You may as well know, since I have nothing to hide in such matters, that when I comment within the blogs of others, I do so using the nom de plume "NotNasser."
[And when I edit on wikipedia, as I believe I've mentioned, I use Christofurio -- but that's another story].
Why do I use "NotNasser"? Because I once had the onerous duty of reviewing a very silly book by a fellow named Nasser Saber. There was an exchange of e-mails after the appearance of my review in which Saber accused me of misquoting him. The accusation was false. In essence, he had mis-remembered his own punctuation.
Anyway, after I had satisfied him that my quotation had been accurate (and that, if it made him look silly, he might just have deserved to look silly) he told me that his next book in the series would deal with the substance of my critique (not just with punctuation I imagine) at some length.
Fine with me. Years have gone by, and I await in diminishing hope my evisceration in Saber's next display of literary swordplay.
In the meantime, and in his honor, I will make my appearance in other people's blogs as ... NotNasser.
Anyway, having said all that, I'd like to quote myself. In the very amusing blog "Dealbreaker" there is now a debate underway over who should play Bernie Madoff in the inevitable movie. My own proposal, in NotNasser persona, is as follows:
If he has no more anti-Darwin movies on his "to do" list: Ben Stein.
Can't you just hear him calling his sons into his office for that fateful showdown?
"Bueller A? Bueller B?"
Showing posts with label Dealbreaker. Show all posts
Showing posts with label Dealbreaker. Show all posts
09 January 2009
02 October 2008
Short selling
The lunacy continues. Indeed it worsens. The SEC has extended its emergency ban on any short selling in the stock of financial companies.
I italicize the word "any" to make the point that this isn't about "failures to deliver" or "short and distort" or any other practice that one might want to argue is an abuse of short selling. The ban is on all short selling, however completely covered, in the stock of any of a wide range of issuers.
The SEC has statutory authority for "emergency" orders (those which for example don't have to go through the normal notice-and-comment process) for a period of up to 30 days. In this case, the SEC announced its order on September 17, originally giving it a two week span. But with those two weeks up, the extension runs through October 17 -- i.e. as long as is allowed.
Short selling, of course, fulfills a variety of crucial roles in the financial system, and the SEC lists these roles even in the order announcing the extension of the ban: "contributing to efficient price discovery, mitigating market bubbles, increasing market liquidity, promoting capital formation, facilitating hedging and other risk management activities." But you can't do any of that for another couple of weeks. And how will prohibiting short selling resolve an emergency?
It won't. It'll give some of the jerks in power the warm and fuzzy feeling that they're doing something important, that's all.
Consider AMB Property Corp., a real estate investment trust, incorporated in Maryland. I take the following from the estimable folks at Dealbreaker.
It appears that AMB wasn't on the original list of financial stocks subject to the shorting ban. So it asked to be added, and the SEC, like a genie, granted that wish.
Two days later, on Wednesday, September 24, AMB slashed its earnings guidance for the remainder of the year. So if you had owned AMB stock, and had been thinking about hedging your long position with something on the short side -- two blows came in quick succession. First, you aren't allowed to hedge (pessimism ist verbotten) and -- second -- bad news! "we're not going to earn as much as we used to tell you we would!" Guess you should have hedged, huh?
Friday night, September 26, AMB said that they wanted off the no-shorting list. "It didn't feel right. We believe we're a good company and if someone wants to short us that's okay."
Except when it isn't. Well-played. If you're going to be a bastard, be upfront about your bastardy, like Edmund in King Lear.
I italicize the word "any" to make the point that this isn't about "failures to deliver" or "short and distort" or any other practice that one might want to argue is an abuse of short selling. The ban is on all short selling, however completely covered, in the stock of any of a wide range of issuers.
The SEC has statutory authority for "emergency" orders (those which for example don't have to go through the normal notice-and-comment process) for a period of up to 30 days. In this case, the SEC announced its order on September 17, originally giving it a two week span. But with those two weeks up, the extension runs through October 17 -- i.e. as long as is allowed.
