Forum Replies Created
-
AuthorPosts
-
davelj
ParticipantWall Street to Ben Bernanke:
“WHAAAAAAA!! WHAAAAAA!! BABY NEED MORE CANDY AND CAKE!! BABY ATE PREVIOUS CANDY AND CAKE AND STILL HUNGRYYYYYYYYYY!! CANDY AND CAKE NOT FILLING UP BABY!! HURRYYYYYYY!! BABY NO LIKEY FREE MARKET INVISIBLE HAND WHEN IT GIVE BABY THE FINGER!! WHAAAAAAAAAA!!”
I think that about sums it up.
ParticipantWall Street to Ben Bernanke:
“WHAAAAAAA!! WHAAAAAA!! BABY NEED MORE CANDY AND CAKE!! BABY ATE PREVIOUS CANDY AND CAKE AND STILL HUNGRYYYYYYYYYY!! CANDY AND CAKE NOT FILLING UP BABY!! HURRYYYYYYY!! BABY NO LIKEY FREE MARKET INVISIBLE HAND WHEN IT GIVE BABY THE FINGER!! WHAAAAAAAAAA!!”
I think that about sums it up.
ParticipantWall Street to Ben Bernanke:
“WHAAAAAAA!! WHAAAAAA!! BABY NEED MORE CANDY AND CAKE!! BABY ATE PREVIOUS CANDY AND CAKE AND STILL HUNGRYYYYYYYYYY!! CANDY AND CAKE NOT FILLING UP BABY!! HURRYYYYYYY!! BABY NO LIKEY FREE MARKET INVISIBLE HAND WHEN IT GIVE BABY THE FINGER!! WHAAAAAAAAAA!!”
I think that about sums it up.
ParticipantI think maybe two better questions are: (1) What has been the annualized increase in rents in the area you’re looking at, and (2) What has been the annualized increase in income in the area you’re looking at. I’d argue that the generic rate of inflation doesn’t get to the heart of the matter. Affordability (re: incomes) and economics (re: rents) do.
ParticipantI think maybe two better questions are: (1) What has been the annualized increase in rents in the area you’re looking at, and (2) What has been the annualized increase in income in the area you’re looking at. I’d argue that the generic rate of inflation doesn’t get to the heart of the matter. Affordability (re: incomes) and economics (re: rents) do.
ParticipantI think maybe two better questions are: (1) What has been the annualized increase in rents in the area you’re looking at, and (2) What has been the annualized increase in income in the area you’re looking at. I’d argue that the generic rate of inflation doesn’t get to the heart of the matter. Affordability (re: incomes) and economics (re: rents) do.
ParticipantI think maybe two better questions are: (1) What has been the annualized increase in rents in the area you’re looking at, and (2) What has been the annualized increase in income in the area you’re looking at. I’d argue that the generic rate of inflation doesn’t get to the heart of the matter. Affordability (re: incomes) and economics (re: rents) do.
ParticipantI think maybe two better questions are: (1) What has been the annualized increase in rents in the area you’re looking at, and (2) What has been the annualized increase in income in the area you’re looking at. I’d argue that the generic rate of inflation doesn’t get to the heart of the matter. Affordability (re: incomes) and economics (re: rents) do.
Participantkdenninger,
You’re dragging this thing way off track. The original topic here was, in simple form, “Banks (over)using TAF funds – signs of imminent danger or not?” My point was, simply, that the TAF is a source cheap, easy capital so a logical banker will use the funds instead of paying more, both in rates and operating expenses, to raise deposits. Nothing wrong with this.
Now, before I address the TAF a bit more, let me say that I actually agree with a lot of your previous post (maybe I differ in degree – I’m bearish, but perhaps not as bearish as you are). But let’s stick to the topic, shall we?
Banks using TAF funds doesn’t bother me at all (again, it’s logical under the circumstances). However, the mere EXISTENCE of the TAF does bother me. But so does a 3% Fed Funds rate. As do all of these ridiculous “bailout” plans being proposed by our Congress. As did the now failed SIV Superfund. As does the idea of the monoline bailout. As does the $143 billion stimulus plan. As does the… and so on and so on…
My point is that the TAF is a tree. One single tree. And by itself it isn’t that important, frankly. It only has any meaning at all in the context of the forest, which is comprised of those issues in the previous paragraph and many many more. And even in the context of the forest, the TAF is one of the smaller trees. That’s why I’m suggesting that spending a lot of time on this one issue is not particularly worthwhile. If the TAF disappears tomorrow the banks can replace these funds with deposits, albeit they’ll probably have to pay an additional 100 – 150 bps to get the same money. So, yes, their margins will get hurt, but it’s not the end of the world. The TAF is an enabling mechanism but the banks can live without it… just less comfortably. So I’ll say it again, the TAF in the whole scheme of things is a bit of a red herring.
