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Posts Tagged ‘losses’

Obama No Longer Bothering to Lie Credibly: Claims Financial Crisis Cost Less Than S&L Crisis

Obama No Longer Bothering to Lie Credibly: Claims Financial Crisis Cost Less Than S&L Crisis

Courtesy of Yves Smith at Naked Capitalism 

I’m so offended by the latest Obama canard, that the financial crisis of 2007-2008 cost less than 1% of GDP, that I barely know where to begin. Not only does this Administration lie on a routine basis, it doesn’t even bother to tell credible lies. .And this one came directly from the top, not via minions. It’s not that this misrepresentation is earth-shaking, but that it epitomizes why the Obama Administration is well on its way to being an abject failure.

On the Jon Stewart Show (starting roughly at the 1:10 mark on this segment) Obama claims the cost of this crisis will be less than 1% of GDP, versus 2.5% for the savings and loan crisis (hat tip George Washington, sorry, no embed code, you need to go here):

Picture 3

The reason Obama makes such baldfacedly phony statements is twofold: first, his pattern of seeing PR as the preferred solution to all problems, and second, his resulting slavish devotion to smoke and mirrors over sound policy.

The savings & loan crisis led to FDIC takeovers of dud banks and the creation of a resolution authority to dispose of bad assets. That produced costs which were largely funded by the Federal government. I’ve heard economists repeatedly peg the costs at $110 to $120 billion; Wikipedia puts it at about $150 billion. This approach, of cleaning up and resolving banks, has been found repeatedly to be the fastest and least costly way to contend with a financial crisis.

The reason Obama can claim such phony figures is that many of the costs of saving the financial system are hidden, the biggest being the ongoing transfer from savers to banks of negative real interest rates, which is a covert way…
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How You’re Going to Get Cornholed Thanks To Obama

How You’re Going to Get Cornholed Thanks To Obama

Courtesy of Karl Denninger of The Market Ticker

The economy, that is.

This is a must-read from Chris Whalen.  He’s spot-on, and I will reprint only the conclusions – read through for the why, what and how.

  • The U.S. banking industry entering a new period of crisis where operating costs are rising dramatically due to foreclosures and loan repurchase expenses. We are less than ¼ of the way through foreclosures. The issue is recognizing existing losses ??not if a loss occurred.

  • Failure by the Bush/Obama to restructure the largest banks during 2008?2009 period only means that this process is going to occur over next three to five years – whether we like it or not. Lower growth, employment are the cost of this lack of courage and vision.

  • The largest U.S. banks remain insolvent and must continue to shrink until they are either restructured or the subsidies flowing from the Fed, Fannie Mae/Freddie Mac cover hidden losses. The latter course condemns Americans to years of economic malaise and further job losses.

Yep.

The bottom line folks is that the fraud – massive and outrageous concealment of losses, intentionally making bad loans in the mid-2000s (now admitted to under oath by Citibank’s chief underwriter, among others) and the selling of that paper everywhere and anywhere that the banks could manage, along with holding much of it themselves, condemns us.

The opportunity to take these banks into receivership in 2007 existed.  It existed in 2008 too.  I counseled on doing exactly this during those years. 

Instead, both Bush and Obama decided to protect those who had committed these offenses.  First by attempting to bail them out, and then when it became obvious that $700 billion of taxpayer money was literally trying to **** on a forest fire to put it out they decided instead to paper it over by extorting FASB so the losses could be swept under the carpet instead of recognized.

The problem is that unlike long-run spending problems like Social Security and Medicare, which will detonate in ten year or more, this is a current account cash-flow problem and the deterioration continues month-by-month as the payments are not made.  It’s like a barrel of dead fish.  The next morning it starts to stink.  Every day it stinks worse.  Putting a…
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Investigation Begins Into E&Y's Role In Connection With Lehman's Repo 105 Scam