Short selling, of course, fulfills a variety of crucial roles in the financial system, and the SEC lists these roles even in the order announcing the extension of the ban: "contributing to efficient price discovery, mitigating market bubbles, increasing market liquidity, promoting capital formation, facilitating hedging and other risk management activities." But you can't do any of that for another couple of weeks. And how will prohibiting short selling resolve an emergency?
It won't. It'll give some of the jerks in power the warm and fuzzy feeling that they're doing something important, that's all.
Consider AMB Property Corp., a real estate investment trust, incorporated in Maryland. I take the following from the estimable folks at Dealbreaker.
It appears that AMB wasn't on the original list of financial stocks subject to the shorting ban. So it asked to be added, and the SEC, like a genie, granted that wish.
Two days later, on Wednesday, September 24, AMB slashed its earnings guidance for the remainder of the year. So if you had owned AMB stock, and had been thinking about hedging your long position with something on the short side -- two blows came in quick succession. First, you aren't allowed to hedge (pessimism ist verbotten) and -- second -- bad news! "we're not going to earn as much as we used to tell you we would!" Guess you should have hedged, huh?
Friday night, September 26, AMB said that they wanted off the no-shorting list. "It didn't feel right. We believe we're a good company and if someone wants to short us that's okay."
Except when it isn't. Well-played. If you're going to be a bastard, be upfront about your bastardy, like Edmund in King Lear.
07 December 2007
Greenberg: Man of the Year?
I love the website Dealbreaker, a purveyor of shameless Wall Street gossip, low-brow humor that may or may not have a finance-industry connection, and once in awhile, an actual thoughtful entry about some matter of public contemporary concerns.
In fact, as soon as I saw our fearless leader, President George Bush II, and Treasury Secretary Paulson, on television spelling out their plan to solve the subprime-mortgage-related credit crunch, I thought to myself, "I wonder if the folks at Dealbreaker are going to have anything to say about this?"
They didn't disappoint me. In accord with my usual plundering impulses, their thoughts are copied and pasted below.
-------
"First of all, let’s call it what it is: a massive bailout.
"Second, let’s see how it works: price controls.
"Third, let’s not pretend that this thing will stay as small as it started. When was the last time a government program ever did that? With defaults accelerating in every type of residential mortgage, there will be intense pressure to expand the program. Recall that we’ll very likely have either Hillary Clinton or Barrack Obama in the White House next year, with Democrats continuing to control the House and Senate. Do you still think the parameter’s of the freeze won’t expand?
"Fourth, let’s notice that the Bush administration is being just about as dishonest about this as they can get away with. They’re denying it’s a bailout. Denying it operates through price-controls. In fact, they’re denying they had any serious role at all. They just brought the parties to the table. Not even the editorial board of the Wall Street Journal buys that line.
"Fifth, let’s stop pretending we actually know what the costs of the bailout will be. It’s going to take quite some time to learn exactly how this will all work out. But we’re none too satisfied that the folks putting this together have even asked the right questions much less arrived at persuasive answers. What’s the moral hazard risk that future homeowners will also look for government bailouts? What investors demand as the price for taking on the risk of a bailout in the future?
"Sixth, can 'Mortgages' be named Time Magazines Person of the Year?"
-------
Brilliant. I endorse every word of it. Well ... I endorse the first five. I think Time ought to abandon its bad habit of naming a gimmicky evasion as POTY. It should name an actual person, not "you," or "the computer chip," or "the planet Earth."
With that thought in mind, let me propose a POTY for TIME. Herb Greenberg.
Novastar Financial has had as much to do with the blowing up of this credit bubble as any single privately owned institution you might name. And Herb Greenberg flagged Novastar's problems years ago, as early as January 2004, and has rigorously pursued them every since. He rocks, too.
Greenberg is the Smith/Emshwiller of the subprime-mortgages story. Put him on the cover of Time.
