is why I said that the minimal regulation that there be should cohere with common sense. We've had endless bl**dy regulations from this catastrophic administration for ten years, but what did they not do? Check what the derivatives market was up to and stop them undermining the foundations of the financial system and ultimately civil society. Perhaps if that would have been done, instead of pursuing their nosey intrusions into our lives everywhere else, then we wouldn't be adrift in this particularly smelly creek now.
  17. Larry's article is fine (and good in publicising the essential difference between a liquidity crisis and and insolvency crisis, which is what we've got), but he signs off with the usual strangulated Grauniad caveat: "The government should do more". No no no no no no no please God for sweet Jesus' mercy no. The government should do less, and make what little they do cohere with common sense. (paraphrasing) Ronnie Reagan: "The most terrifying sentence in the English language is 'Hello, I'm from the government and I'm here to help'." One of Parkinson's laws: "There is no economic situation so bad that it cannot be made worse by a government initiative".
  18. Yeah, what he says! By the bye, the Tory party is surely dead; a great pity, but if it boils down to merely being able to do things for 99 pence that Labour would do for £1 then frankly what is the point of the Conservative party? Why vote for them if they are simply New Labour in a Bullingdon waistcoat? If New Labour is Socialist (almost said Sovietist!), and the Tories are statist, then there's hardly room to insert a bus ticket between them. As a free market liberal believing in ... Small government Low taxes Minimal regulation and intrusiveness/maximum free choice Free markets (obnobviously) - including meaning in favour of the European Union ideal but not the corrupt autocratic bureaucracy (for Gawd's sake) ... then there is no party for which to vote. In a sense the Tories are more of an insult to my way of thinking than the socialists, because they are the ones who have betrayed the open-minded, radical Friedman-Hayekian ideas that have done so much to transform this country from its post-war hopelessness. And Gordon Brown is pace the dental work, the Prince of f*cking Darkness.
  19. No, Goldfinger, say it ain't so! I love reading your posts, and I have a hope and suspicion that you really ARE Gerd Frobe. We should raise a hue and cry about this.
  20. Why don't we try it the other way around and say that you have a subprime mortgage if: - you borrowed without having any deposit; - you borrowed more than the cost of the house so you could get that sofa that will end up costing you £15,000; - you took out an interest only mortgage so you are really renting from the bank without the bank having the usual landlord responsibilities of upkeep etc; - you borrowed more than three times income; - you borrowed for longer than 25 years. I suggest this because in practical terms (looking at what's happened in the USA) "subprime" means those loans that are likely to go t*ts up and therefore represent risk that has not been factored in by the financial markets. Seen in this way, you can probably calculate the proportion of (esp. recent) UK mortgages that are subprime and likely to default as IRs rise/credit tightens/recession hits/unemployment increases. Apparently, for example, over the last couple of years 25% of new mortages have been IO. At a rough guess, and using the above criteria, I'd say that overall 40%-50% of UK mortgages are "subprime" and likely not to be repaid if the worse happens.
  21. dstars, glad you're back. I do hope you're writing your book - it's going to be my Chriastmas present for everyone.
  22. Yes, but not just why attacking China, but why now? I was getting properly miffed watching the business report on BBC News 24 whittering on about the (gasp!) champagne crisis and Mattel recalling millions of toys due to those dastardly Orientals and their heartless child-killing manufacturing processes (despite the fact that the products are made to Mattel's spec, overseen by American managers on site in China and subject to the company's own quality control checks upon importation to the West - or am I wrong?). I was thinking, Jeez, the Dow Jones IA is hovering about 20 points above 13,000, even after the FED has pumped in hundreds of billions of yankee dollars, down about 200 points today, and it's not even mentioned. Instead we get toys and bumptious Frenchies who won't sell their fizzy wine in Calcutta (sorry, Kolkata). It was like the Richard and Judy of financial reporting. But hold! The uber-narrative is developing nicely. As the banking system totters here, a scapegoat must be lined up, a yellow peril that will justify the draconian tariffs and restrictions that will stop the newly-minted creditor nations spending all the dollars they have here and reducing us speedily to penury by effectively reclaiming all their Uncle Sam IOUs. So perfect that it is toys setting the tone. "Won't somebody think of the children!?" (I think that's Rev Lovejoy's wife's clarion call in The Simpsons)
  23. The best description I read of the zombie debt hidden in CDO bonds went something like this: Imagine a layer cake that somebody is trying to sell you that looks fantastic and really tasty, with icing on the top and all. And just as you are about to hand over the moolah and take a bite, the baker says, "And, you know, there are only about ten spoonsful of human faeces in it, and they're mostly near the bottom, so you won't really taste it that much." And I guess you might not, but the typhus will slow you down a little.
  24. Does anybody know why the LSE homepage is showing nothing except a bottom red line on its FTSE 100 graph, and the top ticker has lost every single index price? Coincidence or Twilight Zone?
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