Investigation Begins Into E&Y’s Role In Connection With Lehman’s Repo 105 Scam

Courtesy of Tyler Durden

Fox Business reports that the investigation around Lehman is intensifying. Surely the SEC, now generically equated with objects that float around in sewers in formal conversation, has realized it has to do something, anything, to find at least one scapegoat for the financial collapse. Which is why we read with little surprise Gasparino’s report that "thee SEC has ramped up its inquiry into Lehman’s fall, particularly after court-appointed bankruptcy examiner Anton Valukas issued a lengthy report stating that Lehman’s top executives were “grossly negligent” in possibly hiding the risky nature of the firm’s finances during its final day." What we find much more interesting is that "yet another investigative agency, the Public Accounting Oversight Board — created under the 1992 Sarbanes-Oxley law to investigate and discipline public accounting firms — has launched an inquiry into the role of Lehman’s auditor, Ernst & Young, following the examiner’s report, which accused the big accounting firm of “professional malpractice,” for its work in approving accounting techniques Lehman used during its dying days in the summer of 2008." In the absence of any Wall Street villains, which it is now all too clear have endless diplomatic immunity from prosecution by the corrupt regulators, will the auditor, together with Dick Fuld, be made into the sacrificial lambs? Or will we continue the farce that anything even remotely related to capital markets integrity and reporting is real and valid? Judging by the nearly 60 days of no S&P downticks, the market has answered that question for us.

More from Gasparino:

It was the use of one of those accounting techniques, known as Repo 105, which appears to be at the top of the list of investigators, people with knowledge of the inquiry say. The use of the accounting technique, which is designed to temporarily lower the amount of “leverage,” or borrowing a firm uses to stay afloat thus lowering its risk levels, isn’t necessarily illegal. In fact, Lehman sought and received a favorable opinion from Ernst & Young to use the technique in 2008.

But what might fall afoul of the securities laws, according to people close to the inquiry, is if Lehman turned to the gimmick in a concerted effort to hide its risk level. One person with knowledge of the inquiry say investigators


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How to Get Off the Performance Roller Coaster

How to Get Off the Performance Roller Coaster

Munich Oktoberfest Preparations

By Brett Steenbarger 

Do you find yourself on a performance roller coaster? This is a situation in which you make money for a while, begin to think you have it all figured out, only to fall back, lose money, and feel like a rookie all over again. 

A while back, I wrote about the performance roller coaster and some of the emotional factors that sustain it. The gist of that important post was that how we process wins and losses affects our subsequent trading--and sometimes contributes to winning and losing streaks.

I just finished an enjoyable interview with Mark Wolfinger of the Options for Rookies site. One topic that came up was the way in which traders identify with their P/L. Once a trader’s sense of identity and esteem becomes caught up in profits and losses, the trader begins an emotional roller coaster simply due to the natural ups and downs of markets.

Continue here.>>

See also: Addictive Trading: When Trading Becomes a Problem


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What Happens in the Amygdala… Damage to Brain’s Decision-Making Area May Encourage Dicey Gambles

Evidence that the brain’s region called the "amygdala" is at least partly responsible for fear-based loss aversion: – Ilene

What Happens in the Amygdala… Damage to Brain’s Decision-Making Area May Encourage Dicey Gambles

Image Of Thinking Man's Brain Through Bowler Hat

By Katie Moisse at Scientific American   

Imagine you’ve lost your job. You have some money saved, and a chance to double it with a gamble. But if you lose the bet, you’ll forfeit everything. What would you do?

Most people would not gamble their savings, according to Benedetto De Martino of California Institute of Technology, author of a study published February 8 in Proceedings of the National Academy of Science. People tend to choose avoiding losses over acquiring gains—a behavior known as loss-aversion.

But people with damage to the amygdala—an almond-shaped part of the brain involved in emotion and decision-making—are more likely to take bigger risks with smaller potential gains, De Martino’s study found. Two women with bilateral amygdala damage showed a dramatic reduction in loss aversion compared with age-matched control subjects on a series of experimental gambles, despite understanding full well the values and risks involved.

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Five Fatal Flaws of Trading

Here’s an educational article on the fatal mistakes made by 90% of traders, resulting in – surprise! - losing money.  Courtesy of Elliott Wave International. – Ilene

Five Fatal Flaws of Tradingthe invisible hand, trading

By Jeffrey Kennedy

Close to ninety percent of all traders lose money. The remaining ten percent somehow manage to either break even or even turn a profit – and more importantly, do it consistently. How do they do that?

That’s an age-old question. While there is no magic formula, one of Elliott Wave International’s senior instructors Jeffrey Kennedy has identified five fundamental flaws that, in his opinion, stop most traders from being consistently successful. We don’t claim to have found The Holy Grail of trading here, but sometimes a single idea can change a person’s life. Maybe you’ll find one in Jeffrey’s take on trading? We sincerely hope so.

