Wow Sergio, I never knew you were that old! Just kidding (although I wonder if you started in the restaurant business when you were 10 ). Glad to hear you and your family are hanging in there with a great perspective on things. I hope to see you again soon.
Your killing me Tom...your a funny funny accountant...which is rare...lol....I am 45 years old...started working in this business from high school and through College and Law School.....finally figured out I really enjoyed it...go figure. Yup hope to catch up with you soon....those guys at the NYMC have a full schedule loaded up for 09...hopefully you can attend the Pocono HPDE.
Regards
S
Thanks, a much more detailed explanation than I have heard from anyone else. A couple more questions....
- What were the ratings that were given to the worst tranches? Were they above junk?
- Don't these agencies factor in that all these tranches were tied the housing market...
Caveat emptor for investors but your ratings gave the institutionals free run to "get in the game". I imagine there is much regulation coming to the rating industry.
A good synopsis of this whole CDO fiasco can be found in CNBC's "House of Cards" feature. It's been showing on a regular basis.
For those of you wanting to discuss/debate/argue/fight-to-the-***** on politics and investing, there are several good threads in the Off Topic Area. We've been debating the origins of this financial mess, who's to blame and what's ahead. Join in if you'd like to contribute there. Please keep your posts mature and civil, the board lost members who got carried away.
Pelosi is an idiot - Ignore the comments of the banned member, good conversation otherwise. (Gustav, you really need to move the good posts to a new thread and let it continue.)
I do private investment work and have seen a broad based decline in most all sectors. Defensive stocks, such as broad based and well established consumer staple companies, like food (General Mills), medical (JNJ) and specific "sin-products" (Altaria) have taken less of a hit than the general market. (I am not recommending any of these companies, simply using as examples.)
In statistics there is always regression towards the mean. The U.S. has lived on borrowed money and beyond it's paycheck for decades and its not going to get fixed overnight. Crooked corporate and government bookkeeping have hidden growing problems. Combined with synthetic investments (derivatives, securitization of cash flow products, etc) that have grown beyond the understanding of those who created them and outright business fraud, we're going to endure tight times before this storm blows over. More financial radioactive skeletons to be uncovered.
I believe the field of medicine went downhill when it changed from a healing art to big business, and now supports thousands of parasitic third party companies that contribute nothing of real value.
One myth promoted by the brokerage business was that foreign economies operated relatively independently of one another. Recent events have shown how interdependent the world's economies have actually become. For example, growing areas of industrial China are filled with abandoned factories and millions of unemployed workers are heading back to their villages.
Except for the mind boggling growing debt, which will last longer than anyone reading this, economic conditions will eventually improve. Live frugally, conserve cash and if possible, pay off any debt.
As shorts said in an earlier post, "We will get out of this slump eventually, we always prevail. The worst thing you can do is panic and make a bad decision."
Here's to better times ahead.
__________________
When someone with experience proposes a deal to someone with money, too often the fellow with the money ends up with the experience and the fellow with experience ends up with the money.-- Warren Buffett
Please Do Not Annoy, Torment, Pester, Lague, Molest, Worry, Badger, Harry, Harass, Heckle, Persecute, Irk, Bullyrag, Vex, Disquiet, Grate, Beset, Bother, Tease, Nettle, Tantalize, or Ruffle Members of the HowlingBohemianCurmudgeonClub.
The Following 5 Users Say Thank You to Dylan Thomas For This Useful Post:
For those of you wanting to discuss/debate/argue/fight-to-the-***** on politics and investing, there are several good threads in the Off Topic Area. We've been debating the origins of this financial mess, who's to blame and what's ahead. Join in if you'd like to contribute there. Please keep your posts mature and civil, the board lost members who got carried away.
Pelosi is an idiot - Ignore the comments of the banned member, good conversation otherwise. (Gustav, you really need to move the good posts to a new thread and let it continue.)
I do private investment work and have seen a broad based decline in most all sectors. Defensive stocks, such as broad based and well established consumer staple companies, like food (General Mills), medical (JNJ) and specific "sin-products" (Altaria) have taken less of a hit than the general market. (I am not recommending any of these companies, simply using as examples.)
In statistics there is always regression towards the mean. The U.S. has lived on borrowed money and beyond it's paycheck for decades and its not going to get fixed overnight. Crooked corporate and government bookkeeping have hidden growing problems. Combined with synthetic investments (derivatives, securitization of cash flow products, etc) that have grown beyond the understanding of those who created them and outright business fraud, we're going to endure tight times before this storm blows over. More financial radioactive skeletons to be uncovered.
I believe the field of medicine went downhill when it changed from a healing art to big business, and now supports thousands of parasitic third party companies that contribute nothing of real value.
