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Posts Tagged ‘Treasury officials’

Monday at the Treasury: an overlong exegesis

Monday at the Treasury: an overlong exegesis

Courtesy of Steve Randy Waldman at Interfluidity 

Last Monday, I had the privilege to meet up with a bunch of bloggers and Treasury officials for what might be described as a “rap session”. The meeting was less formal than a previous meeting. There were no presentations, and no obvious agenda. Refugees from the blogosphere included Tyler CowenPhil DavisJohn LounsburyMike KonczalYves SmithAlex Tabarrok, and myself. Our hosts at Treasury were Lewis Alexander, Michael Barr, Timothy Geithner, Matthew Kabaker, Mary John Miller, and Jake Siewart. You will find better write-ups of the affair elsewhere [Konczal, Lounsbury (also here), SmithTabarrok]. Treasury held another meeting, with a different set of bloggers, on Wednesday.

It is bizarro world for me to go to these things. First, let me confess right from the start, I had a great time. I pose as an outsider and a crank. But when summoned to the court, this jester puts on his bells. I am very, very angry at Treasury, and the administration it serves. But put me at a table with smart, articulate people who are willing to argue but who are otherwise pleasant towards me, and I will like them. One or two of the “senior Treasury officials” had the grace to be a bit creepy in their demeanor. But, cruelly, the rest were lively, thoughtful, and willing to engage as though we were equals. Occasionally, under attack, they expressed hints of frustration in their body language — the indignation of hardworking people unjustly accused. But they kept on in good spirits until their time was up. I like these people, and that renders me untrustworthy. Abstractly, I think some of them should be replaced and perhaps disgraced. But having chatted so cordially, I’m far less likely to take up pitchforks against them. Drawn to the Secretary’s conference room by curiosity, vanity, ambition, and conceit, I’ve been neutered a bit. There’s an irony to that, because some of the people I met with may have been neutered, in precisely the same way and to disastrous effect, by their own meetings and mentorings with the Robert Rubins and Jamie Dimons of the world.

Obviously the headline act was Timothy Geithner. Off the record (or “on deep background”), Geithner is entirely different from the sometimes stiff character who appears on television. He…
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I Retract My Apology and Call for More Regulation of Goldman Sachs

I Retract My Apology and Call for More Regulation of Goldman Sachs (pdf)

apologyCourtesy of Janet Tavakoli at TSF
(see also Apology)

According to SIGTARP1, both the Federal Reserve and Treasury agreed that an AIG failure posed unacceptable risk to the global financial system and the U.S. economy.  On March 24, 2009, Fed Chairman Ben Bernanke testified before the House Financial Services Committee [P.9]:

[C]onceivably, its failure could have resulted in a 1930’s-style global financial and economic meltdown, with catastrophic implication[s].

From July 2007, AIG’s financial situation deteriorated while so-called “AAA” collateralized debt obligations (CDOs) dropped in value. AIG sold credit default swaps (CDSs) on these CDOs and had to post more collateral, as the prices plummeted. 

Goldman Sachs was AIGFP’s (UK-based AIG Financial Products) largest CDS counterparty with around $22.1 billion, or about one-third of the problematic trades.  Goldman underwrote some of the CDOs underlying its own CDSs, and also underwrote a large portion of the CDOs against which French banks SocGen, Calyon, Bank of Montreal, and Wachovia bought CDS protection.  Goldman provided pricing on these CDOs to SocGen and Calyon. Goldman was a key contributor to AIG’s liquidity strain and the resulting systemic risk.  (See “Goldman’s Undisclosed Role in AIG’s Distress”)

Apocalypse AIG

By mid September 2008, AIG’s long-term credit rating was downgraded, its stock price plummeted, and AIG couldn’t meet its borrowing needs in the short-term credit markets.  According to SIGTARP, “without outside intervention, the company faced bankruptcy, as it simply did not have the cash that was required to provide to AIGFP’s counterparties as collateral.” [P.9] The Federal Reserve Board with Treasury’s encouragement authorized a bailout. 2

The Federal Reserve Bank of New York (FRBNY) extended an $85 billion revolving credit facility, so AIG could make its collateral payments to Goldman and some of its CDO buyers.  AIG also met other obligations, such as payments under its securities lending programs owed to Goldman and some of its CDO buyers.  (See also: “AIG Discloses Counterparties to CDS, GIA, and Securities Lending Transactions.”) 