The following is an excerpt from Jeffrey Kennedy’s Trader’s Classroom Collection. For a limited time, Elliott Wave International is offering Jeffrey Kennedy’s report, How to Use Bar Patterns to Spot Trade Setups, free.

Why Do Traders Lose?

If you’ve been trading for a long time, you no doubt have felt that a monstrous, invisible hand sometimes reaches into your trading account and takes out money. It doesn’t seem to matter how many books you buy, how many seminars you attend or how many hours you spend analyzing price charts, you just can’t seem to prevent that invisible hand from depleting your trading account funds.

Which brings us to the question: Why do traders lose? Or maybe we should ask, ‘How do you stop the Hand?’ Whether you are a seasoned professional or just thinking about opening your first trading account, the ability to stop the Hand is proportional to how well you understand and overcome the Five Fatal Flaws of trading. For each fatal flaw represents a finger on the invisible hand that wreaks havoc with your trading account.

Fatal Flaw No. 1 – Lack of Methodology

If you aim to be a consistently successful trader, then you must have a defined trading methodology, which is simply a clear and concise way of looking at markets. Guessing or going by gut instinct won’t work over the long run. If you don’t have a defined trading methodology, then you don’t have a way to know what constitutes a…
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Credit Card Issuer Advanta Has Huge Losses, Halts Lending

Courtesy of Mish

Credit Card Issuer Advanta Has Huge Losses, Halts Lending

The credit card industry is in huge stress and things are about to get worse. Please consider Advanta Halts Credit-Card Lending Amid Surging Losses

Advanta Corp., the issuer of credit cards for small businesses, will shut down accounts for its 1 million customers next month and seek to pay off securitized debtholders early as the recession pushes defaults higher.

Lending will cease June 10 as part of a plan to preserve capital after uncollectible debt reached 20 percent on some cards as of March 31, the Spring House, Pennsylvania-based firm said yesterday in a statement. Advanta will use as much as $1.4 billion to pay investors as little as 65 cents on the dollar to buy back securitized credit-card loans. That would be the first so-called early amortization of a trust since 2003, according to JPMorgan Chase & Co. analyst Christopher Flanagan.

“Early-amortization has been viewed as a catastrophic event for issuers,” Scott Valentin, an analyst at Friedman Billings Ramsey & Co., said today in a research note. “Given that all credit-card accounts in the trust will be shut down to future use, we expect losses to increase as the cards have substantially less utility to cardholders.”

The company plans to use up to $1.4 billion to make cash offers to trust investors at a price of 65 percent and 75 percent of the debt’s face value. While the company has “no indication” if investors will accept that offer, the price is “relatively consistent with recent trading levels of the bonds,” Browne said.

“They’re hoping they can stay alive barely until the environment changes,” said David Robertson, president of the Nilson Report, the Carpinteria, California-based industry newsletter. This is “a big sign that the credit-card industry has problems that are going to be around for several years.”

Advanta was the 11th-biggest U.S. credit-card issuer at the end of 2008 with about $5 billion in outstanding balances, and the only major lender focused on small business borrowers, Robertson said.

With the economy shedding jobs at an unprecedented rate, consumers and small businesses are under extreme stress. Please consider the following chart.

Economy losing 500,000+ jobs for six consecutive months

For more details on jobs, please see Jobs Contract 16th Straight Month; Unemployment Rate Soars to 8.9%.

Even if losses improve to


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Phil's Favorites

News You Can Use, 4-25-15 P.M.

The "War On Cash" Migrates To Switzerland (Acting-Man)

Banks Increasingly Refuse Cash Withdrawals – Switzerland Joins the Fun

The war on cash is proliferating globally. It appears that the private members of the world’s banking cartels are increasingly joining the fun, even if it means trampling on the rights of their customers.

Yesterday we came across an article at Zerohedge, in which Dr. Salerno of the Mises Institute notes that JP Morgan Chase has apparently joined the “war on cash”, by “restricting the use of cash in selected markets, restricting borrowers from making cash payments on credit cards, mortgages, equity lines and auto loans, as well as prohibiting storage of cash in safe deposit boxes&rdqu...



