Comments on: Katsenelson Predicts

by: Manish Aurora

Sat, 12 Apr 2008 12:44:57 +0000

Securitization markets will return. But that is stating that the sun will rise. If the question is when, the answer depends on new structures where the agent takes the risk of default and expects a commensurate return i.e. levered equity. So even as AAA top rated paper sells at a couple of hundred basis points above Treasury’s, FMD would keep the lower rated paper for a 100% return IF defaults are within expected bands. The incentive to ensure that rises quite dramatically, because the downside is also 100%.

by: Rich Wohlstadter

Tue, 01 Apr 2008 02:05:01 +0000

Late last year you wrote:
“The only way we’d see recently originated loans on FMD’s balance sheet is if secularization markets shutdown. In this case FMD is required to buy originated loans from the banks. I put this risk in the same category with a risk of a nuclear meltdown. Securitization markets are the lifeblood of this financial system. FMD securitized successfully loans during the September 11th crisis.”

My comment = Ka-BOOM!! Care to update your analysis of FMD chances of recovering to, say, $20/share or higher?

Thanks.

Rich

by: paul b

Thu, 13 Mar 2008 01:02:49 +0000

“Corporate profit margins…are 40% above the mean”
Yea many companies revenue streams are being canceled or reduced. Actually it would make most stocks still look expensive if we calculate creative financing disappearing from balance sheets. Remember last November when Porsche made more $$ in trading derivatives than car sales — if that income goes to 0, its just building and selling cars. This creative financing does not seem to show up consistently on income statements??. If (revenue / net income) is too low for a certain industry, I guess that is a red flag for sketchy income somewhere on the books.

by: Vitaliy

Mon, 10 Mar 2008 23:18:36 +0000

I guess I was in the metaphor-writing type of mood. I hope my points were not drowned by metaphors.

by: Tom L

Mon, 10 Mar 2008 20:49:29 +0000

I count 6 metaphors. Reminds me of the New York Times financial section.

by: Tom L

Thu, 06 Mar 2008 20:40:40 +0000

“To put a cherry on this less than pretty cake, the financial system, the oil on the wheels of capitalism, is strained. As falling dominos, escalating defaults from housing and consumer loans, which appear to be spreading beyond the sub-prime, have triggered a chain reaction in defaults.”

You are mixing too many metaphors! My head is spinning.