[Allan from Fallbrook]

Daniel: That’s correct, but with a caveat. It presupposes that in case of a correction, the various positions will not unwind in a disorderly fashion. This would be akin to what happened with LTCM in ’98. These various hedged positions are built using computer models that have not been tested in a full-blown crisis.

Moreover, many of the supposed “controls” (like insurance) are at grave risk due to both a lack of understanding and a lack of transparency.

Bernanke himself had to undergo a refresher course recently in this area. This is a very arcane area of finance, and many of the hedge fund players have been very lucky up to this point. The markets are under increasingly severe strain and, due to a lack of real-world testing for these computer models, there is a great deal of concern over what might happen.

I don’t think it is any surprise that Buffett has jumped into the monoline insurance/reinsurance market. There is a great amount of fear out there, which means there is a great deal of money to be made.

[Allan from Fallbrook]

Daniel: That’s correct, but with a caveat. It presupposes that in case of a correction, the various positions will not unwind in a disorderly fashion. This would be akin to what happened with LTCM in ’98. These various hedged positions are built using computer models that have not been tested in a full-blown crisis.

Moreover, many of the supposed “controls” (like insurance) are at grave risk due to both a lack of understanding and a lack of transparency.

Bernanke himself had to undergo a refresher course recently in this area. This is a very arcane area of finance, and many of the hedge fund players have been very lucky up to this point. The markets are under increasingly severe strain and, due to a lack of real-world testing for these computer models, there is a great deal of concern over what might happen.

I don’t think it is any surprise that Buffett has jumped into the monoline insurance/reinsurance market. There is a great amount of fear out there, which means there is a great deal of money to be made.

[Allan from Fallbrook]

Daniel: That’s correct, but with a caveat. It presupposes that in case of a correction, the various positions will not unwind in a disorderly fashion. This would be akin to what happened with LTCM in ’98. These various hedged positions are built using computer models that have not been tested in a full-blown crisis.

Moreover, many of the supposed “controls” (like insurance) are at grave risk due to both a lack of understanding and a lack of transparency.

Bernanke himself had to undergo a refresher course recently in this area. This is a very arcane area of finance, and many of the hedge fund players have been very lucky up to this point. The markets are under increasingly severe strain and, due to a lack of real-world testing for these computer models, there is a great deal of concern over what might happen.

I don’t think it is any surprise that Buffett has jumped into the monoline insurance/reinsurance market. There is a great amount of fear out there, which means there is a great deal of money to be made.

[Allan from Fallbrook]

Daniel: That’s correct, but with a caveat. It presupposes that in case of a correction, the various positions will not unwind in a disorderly fashion. This would be akin to what happened with LTCM in ’98. These various hedged positions are built using computer models that have not been tested in a full-blown crisis.

Moreover, many of the supposed “controls” (like insurance) are at grave risk due to both a lack of understanding and a lack of transparency.

Bernanke himself had to undergo a refresher course recently in this area. This is a very arcane area of finance, and many of the hedge fund players have been very lucky up to this point. The markets are under increasingly severe strain and, due to a lack of real-world testing for these computer models, there is a great deal of concern over what might happen.

I don’t think it is any surprise that Buffett has jumped into the monoline insurance/reinsurance market. There is a great amount of fear out there, which means there is a great deal of money to be made.

[Allan from Fallbrook]

SDR: The notional trading value of derivatives world-wide is absolutely staggering. Somewhere in excess of $600 trillion (yep, trillion).

I have to believe that Bernanke, Paulson and that whole Wall Street cabal are terrified of having to come completely clean on actual “mark to market” (what those derivatives would bring in real dollars) value versus letting them remain on a “mark to model” valuation (what the investment houses and banks can claim they’re worth).

If recent activity is any indicator (like E-trade’s sale), there are huge discrepancies in the two valuations. Coming clean with a real-world valuation would probably put several banks out of business, as they lack the capital base to cover the losses. Think Citi, Bear Stearns, Merrill, etc. Even banks like Wells Fargo that had fairly strong underwriting protocols in place and avoided much of the sub-prime debacle would get hit due to investing in these (CDO, CDS) type products.

[Allan from Fallbrook]

SDR: The notional trading value of derivatives world-wide is absolutely staggering. Somewhere in excess of $600 trillion (yep, trillion).

I have to believe that Bernanke, Paulson and that whole Wall Street cabal are terrified of having to come completely clean on actual “mark to market” (what those derivatives would bring in real dollars) value versus letting them remain on a “mark to model” valuation (what the investment houses and banks can claim they’re worth).