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Zero Hedge

TaRGeT LiBeRTY...

Courtesy of ZeroHedge. View original post here.

Submitted by williambanzai7.

...

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Chart School

Price waves that signal market direction

Courtesy of Read the Ticker.

Question: Do price waves answer the Continuation or Reversal question?More from RTT TvAnswer: Yes when you understand Wyckoff logic, more so if you understand Richard Wyckoff law off 'Effort vs Results' and how it supports the Richard Wyckoff law of 'Supply and Demand'.

AMZN price chart with waves colored (the daily price waves are the same formula as PnF wave/bar calculation below, allows sync of price action).

Click for popup. Clear your browser cache if image is not showing.

Auto PnF chart from our Swing Pop out charts.

Click for popup. Clear your browser cache if image is not showing.

NOTE: readtheticker.com does allow users to load ...

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Kimble Charting Solutions

King Dollar slipping below support, say Joe Friday

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

King Dollar has been on a role since last summer, up over 20% in less than a year. When looking back on the US$, the rally has been rare and nearly historic. Majority of the rally took place inside the steep rising channel above. Over the past month the US$ might have put in a double top. Over the past few days, the US$ has slipped a little below rising support at red arrow above.

CLICK ON CHART TO ENLARGE

As you can see from the table abo...



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Digital Currencies

Why Bitcoin's male domination will be its downfall

Here's an interesting argument by Felix Salmon, although I think he is taking two correct observations and mistakenly attributing a cause-and-effect relationship to them: Bitcoin is going nowhere because women are not involved.

More likely, in my opinion, women are not involved in bitcoin because bitcoin is going nowhere (and they know it). Or maybe, simply, bitcoin is going nowhere and women are not involved. 

Why Bitcoin's male domination will be its downfall 

By Felix Salmon

Nathaniel Popper’s new book, Digital Gold, is as close as you can get to being the definitive account of the history of Bitcoin. As its subtitle proclaims, the book tells the story of the “misfits” (the first generation of hacker-l...



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OpTrader

Swing trading portfolio - week of April 20th, 2015

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Sabrient

Sector Detector: Earnings and GDP temporarily take investor spotlight off the Fed

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Sabrient Systems and Gradient Analytics

As we get into the heart of earnings season and anticipate the GDP report for Q1, the investor spotlight has been taken off the Federal Reserve and timing of its first interest rate hike, at least temporarily. Even though Q1 economic growth will undoubtedly look weak, the future remains bright for the U.S economy – even though many multinationals will struggle with top-line growth due to the strong dollar – and any near-term selloff resulting from weak economic or earnings news should be bought yet again in expectation of better results for the balance of the year. High sector correlations remain a concern, reflectin...



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Promotions

Watch the Phil Davis Special on Money Talk on BNN TV!

Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene

 

The replay is now available on BNN's website. For the three part series, click on the links below. 

Part 1 is here (discussing the macro outlook for the markets) Part 2 is here. (discussing our main trading strategies) Part 3 is here. (reviewing our pick of th...

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Market Shadows

Kimble Charts: South Korea's EWY

Kimble Charts: South Korea's EWY

By Ilene 

Chris Kimble likes the iShares MSCI South Korea Capped (EWY), but only if it breaks out of a pennant pattern. This South Korean equities ETF has underperformed the S&P 500 by 60% since 2011.

You're probably familiar with its largest holding, Samsung Electronics Co Ltd, and at least several other represented companies such as Hyundai Motor Co and Kia Motors Corp.

...



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Mapping The Market

S&P 500 Leverage and Hedges Options - Part 2

Courtesy of Jean-Luc Saillard.

In my last post (Part 1 of this article), I looked at alternative ETFs that could be used as hedges against the corrections that we have seen during that long 2 year bull run. Looking at the results, it seems that for short (less than a month) corrections, a VIX ETF like VXX could actually be a viable candidate to hedge or speculate on the way down. Another alternative ETF was TMF, a long Treasuries ETF which banks on the fact that when markets go down, money tends to pack into treasuries viewed as safe instruments. In some cases, TMF even outperformed the usual hedging instruments like leveraged ETFs. There could of course be other factors at play since some of 2014 corrections were related to geopolitical events which are certain...

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Pharmboy

2015 - Biotech Fever

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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