NP: No gov't; best gov't..from John Lanchester LRoB

[Keith Davis]

"The Creature From Jekyll Island" is an interesting read on how our finances
work. "The Big Short" is another. I'll admit right away that I'm ignorant
about this stuff, and seeking to educate myself, to a certain extent. Any
recommendations are appreciated. Now I'm into "The Shock Doctrine".

On Sat, Sep 3, 2011 at 1:29 PM, Mark Kohut <markekohut at yahoo.com> wrote:

> May I recommend, since we keep talking, All The Devils are Here about
> the history of the credit default crisis.
>
> good, among much else, on the corruption of Moody's and S & P when
> they decided to increase 'market share".....................
>
>  *From:* alice wellintown <alicewellintown at gmail.com>
> *To:* pynchon -l <pynchon-l at waste.org>
> *Sent:* Saturday, September 3, 2011 10:41 AM
> *Subject:* Re: NP: No gov't; best gov't..from John Lanchester LRoB
>
> Much as I hate the expression, this is rocket science. Investments, if
> we get into the esoteric, the reverse floating rate credit default
> swap options,  are  every bit as complex as anything NASA does. In
> fact, this is one of the reasons we are in this mess. The people at
> the top of (insert any major investment bank or bank here) have no
> idea what the math whiz kids and gurus are inventing and putting tons
> of money in. Moreover, even with wall street folk all over the Obama
> administration, the government simply can not keep up with the pace of
> wall street & Co. Make a regulation and they will invent a way around
> it. The most creative people, the brightest, don't all work for Gates
> and Jobs. Wall Street is not built on greed; it is built on very smart
> and clever people who work their asses off.
>
> On Sat, Sep 3, 2011 at 7:53 AM, Paul Mackin <mackin.paul at verizon.net>
> wrote:
> > Nobody's wrong. This isn't rocket science.  However it can't be explained
> > adequately in a few p-posts.
> >
> > Part of the system is broke and part of it ain't.
> >
> > The fed is limited in what it can do.
> >
> > Congress hasn't the political will.
> >
> > But the U.S. can still borrow at practically zero interest so the credit
> > rating of U.S. Teasuries isn't a big deal.  Heck, i'd give them a
> quadruple
> > rating if I thought it would do any good. But it wouldn't.  Ratings are
> >  important as serving a cya function for fund managers and such. I can't
> > imagine people investing their own money,  Warren Buffet comes to mind,
> on
> > the basis of what the disgraced S&P says.
> >
> > But i love you all.
> >
> > P
> >
> > On 9/2/2011 7:34 PM, alice wellintown wrote:
> >>
> >> David, you are simply wrong. If S&P or Moodys or Duff&  Phelps or
> >> Fitch or any other reputable rating agency had reason to suspect that
> >> the USA would default on its securities it could not and would not
> >> give the USA a AA+ rating. How could it?
> >>
> >> Paul is missing something here too. That is, the UST yield curve had
> >> become steeper after the QE by the Fed. This steepening is owed to the
> >> major market players in the UST  moving the long end up vs the short
> >> term securities, so the bell weather 10 year and the old bell weather
> >> or benchmark 30 year had declined in price and the yield increased as
> >> the curve is a leading indicator, and the players were betting that
> >> the economy would recover in a traditional steep pattern.  This is
> >> normal. After a deep recession we usually get a steep recovery.
> >>
> >> Of course, this did not happen. The double dip in the housing market,
> >> now a double dip in the US banks and agencies, now heading to the
> >> courts, along with other factors, including the Obama vs Rep Tea Party
> >> factor and the S&P downgrade, Greece....Japan, natural
> >> disasters...protracted wars...so on, has put an end to the whimpering
> >> recovery. So, the UST yield curve, while a flight to quality play even
> >> after a downgrade, as Paul noted, is normal as it is actually a
> >> fundamental trade because the traders believe the USA is heading into
> >> a recession and the tools it has to get out of it are all locked up
> >> the woodshed Ben took the congress to the other day or broken or
> >> useless. The fundamentals are weak and getting weaker, so the US long
> >> term securities, never a default risk, are a good play right now. Buy
> >> them! Also, because the US market is soooo big, it has liquidity. You
> >> can sell a billion of these securities in one second and you will have
> >> ten firms bidding aggressively to buy them from you. Try that with any
> >> other bond.
> >>
> >>
> >>
> >> As Paul notes, the US is not any old nation state but the locomotive
> >> of the world economy; right now, it is, as Bob Dylan sez, a broke down
> >> engine. How is the issue. How will we get out of it? How long will it
> >> take?
> >>
> >>
> >>
> >> On Fri, Sep 2, 2011 at 4:35 PM, David Morris<fqmorris at gmail.com>
>  wrote:
> >>>
> >>> Right.  This fact really did make S&P's move look silly.  But they've
> >>> been courting the silly for a while now...
> >
> >
>
>
>


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