One myth promoted by the brokerage business was that foreign economies operated relatively independently of one another. Recent events have shown how interdependent the world's economies have actually become. For example, growing areas of industrial China are filled with abandoned factories and millions of unemployed workers are heading back to their villages.
Except for the mind boggling growing debt, which will last longer than anyone reading this, economic conditions will eventually improve. Live frugally, conserve cash and if possible, pay off any debt.
As shorts said in an earlier post, "We will get out of this slump eventually, we always prevail. The worst thing you can do is panic and make a bad decision."
Here's to better times ahead.
I would add further IMHO...as has been shown by those with more insight than I...that this was bound to happen...and quite frankly should be considered a good thing....get the bad blood out if you will....
Re-establish sound principles and do away with notions of entitlement(American Dream...everyone should own a house)
Do not SPEND more than you take IN....lol...and even in this economic debacle people are doing well...some extremely well...which again IMHO shows that Capitalism works..especially if left alone...
We have come to reap what we have sown...now its time to pay the piper.......Did I use enough sayings??....LOL
Regards
S
My industry has been in a depression for over a year and Obama just literally killed the student lending business in his new budget, "An Era of Responsibility".
This opinion piece from the WSJ is more in line with what is actually happening in the US.
OPINION
MARCH 6, 2009
Obama's Radicalism Is Killing the Dow
A financial crisis is the worst time to change the foundations of American capitalism.
By MICHAEL J. BOSKIN
It's hard not to see the continued sell-off on Wall Street and the growing fear on Main Street as a product, at least in part, of the realization that our new president's policies are designed to radically re-engineer the market-based U.S. economy, not just mitigate the recession and financial crisis.
Martin Kozlowski
The illusion that Barack Obama will lead from the economic center has quickly come to an end. Instead of combining the best policies of past Democratic presidents -- John Kennedy on taxes, Bill Clinton on welfare reform and a balanced budget, for instance -- President Obama is returning to Jimmy Carter's higher taxes and Mr. Clinton's draconian defense drawdown.
Mr. Obama's $3.6 trillion budget blueprint, by his own admission, redefines the role of government in our economy and society. The budget more than doubles the national debt held by the public, adding more to the debt than all previous presidents -- from George Washington to George W. Bush -- combined. It reduces defense spending to a level not sustained since the dangerous days before World War II, while increasing nondefense spending (relative to GDP) to the highest level in U.S. history. And it would raise taxes to historically high levels (again, relative to GDP). And all of this before addressing the impending explosion in Social Security and Medicare costs.
To be fair, specific parts of the president's budget are admirable and deserve support: increased means-testing in agriculture and medical payments; permanent indexing of the alternative minimum tax and other tax reductions; recognizing the need for further financial rescue and likely losses thereon; and bringing spending into the budget that was previously in supplemental appropriations, such as funding for the wars in Iraq and Afghanistan.
The specific problems, however, far outweigh the positives. First are the quite optimistic forecasts, despite the higher taxes and government micromanagement that will harm the economy. The budget projects a much shallower recession and stronger recovery than private forecasters or the nonpartisan Congressional Budget Office are projecting. It implies a vast amount of additional spending and higher taxes, above and beyond even these record levels. For example, it calls for a down payment on universal health care, with the additional "resources" needed "TBD" (to be determined).
Mr. Obama has bravely said he will deal with the projected deficits in Medicare and Social Security. While reform of these programs is vital, the president has shown little interest in reining in the growth of real spending per beneficiary, and he has rejected increasing the retirement age. Instead, he's proposed additional taxes on earnings above the current payroll tax cap of $106,800 -- a bad policy that would raise marginal tax rates still further and barely dent the long-run deficit.
Increasing the top tax rates on earnings to 39.6% and on capital gains and dividends to 20% will reduce incentives for our most productive citizens and small businesses to work, save and invest -- with effective rates higher still because of restrictions on itemized deductions and raising the Social Security cap. As every economics student learns, high marginal rates distort economic decisions, the damage from which rises with the square of the rates (doubling the rates quadruples the harm). The president claims he is only hitting 2% of the population, but many more will at some point be in these brackets.
As for energy policy, the president's cap-and-trade plan for CO2 would ensnare a vast network of covered sources, opening up countless opportunities for political manipulation, bureaucracy, or worse. It would likely exacerbate volatility in energy prices, as permit prices soar in booms and collapse in busts. The European emissions trading system has been a dismal failure. A direct, transparent carbon tax would be far better.
Moreover, the president's energy proposals radically underestimate the time frame for bringing alternatives plausibly to scale. His own Energy Department estimates we will need a lot more oil and gas in the meantime, necessitating $11 trillion in capital investment to avoid permanently higher prices.