Goldman “Would Have Realized a Loss”

Fed Chairman Bernanke said AIG’s crisis put the world at risk for a global financial meltdown.  Goldman purchased little credit default protection3 against an AIG collapse.  Even if Goldman escaped a collateral clawback of the billions it held from AIG4, the


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Sympathy for the Treasury

Wondering what happened at the bloggers-Treasury officials’ get-together?  Here’s Steve Randy Waldman’s account of the meeting. – Ilene

Sympathy for the Treasury

us treasury buildingCourtesy of Steve Randy Waldman of Interfluidity

On Monday, I was among a group of eight bloggers who attended a discussion with "senior Treasury officials" in Washington. Several nice accounts of that meeting have already been posted (see roundup below). Here’s mine.

First, I’d like to thank the "senior Treasury officials" for taking the time to meet with us, and for being very gracious hosts. Whatever disagreements one might have, in statistical if not moral terms it was an extreme privilege to sit across a conference table and have a chance to speak with these people. And despite the limitations of the event, I’d rather there be more of this kind of thing than less. So a sincere tip o’the hat to all of our hosts. Thank you for having us.

The second thing I’d like to discuss is corruption. Not, I hasten to add, the corruption of senior Treasury officials, but my own. As a slime mold with a cable modem, it was very flattering to be invited to a meeting at the US Treasury. A tour guide came through with two visitors before the meeting began, and chattily announced that the table I was sitting at had belonged to FDR. It very clearly was not the purpose of the meeting for policymakers to pick our brains. The e-mail invitation we received came from the Treasury’s department of Public Affairs. Treasury’s goal in meeting with us was to inform the public discussion of their past and continuing policies. (Note that I use the word "inform" in the sense outlined in a previous post. It is not about true or false, but about shaping behavior.)

Nevertheless, vanity outshines reason, and I could not help but hope that someone in the bowels of power had read my effluent and decided I should be part of the brain trust. The mere invitation made me more favorably disposed to policymakers. Further, sitting across a table transforms a television talking head into a human being, and cordial conversation with a human being creates a relationship. Most corrupt acts don’t take the form of clearly immoral choices. People fight those. Corruption thrives where there is a tension between institutional and interpersonal ethics. There is "the…
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Zero Hedge

Just 8 Numbers

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Originally posted at Macro-Man blog,

26.1% :  The amount that retail gasoline margins expanded in the United States last month, even as prices dropped $0.34/gallon.

202,000:  Number of Google results for "FX price fixing"

542,000:  Number of Google results for "Gas Station price fixing"

$500,000,000:  Average annual cost to the world if one assumes a daily FX fixing volume of $10 billion and that each rat...



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Chart School

Weekly Gasoline Price Update: Down Another Seven Cents

Courtesy of Doug Short.

It's time again for my weekly gasoline update based on data from the Energy Information Administration (EIA). Rounded to the penny Regular dropped another seven cents and Premium six. Regular is now at its lowest price since November 2010. Will the price decline in gasoline boost discretionary spending as we approach the holiday season? Stay tuned!

According to GasBuddy.com, Hawaii has the highest cost at $3.88. The highest continental average price is in New York at $3.18. Missouri and South Carolina are tied for the cheapest Regular at $2.55.

How far are we from the interim high prices of 2011 and the all-time highs of 2008? Here's a visual answer.

...



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Phil's Favorites

Fed "Mystified" Why Millennials Still Live at Home; My Answer May Surprise You (It Isn't Jobs, Student Debt, or Housing)

Courtesy of Mish.

A New York Fed research paper wonders What’s Keeping Millennials at Home? Is it Debt, Jobs, or Housing?

