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

[Bekah]

Another couple of good ones are "Too Big To Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System -- and Themselves" by Andrew Ross Sorkin and "The Big Short: Inside the Doomsday Machine"  by Michael Lewis.  Both quite readble for the interested layman -  moi. 

Bekah
"If they can get you asking the wrong questions, they don't have to worry about the answers." 
 Thomas Pynchon 



On Sep 3, 2011, at 12:29 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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