For those not familiar with the Novastar story, let me just say that it has spent most of 2007 flirting with a stock price of zero, although it has received various sorts of rescue that have so far kept it solvent. Early this year, one of the company's long-time fans, a fellow who had created a website exclusively for the promotion of this company's wonderfulness, lost faith. He posted the following swan song:
"This will be probably my last writing here. Like most long NFI investor, I am shell-shocked after the conference that took place yesterday, and quite annoyed that I participated in the collective hallucination that led so many into such a disaster. Yes, hallucination, or more to the point, collectice delusion, a variant of the latter."
And there was more in that line.
It's sad to see faith die. But of course the stock markets aren't the place for unreasoning acts of faith in the first place.
The Paulson plan is, along with everything else one might say about it, another rescue for Novastar. A rescue for a "collective delusion". The federal government will get behind belief in tinkerbell and keep her flying for awhile longer.
In fact, as soon as I saw our fearless leader, President George Bush II, and Treasury Secretary Paulson, on television spelling out their plan to solve the subprime-mortgage-related credit crunch, I thought to myself, "I wonder if the folks at Dealbreaker are going to have anything to say about this?"
They didn't disappoint me. In accord with my usual plundering impulses, their thoughts are copied and pasted below.
-------
"First of all, let’s call it what it is: a massive bailout.
"Second, let’s see how it works: price controls.
"Third, let’s not pretend that this thing will stay as small as it started. When was the last time a government program ever did that? With defaults accelerating in every type of residential mortgage, there will be intense pressure to expand the program. Recall that we’ll very likely have either Hillary Clinton or Barrack Obama in the White House next year, with Democrats continuing to control the House and Senate. Do you still think the parameter’s of the freeze won’t expand?
"Fourth, let’s notice that the Bush administration is being just about as dishonest about this as they can get away with. They’re denying it’s a bailout. Denying it operates through price-controls. In fact, they’re denying they had any serious role at all. They just brought the parties to the table. Not even the editorial board of the Wall Street Journal buys that line.
"Fifth, let’s stop pretending we actually know what the costs of the bailout will be. It’s going to take quite some time to learn exactly how this will all work out. But we’re none too satisfied that the folks putting this together have even asked the right questions much less arrived at persuasive answers. What’s the moral hazard risk that future homeowners will also look for government bailouts? What investors demand as the price for taking on the risk of a bailout in the future?
"Sixth, can 'Mortgages' be named Time Magazines Person of the Year?"
-------
Brilliant. I endorse every word of it. Well ... I endorse the first five. I think Time ought to abandon its bad habit of naming a gimmicky evasion as POTY. It should name an actual person, not "you," or "the computer chip," or "the planet Earth."
With that thought in mind, let me propose a POTY for TIME. Herb Greenberg.
Novastar Financial has had as much to do with the blowing up of this credit bubble as any single privately owned institution you might name. And Herb Greenberg flagged Novastar's problems years ago, as early as January 2004, and has rigorously pursued them every since. He rocks, too.
Greenberg is the Smith/Emshwiller of the subprime-mortgages story. Put him on the cover of Time.
For those not familiar with the Novastar story, let me just say that it has spent most of 2007 flirting with a stock price of zero, although it has received various sorts of rescue that have so far kept it solvent. Early this year, one of the company's long-time fans, a fellow who had created a website exclusively for the promotion of this company's wonderfulness, lost faith. He posted the following swan song:
"This will be probably my last writing here. Like most long NFI investor, I am shell-shocked after the conference that took place yesterday, and quite annoyed that I participated in the collective hallucination that led so many into such a disaster. Yes, hallucination, or more to the point, collectice delusion, a variant of the latter."
And there was more in that line.
It's sad to see faith die. But of course the stock markets aren't the place for unreasoning acts of faith in the first place.
The Paulson plan is, along with everything else one might say about it, another rescue for Novastar. A rescue for a "collective delusion". The federal government will get behind belief in tinkerbell and keep her flying for awhile longer.
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