If recent activity is any indicator (like E-trade’s sale), there are huge discrepancies in the two valuations. Coming clean with a real-world valuation would probably put several banks out of business, as they lack the capital base to cover the losses. Think Citi, Bear Stearns, Merrill, etc. Even banks like Wells Fargo that had fairly strong underwriting protocols in place and avoided much of the sub-prime debacle would get hit due to investing in these (CDO, CDS) type products.

[Allan from Fallbrook]

SDR: The notional trading value of derivatives world-wide is absolutely staggering. Somewhere in excess of $600 trillion (yep, trillion).

I have to believe that Bernanke, Paulson and that whole Wall Street cabal are terrified of having to come completely clean on actual “mark to market” (what those derivatives would bring in real dollars) value versus letting them remain on a “mark to model” valuation (what the investment houses and banks can claim they’re worth).

If recent activity is any indicator (like E-trade’s sale), there are huge discrepancies in the two valuations. Coming clean with a real-world valuation would probably put several banks out of business, as they lack the capital base to cover the losses. Think Citi, Bear Stearns, Merrill, etc. Even banks like Wells Fargo that had fairly strong underwriting protocols in place and avoided much of the sub-prime debacle would get hit due to investing in these (CDO, CDS) type products.

[Allan from Fallbrook]

SDR: The notional trading value of derivatives world-wide is absolutely staggering. Somewhere in excess of $600 trillion (yep, trillion).

I have to believe that Bernanke, Paulson and that whole Wall Street cabal are terrified of having to come completely clean on actual “mark to market” (what those derivatives would bring in real dollars) value versus letting them remain on a “mark to model” valuation (what the investment houses and banks can claim they’re worth).

If recent activity is any indicator (like E-trade’s sale), there are huge discrepancies in the two valuations. Coming clean with a real-world valuation would probably put several banks out of business, as they lack the capital base to cover the losses. Think Citi, Bear Stearns, Merrill, etc. Even banks like Wells Fargo that had fairly strong underwriting protocols in place and avoided much of the sub-prime debacle would get hit due to investing in these (CDO, CDS) type products.

[Allan from Fallbrook]

SDR: The notional trading value of derivatives world-wide is absolutely staggering. Somewhere in excess of $600 trillion (yep, trillion).

I have to believe that Bernanke, Paulson and that whole Wall Street cabal are terrified of having to come completely clean on actual “mark to market” (what those derivatives would bring in real dollars) value versus letting them remain on a “mark to model” valuation (what the investment houses and banks can claim they’re worth).

If recent activity is any indicator (like E-trade’s sale), there are huge discrepancies in the two valuations. Coming clean with a real-world valuation would probably put several banks out of business, as they lack the capital base to cover the losses. Think Citi, Bear Stearns, Merrill, etc. Even banks like Wells Fargo that had fairly strong underwriting protocols in place and avoided much of the sub-prime debacle would get hit due to investing in these (CDO, CDS) type products.

[Allan from Fallbrook]

Nost: Very tasteful interior, and very nice location. $619k, though? Little on the pricey side. There was another Bay Park home on the site that was clocking in at $519/sf. Is the neighborhood really that nice?

[Allan from Fallbrook]

Nost: Very tasteful interior, and very nice location. $619k, though? Little on the pricey side. There was another Bay Park home on the site that was clocking in at $519/sf. Is the neighborhood really that nice?

[Allan from Fallbrook]

Nost: Very tasteful interior, and very nice location. $619k, though? Little on the pricey side. There was another Bay Park home on the site that was clocking in at $519/sf. Is the neighborhood really that nice?

[Allan from Fallbrook]

Nost: Very tasteful interior, and very nice location. $619k, though? Little on the pricey side. There was another Bay Park home on the site that was clocking in at $519/sf. Is the neighborhood really that nice?

[Allan from Fallbrook]

Nost: Very tasteful interior, and very nice location. $619k, though? Little on the pricey side. There was another Bay Park home on the site that was clocking in at $519/sf. Is the neighborhood really that nice?

[Allan from Fallbrook]

pablo: That kitchen is a gem, too! Glad they cleaned up beforehand.

I noticed some of the comps were pushing $600/sf. Is it just me, or is that completely out of whack? I know the Bay Park area, and it isn’t that nice.

Of course, growing up in the SF/Bay Area, I am used to stupidly overpriced houses in not so great areas. Like East Palo Alto.

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