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His advice is messed up - he says to avoid leverage but leverage is good in an inflationary environment. Debt payments do not go up with inflation.

Derivatives aren't inherently dangerous but they let companies hide true exposures/levarage and let portfolio managers get around investment policy constraints.

A lot of the current/departing management at these companies was brought in from the outside within the last several years as turnaround people after the old management was thrown out over the accounting scandals. They failed to rescue the companies but for the most part inherited big messes...

This is not a dramatic rate. Mortgages run off faster than that normally, the average 30 year mortgage only lasts about 7 years due to refinancing and moving. With the screwed up housing and mortgage market the runoff might be slower than average (even with defaults), but the point is that a...

So it looks like they went with convertibles after all. $1 strike to buy 80% of the shares. I am looking forward to hearing their justification for this - it looks like it just dilutes shareholders with no benefits for the debtholders or the mortgage market that I can see. I could see it if...

I have a much simpler explanation. 1) First gulf war ends with a cease fire "contract" saying if Sadam does X we will stop fighting and let him stay in power. 2) Sadam doesn't do X. Trying to make Sadam do X peacefully or through pinprick strikes or with sanctions that hurt the people...

I thought they actually sort of do in the US. Doesn't the fed OMC enforces the hike by selling bonds and letting the "money" that comes in evaporate? I think this is only part of the effect b/c a lot of rates just follow the announcement without being prodded, but a hike does take some money...

Assuming the government doesn't do anything drastic I think it is all rollover risk in the near term, which doesn't seem high based on the government backing and the recent auctions but who knows what could spook the debt market. Last I looked the interest rate spread between their existing...

One interesting thing I think is missing from most of these discussions is exactly how the shareholders would get diluted in a recapitalization. It seems like the most common view is that the govt buys preferreds. But from the common shareholder persepective, vanilla preferreds are just...

Index and index futures prices will be off by the futures-cash basis. There are also different trading hours, and it is possible the futures high/low will come when the cash market is closed. Returns should be close if you can get the times lined up- basis movement is small relative to...

You seem to have a lot of time on your hands but since I keep replying I guess that means I do too ... First I can't help noticing you are very selective in what you choose to respond to - so why don't we count the British empire under your rules? Pointing out wikipedia facts does not help...

Cool, it looks like NATO and the British empire cleaned up at the games! I like your scoring system, I didn't realize we could count other country's medals without actually taking them over.

Then that is not contemporaneous cross sectional correlation, you have some lagged cross correlations in that story and that does violate the random walk assumptions. But it sounds like you know what you are talking about and we just disagreed about terminology. That sounds very testable, I...

Then I misunderstood you - sorry. I thought you were saying something about contemporaneous cross sectional correlation.

This is actually a pretty tough call for the treasury, I am interested to see what they do but wouldn't want to be in their shoes. It looks like two bad choices. If they had to liquidate now at the current market values there would obviously be nothing left for the shareholders, but in...

I don't think anyone would disagree with you but that does not disprove a random walk. A random walk means that today your best guess for tomorrow is: tomorrow's price = today's price + unknowable surprise The fact that surprise for stock A is related to surprise for stock B does not...

If I understand you this is possible. I'm probably too tired to explain this clearly but I'll try. The main feature of a random walk is that your expectation for a future price is the current price. You can have mean reversion or autocorrelation at a short frequency but a random walk at a...

I'm not Daal but here is my take- Preferred dividends can be deferred in an emergency. Plus it is usually long term or perpetual. It's like getting debt that doesn't force you to go bankrupt if you can't pay it. Shareholders could view it as reducing bankruptcy risk and giving them a better...

As a moderator can you create a new category for propoganda and manifestos?

Now it sounds like you are arguing just for arguments sake, but I'll respond anyway. You made my point about impeachment - legislative branch, not judicial. Unless you don't recognize the separation you can't blame the judiciary for not impeaching someone. And frankly the "system" gives the...