The Credit Crisis Financial Stocks Short Journal

Well, Paulson wasn't charged by the SEC. The chattering masses can say whatever they like about his ethics and speculate about the legality of his actions, but the SEC doesn't feel like they could make any charges stick. From what i've read, that Fab guy from GS is singing like a bird and this could move up the chain. Perhaps Paulson would be implicated at a later date.

I think if Paulson does have a problem it will be that a jury could decide that these were not "arms lengths" transactions - i.e where is the line between GS and Paulson in this deal? A case may be made that Paulson's hedge fund was little more than an extension of GS for these transactions. We do know that Paulson had approached Bear Stearns to do this same transaction, but Bear thought it crossed a line and would not take the business.

I'm pretty certain that the genesis of this whole investigation has to have come from the sections of Zuckerman's book that talk about Paulson and GS's packaging of these CDOs. I find that amusing.


edited to say: there is absolutely zero comparison between these CDOs and the Rogers index. I can't believe an inteligent person would even include the two things in the same sentence. You do understand that these synthetic CDOs were a zero sum game - they could not exist w/o someone shorting them. The Rogers index is a COMPLETELY different animal.
 
Quote from ralph00:

Well, Paulson wasn't charged by the SEC. The chattering masses can say whatever they like about his ethics and speculate about the legality of his actions, but the SEC doesn't feel like they could make any charges stick. From what i've read, that Fab guy from GS is singing like a bird and this could move up the chain. Perhaps Paulson would be implicated at a later date.

I think if Paulson does have a problem it will be that a jury could decide that these were not "arms lengths" transactions - i.e where is the line between GS and Paulson in this deal? A case may be made that Paulson's hedge fund was little more than an extension of GS for these transactions. We do know that Paulson had approached Bear Stearns to do this same transaction, but Bear thought it crossed a line and would not take the business.

I'm pretty certain that the genesis of this whole investigation has to have come from the sections of Zuckerman's book that talk about Paulson and GS's packaging of these CDOs. I find that amusing.


edited to say: there is absolutely zero comparison between these CDOs and the Rogers index. I can't believe an inteligent person would even include the two things in the same sentence. You do understand that these synthetic CDOs were a zero sum game - they could not exist w/o someone shorting them. The Rogers index is a COMPLETELY different animal.
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You missed the point, some people are attacking him on the basis that he was a scoundrel for doing that, approaching an investment bank to create a product for his financial gain, they dont apply the same logic to long oriented investments. its the old prejudice against short selling disguised by silly claims on morality and honesty. They are trying to make him look bad by saying 'he choose bad mortgages'
 
Quote from Ghost of Cutten:

Nice call, looks like a long-term short/put position is in order.
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Its bouncing back nicely, despite the fact that the new politicized SEC might decide to make an example of PPD in order to show what 'consumer protection' should be all about
 
Looks like the BOC will raise rates, I dont think thats very meaningful for 2 reasons
-Canada is a net exporter of commodities(With the US being an importer all the commodity inflation that the ET vigilantes complain actually weakens the economy on net)
-Canada did not had a banking crisis(The next US Senior Fed survey might STILL show flat credit standards as the Beige Book suggests)

Looks like Rosenberg was very off on this one, I seem to recall him saying BOC would not hike rates this year
 
As far as commodity inflation are concerned, shouldn't the Fed raise rates to deal with rising commidity prices?In my view no, raising rates could help control that kind of inflation by raising real rates and making it harder to borrow, putting people out of work to cool down demand.
Problem is, in both fronts the 'problem' is already contained, there is a massive amount of people out of work and or underemployed and credit is still contracting(banks dont lend and people dont borrow). Fed policy can't control ex-US demand to meaningful amount(unless they were to jack rates to absurd levels and create a global recession)
 
"1435 GMT [Dow Jones] Moody's downgrades the government bond ratings of Greece to A3 from A2 and placed them on review for further possible downgrade. Moody's also put Greece's Prime-1 short-term issuer rating under review for downgrade. "Although the Greek government appears to be on, or even ahead of, schedule in terms of the implementation of the actions laid out in its Stability and Growth Programme, the difficult macroeconomic and financial environment has made continued adherence to the programme considerably more challenging," says Sarah Carlson, VP-Senior Analyst in Moody's Sovereign Risk Group and lead analyst for Greece. darlene.ross@dowjones.com"

Negative feedback loop, downgrades leads to selling, which leads to downgrades. I wonder what would happen if they were to be downgraded to a point they would be out of the ECB window
 
Looks like the sell-off in Greece continues, yet to my knowledge tons of countries still dont have the authority to bail Greece out and it would take some time. It appears the the only thing that would calm short-term debt holders is when they get the news that Papandreou emailed Strauss-Kahn his IBAN and received the wire from IMF. Anything less then actual cash and the tension continues
 
"It is unlikely that the rating will remain at A3, unless the government's actions can restore confidence in the markets and counteract the prevailing headwinds of high interest rates and low growth that could ultimately undermine the government's ability to sustainably cut debt levels,"
 
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