The paper says "it's a mystery" why the housing recovery did not have a bigger impact on millennials living at home.

The research paper, written by Zachary Bleemer, Meta Brown, Donghoon Lee, and Wilbert van der Klaauw notes correlations to debt, jobs and housing.

Yet, "student debt only explains about 10% of the increase in parental coresidence since 2004, with another 10% being explained by house prices during the mid-2000s".

I have the answer below, but first a few charts and notes on the charts.

Notes:

  • CCP is the Federal Reserve Bank of New York’s Equifax-Sourced Consumer...



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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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Sabrient

Sector Detector: Holiday fever takes hold of stock investors, but a pullback is needed

Courtesy of Sabrient Systems and Gradient Analytics

With warmer weather arriving to melt the early snowfall across much of the country, investors seem to be catching a severe case of holiday fever and positioning themselves for the seasonally bullish time of the year. And to give an added boost, both Europe and Asia provided more fuel for the bull’s fire last week with stimulus announcements, particularly China’s interest rate cut. Yes, all systems are go for U.S. equities as there really is no other game in town. But nothing goes up in a straight line, not even during the holidays, so a near-term market pullback would be a healthy way to prevent a steeper correction in January.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based Sector...



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Digital Currencies

Bitcoin Mining

Bitcoin Mining

Courtesy of Global Economic Intersection

By Rod Garratt and Rosa Hayes - Liberty Street Economics, Federal Reserve Bank of New York

In June 2014, the mining pool Ghash.IO briefly controlled more than half of all mining power in the Bitcoin network, awakening fears that it might attempt to manipulate the blockchain, the public record of all Bitcoin transactions. Alarming headlines splattered the blogosphere. But should members of the Bitcoin community be worried?

Miners are members of the Bitcoin community who engage in a proce...



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OpTrader

Swing trading portfolio - week of November 25th, 2014

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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Insider Scoop

UPDATE: Bank Of America Upgrades Kate Spade

Courtesy of Benzinga.

Heather Balsky of Bank of America upgraded shares of Kate Spade & Co (NYSE: KATE) to Buy from Neutral on Monday with a price target raised to $34 from a previous $33.

“Based on our handbag survey results, we think Kate Spade can offset fewer markdown sales with greater full price sell-through, and continue to post comp and earnings beats,” Balsky wrote in a note to clients.

The analyst adds that a projected 45 percent growth outlook on higher comp and margins are not currently factored in to share prices and that the company can see “robust” comp growth as promotions decline.

According to an internal consumer survey, Balsky concluded that fewer Kate Spade customers seek deals and promotions as purchasing an item with a superior fashion and design is more im...



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's the Happy Thanksgiving Edition of Stock World Weekly!

Click on this link and sign in with your PSW user name and password. 

Picture via Pixabay.

...

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Market Shadows

Official Moves in the Market Shadows' Virtual Portfolio

By Ilene 

I officially bought 250 shares of EZCH at $18.76 and sold 300 shares of IGT at $17.09 in Market Shadows' Virtual Portfolio yesterday (Fri. 11-21).

Click here for Thursday's post where I was thinking about buying EZCH. After further reading, I decided to add it to the virtual portfolio and to sell IGT and several other stocks, which we'll be saying goodbye to next week.

Notes

1. th...



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Option Review

Yamana Gold call options sink

Yamana Gold call options sink

By Andrew Wilkinson at Interactive Brokers

A four-year low for the spot price of gold has had a devastating impact on Yamana Gold (Ticker: AUY), with shares in the name down at the lowest price in six years. Some option traders were especially keen to sell premium and appear to see few signs of a lasting rebound within the next five months. The price of gold suffered again Wednesday as the dollar strengthened and stock prices advanced. The post price of gold fell to $1145 adding further pain to share prices of gold miners. Shares in Yamana Gold tumbled to $3.62 and the lowest price since 2008 as call option sellers used the April expiration contract to write premium at the $5.00 strike. That strike is now 38% above the price of the stock. Premium writers took in around 16-cents per contract o...



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Pharmboy

Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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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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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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