Used Car Salesmen

October 26, 2012

Yesterday I called the reporting of some trade information for MBS bonds a “baby step” in the right direction, but didn’t try to describe exactly why it was such a small step, or why the sleazoids that hide in the shadows could still do their thing.  Quite rightly, frequent commenter and longtime friend from the business “Conscience of a Conservative” pointed out that one AA private label MBS might be so different from another that the information has truly limited value without knowing the exact bond that traded.

The reason I didn’t get “down into the weeds” in my initial post was that I hadn’t come up with the right metaphor to describe why disclosing trade prices without CUSIP numbers still leaves too much hidden.  I’m sure it doesn’t escape anyone’s notice that the SEC is a captured regulator, or that FINRA obviously won’t bite the hand that owns it directly and signs the paychecks, but that doesn’t get to the specifics.

I have to thank my friend Stephen Jencks for making a comment on Jody’s article that gave me that elusive metaphor that makes it clear to the average Joe why the new “transparency” is so little so late.  Read the rest of this entry »


A Baby Step

October 25, 2012

Transparency in the mortgage bond market just got a baby step in the right direction.

Yesterday the SEC approved FINRA’s plan to tell the world where some Agency MBS and small business loan (SBA only) bonds are trading.  FINRA is the brokerage industry’s self-regulator, so the fact that it’s only a baby step is no surprise.

I’m reminded of the scene five years ago, when short sellers and CDS “insurance” buyers used complicit or ignorant reporters and the opacity of the structured securities markets to turbo charge their profits.

In fact, they made the mortgage meltdown worse through their actions. Read the rest of this entry »

Hens Volunteer, Foxes Approve

October 18, 2012

A small piece in Forbes today reviewed the earnings report from Morgan Stanley, and noted yet another setup for the next big debacle.

When my second piece in the series on derivatives runs on, you’ll see that I have become even more cynical about the business of risk management at the big banks. (Was that possible?)

As I put it in a phone call today to a friend, “Let’s see, it must be almost time for another hundred-year flood since four years have passed since the last one.”

Read the rest of this entry »

Keeping It Simple

October 17, 2012

I had written a longer article that went through the madness of proving the tax cut numbers simply didn’t add up in last night’s debate, but realized it might bury the main point — that the Romney tax cuts are another huge giveaway that will help the economy the least among all the ways we could borrow and spend trillions of dollars.

Instead, I focused on a peculiar form of sleight of hand that turned paying the same percentage into paying the same. Here’s the link to my nationalmemo article just published.

Debate Arithmetic, Round Two



Blue Light Specials

October 15, 2012

This morning in the mREIT aisle the spinning blue light attracted alert shoppers.  In particular, seveal amREITs completed what looks like an “air pocket” end to a week-long trend of dramatically lower prices.

As always, there are both fundamental and emotional reasons for the price movements, but today’s early plunge looks like a mini-capitulation.

Among the stocks I watch, AGNC traded briefly under $30 a share, and ANH traded to just a penny higher than $6.  Those were the “screaming buys” in my opinion, but NLY flirted with the $15 level, and TWO traded solidly under $11, albeit briefly.

MITT also traded down, but I haven’t got a feel for its price action yet, though I admire the bond-picking talents at Angelo Gordon.

But don’t get too upset that you missed the sale.

I’ll explain after the break. Read the rest of this entry »

Romney’s “Word Problem”

October 4, 2012

My reaction to last night’s policy debate was just published on

Here’s the link:

I’ll be posting more on national memo soon.

The full text of today’s short article is after the break.

Read the rest of this entry »

Gold, Grains and Gasoline

October 2, 2012

As any veteran of the agonizing series of delays and loopholes built into the attempt to stop naked short selling in the stock market can recall, the “players” who manipulate our markets for profit have a playbook that keeps their games going even when the refs first blow the whistle.  They delay, delay and delay, and all along the path, they weaken the restraints that might keep them from maximizing their profits.

The latest hidden profit game that they are defending is the manipulation of commodities markets.

Read the rest of this entry »