The president proposes a large defense drawdown to pay for exploding nondefense outlays -- similar to those of Presidents Carter and Clinton -- which were widely perceived by both Republicans and Democrats as having gone too far, leaving large holes in our military. We paid a high price for those mistakes and should not repeat them.
The president's proposed limitations on the value of itemized deductions for those in the top tax brackets would clobber itemized charitable contributions, half of which are by those at the top. This change effectively increases the cost to the donor by roughly 20% (to just over 72 cents from 60 cents per dollar donated). Estimates of the responsiveness of giving to after-tax prices range from a bit above to a little below proportionate, so reductions in giving will be large and permanent, even after the recession ends and the financial markets rebound.
A similar effect will exacerbate tax flight from states like California and New York, which rely on steeply progressive income taxes collecting a large fraction of revenue from a small fraction of their residents. This attack on decentralization permeates the budget -- e.g., killing the private fee-for-service Medicare option -- and will curtail the experimentation, innovation and competition that provide a road map to greater effectiveness.
The pervasive government subsidies and mandates -- in health, pharmaceuticals, energy and the like -- will do a poor job of picking winners and losers (ask the Japanese or Europeans) and will be difficult to unwind as recipients lobby for continuation and expansion. Expanding the scale and scope of government largess means that more and more of our best entrepreneurs, managers and workers will spend their time and talent chasing handouts subject to bureaucratic diktats, not the marketplace needs and wants of consumers.
Our competitors have lower corporate tax rates and tax only domestic earnings, yet the budget seeks to restrict deferral of taxes on overseas earnings, arguing it drives jobs overseas. But the academic research (most notably by Mihir Desai, C. Fritz Foley and James Hines Jr.) reveals the opposite: American firms' overseas investments strengthen their domestic operations and employee compensation.
New and expanded refundable tax credits would raise the fraction of taxpayers paying no income taxes to almost 50% from 38%. This is potentially the most pernicious feature of the president's budget, because it would cement a permanent voting majority with no stake in controlling the cost of general government.
From the poorly designed stimulus bill and vague new financial rescue plan, to the enormous expansion of government spending, taxes and debt somehow permanently strengthening economic growth, the assumptions underlying the president's economic program seem bereft of rigorous analysis and a careful reading of history.
Unfortunately, our history suggests new government programs, however noble the intent, more often wind up delivering less, more slowly, at far higher cost than projected, with potentially damaging unintended consequences. The most recent case, of course, was the government's meddling in the housing market to bring home ownership to low-income families, which became a prime cause of the current economic and financial disaster.
On the growth effects of a large expansion of government, the European social welfare states present a window on our potential future: standards of living permanently 30% lower than ours. Rounding off perceived rough edges of our economic system may well be called for, but a major, perhaps irreversible, step toward a European-style social welfare state with its concomitant long-run economic stagnation is not.
Mr. Boskin is a professor of economics at Stanford University and a senior fellow at the Hoover Institution. He chaired the Council of Economic Advisers under President George H.W. Bush.
I really do not have any party affiliation, as I do not like any of them. However, Obama is not going to raise taxes on the middle class which IMO has been dumped on for too long. They(middle class) have few tax breaks and even their most important one in real estate, has gone sour for many. Obama is letting Bush's tax credit for the wealthy run out in 2010. I addition, after the so-called "resession" is over in two years, will tax those that make over $250,000.
[quote=jimmyz2;1533157]....Obama is not going to raise taxes on the middle class....quote]
This is only a dream... Even if the tax rate does not go up the middle class the enormous amount of inflation that will follow the government spending spree and economic recovery will significantly lower your standard of living and that will be a real tax hike for everyone. There is a reason Obama is increasing the amount of government workers and those that pay no taxes....they make great democrat voters.
If it wasn't for capitalism there wouldn't be such thing as an M5! We would all drive Volkswagons.
over 250k a year! how stupid is that. someone making over 250k a year in iowa is much different than a person who makes the same money and lives in new york or california.
__________________
The Following User Says Thank You to aznronin For This Useful Post:
The Tax break should be given based on the cost of living for a demographic area. Sort of like how the FHA does it with conforming loan limits and adjustments to those limits.
I want to know where all these people where when the money was pouring in and no one said...wait, whats going on. Its funny how everyone is now an expert in everything, but when the music stops everyone wants a chair and when there are no more chairs everyone becomes a carpenter, but they never handled a lath.
__________________
"Motion does not equal progress"...Cos
Malo periculosam libertatem quam quietum servitium...
The Following User Says Thank You to Cosmos For This Useful Post:
). Glad to hear you and your family are hanging in there with a great perspective on things. I hope to see you again soon. 
Linear Mode
