Archives of “genie” tag

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IMF is $318 billion short of solvency

  
Economy, Education
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Those observing the emperor’s lack of clothing are multiplying. Earlier today, someone opened their mouth, and remarked on the blatantly obvious. Next thing you know Hungarian CDS was 30% wider, Romanian bond auctions were failing, the euro was tumbling, the PPT was scrambling, US markets closed green with nobody trading, etc. Yet the “letting the genie out of the bottle” award of the day has to go to the head of IMF’s policy-steering committee, Youssef Boutros-Ghali who said that the IMF is essentially insolvent in its current form of being the go to backstop for a European bailout. “If we are going to start including funds made available to Europe, then the IMF is not properly resourced,” Youssef Boutros-Ghali told Reuters, adding that IMF members were talking of doubling the amount of SDRs. The means the IMF is $318 billion short of solvency. And what is the IMF long? Why gold…3,005 tonnes worth.

The IMF has to have more resources after the support for Greece and needs to “very significantly” increase the amount of special drawing rights, the head of the Fund’s policy-steering committee said on Friday.

What does this mean in English? The IMF currently has 204 billion in allocated SDR to member countries (or $318 billion). Boutros-Ghali has basically said that in order to preserve its front-man status as a world bailout force (just because the Fed knows that the political whiplash of it being the bailout provider of last resort would mean the end of it, thus needing a strawman such as the IMF), the IMF will need to raise another $318 billion. Where will the IMF get that money? Here’s an idea: the IMF holds 3,005 tons of Gold. At today’s fixing, this equates to just over $116 billion (and much more should the price of gold mysteriously skyrocket). Of course, any fiction that the SDR is backed by gold will then disappear, but it’s not as if anyone even remotely pretends that any fiat currency (and the SDR is no exception) has any value left whatsoever. And since the US will end up having to fund the bulk of the SDR allocation, at least US taxpayers would be on the hook for a far more manageable $200 billion that the IMF needs in order to fully bail out Greece and everyone else in Europe.

 

Corporate Lessons

  
Education, Life
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CORPORATE LESSON 1

A man is getting into the shower just as his wife is finishing up her shower when the doorbell rings. The wife quickly wraps herself in a towel and runs downstairs. When she opens the door, there stands Bob, the next door neighbor. Before she says a word, Bob says, ‘I’ll give you $800 dollars to drop that towel.”

After thinking for a moment, the woman drops her towel and stands naked in front of Bob. After a few seconds, Bob hands her $800 dollars and leaves. The woman wraps back up in the towel and goes back upstairs. When she get to the bathroom, her husband asks, “Who was that?”

“It was Bob the next door neighbor” she replies.

“Great!” the husband says. “Did he say anything about the $800 he owes me?”

Moral of the story: If you share critical information pertaining to the credit and risk with your shareholders in time, you may be in a position to prevent avoidable exposure.


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CORPORATE LESSON 2
A sales rep, an administration clerk, and the manager are walking to lunch when they find an antique oil lamp. They rub it and a Genie comes out. The Genie says, “I’ll give each of you just one wish.”
“Me first! Me first!” says the admin. clerk. “I want to be in the Bahamas, driving a speedboat, without a care in the world.” Poof! She’s gone.
“Me next! Me next!” says the sales rep. “I want to be in Hawaii, relaxing on the beach with my personal masseuse, an endless supply of Pina Coladas and the love of my life.” Poof! He’s gone.
“OK, you’re up,” the Genie says to the manager. The manager says, “I want those two back in the office after lunch.”
Moral of the story: Always let your boss have the first say. (more…)

Three Wishes

  
  Education
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Everyday receiving hundreds of emails for Subscriptions and many Traders are asking these type of questions …….

Q:  Genie has granted you three wishes to help you improve your trading/investing skills. What would you ask the Genie?

A:  I would ask for three things: 1) better statistical analysis skills, 2) more time to devote to mechanical strategy development and research, and 3) straightforward guidance on what I need to do to improve the performance consistency of a few of my stock screens. The good thing with all three of these is that I don’t really need a “genie” to give it to me as each are within reach as long as I devote the time and effort.

Three Wishes

  
  Education
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Indian_Post_BoxQ:  Genie has granted you three wishes to help you improve your trading/investing skills. What would you ask the Genie?

A:  I would ask for three things: 1) better statistical analysis skills, 2) more time to devote to mechanical strategy development and research, and 3) straightforward guidance on what I need to do to improve the performance consistency of a few of my stock screens. The good thing with all three of these is that I don’t really need a “genie” to give it to me as each are within reach as long as I devote the time and effort.

Mr.Warren Buffett :Buy and Hold -Failed

  
Analysis, Economy, Education
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From the wires today:

“OMAHA, Neb. (AP) — Warren Buffett’s company reported a 40 percent drop in second-quarter profit Friday because the improvement at Berkshire Hathaway Inc.’s operating companies couldn’t overcome $1.4 billion in paper losses on derivative contracts. Berkshire’s strong performances from its railroad, insurance and manufacturing businesses was overshadowed by the plummeting value of the Omaha company’s derivatives — many of which are tied to the value of four major stock markets.”

From Buffett himself in 2002:

“The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear. Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts. In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.”

From Bloomberg recently:

“Buffett’s well known for his criticism of derivatives. Yet Berkshire in recent years has become a big player, with some $60 billion in derivatives contracts. Under any new derivatives regulation, Berkshire would be likely to have to produce collateral for new derivatives contracts it writes. This would limit the attractiveness of new derivatives deals for Buffett, who has boasted that Berkshire rarely does a deal that calls for it to produce collateral. But that’s not why Buffett has been pushing back against the financial reform bill in the Senate. Instead, Buffett says he’s concerned that the legislation would impose collateral requirements on existing contracts — which he says would be illegal. Sen. Ben Nelson, D-Neb., made the same case this week as he defected from the Democrats backing the financial reform bill. Whatever his logic, pushing back on derivatives reform has the interesting side effect of aligning Buffett, with his sterling reputation, with the widely derided Wall Street banks.”

Buy and hold? Buying strong businesses? Derivatives are weapons of mass destruction? Bailouts of many of the components of BRKA? Does anyone have the cajones to criticize Buffett? There has to be at least one emasculated weenie out there who will come on here and tell me that I can’t criticize America’s wealthiest just because he is rich. Right?

The Buffett myth is just that — a myth. If not for the fall 2008 bailouts, he would be on the senior circuit revising history along with Greenspan. Why my stark view on this lovely sunny morning in beautiful Southern California? Cause no matter how many books populate Amazon, all preaching about how you can become the next Buffett, they are all disingenuous fairy tales.

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