(Also, I didn’t ask whether you were a CEO. I asked whether you were the CEO (etc.) of a BANK. That’s pertinent as we’re discussing BANKING.)
stx,
I think I addressed your issues above as well.
kdenninger, you wrote above that: “None of this is difficult to figure out if you approach it from an analytical basis and know how to read financial data.”
I’m going to completely disagree with you here and explain why. I’ve found that any reasonably intelligent person can learn/understand about 90% of almost any industry fairly quickly. The economics, critical profit drivers, financials, etc. The problem is that the last 10% is the only part that matters. That’s what distinguishes real expertise from amateurs. There are a LOT of ninety percenters out there that don’t even know what they don’t know, although they will be quite dogmatic regarding those things that they think they know (but don’t). Personally, I’ve exceeded the 90% threshold in two industries, one of which is banking. If I’m really lucky that number might get to three (or maybe four) before I die. As Mark Twain once said, “It ain’t the things you don’t know that get you in trouble; it’s the things you know for sure that just ain’t so.” Just something to think about.
Participantkdenninger,
You’re dragging this thing way off track. The original topic here was, in simple form, “Banks (over)using TAF funds – signs of imminent danger or not?” My point was, simply, that the TAF is a source cheap, easy capital so a logical banker will use the funds instead of paying more, both in rates and operating expenses, to raise deposits. Nothing wrong with this.
Now, before I address the TAF a bit more, let me say that I actually agree with a lot of your previous post (maybe I differ in degree – I’m bearish, but perhaps not as bearish as you are). But let’s stick to the topic, shall we?
Banks using TAF funds doesn’t bother me at all (again, it’s logical under the circumstances). However, the mere EXISTENCE of the TAF does bother me. But so does a 3% Fed Funds rate. As do all of these ridiculous “bailout” plans being proposed by our Congress. As did the now failed SIV Superfund. As does the idea of the monoline bailout. As does the $143 billion stimulus plan. As does the… and so on and so on…
My point is that the TAF is a tree. One single tree. And by itself it isn’t that important, frankly. It only has any meaning at all in the context of the forest, which is comprised of those issues in the previous paragraph and many many more. And even in the context of the forest, the TAF is one of the smaller trees. That’s why I’m suggesting that spending a lot of time on this one issue is not particularly worthwhile. If the TAF disappears tomorrow the banks can replace these funds with deposits, albeit they’ll probably have to pay an additional 100 – 150 bps to get the same money. So, yes, their margins will get hurt, but it’s not the end of the world. The TAF is an enabling mechanism but the banks can live without it… just less comfortably. So I’ll say it again, the TAF in the whole scheme of things is a bit of a red herring.
(Also, I didn’t ask whether you were a CEO. I asked whether you were the CEO (etc.) of a BANK. That’s pertinent as we’re discussing BANKING.)
stx,
I think I addressed your issues above as well.
kdenninger, you wrote above that: “None of this is difficult to figure out if you approach it from an analytical basis and know how to read financial data.”
I’m going to completely disagree with you here and explain why. I’ve found that any reasonably intelligent person can learn/understand about 90% of almost any industry fairly quickly. The economics, critical profit drivers, financials, etc. The problem is that the last 10% is the only part that matters. That’s what distinguishes real expertise from amateurs. There are a LOT of ninety percenters out there that don’t even know what they don’t know, although they will be quite dogmatic regarding those things that they think they know (but don’t). Personally, I’ve exceeded the 90% threshold in two industries, one of which is banking. If I’m really lucky that number might get to three (or maybe four) before I die. As Mark Twain once said, “It ain’t the things you don’t know that get you in trouble; it’s the things you know for sure that just ain’t so.” Just something to think about.
Participantkdenninger,
You’re dragging this thing way off track. The original topic here was, in simple form, “Banks (over)using TAF funds – signs of imminent danger or not?” My point was, simply, that the TAF is a source cheap, easy capital so a logical banker will use the funds instead of paying more, both in rates and operating expenses, to raise deposits. Nothing wrong with this.
Now, before I address the TAF a bit more, let me say that I actually agree with a lot of your previous post (maybe I differ in degree – I’m bearish, but perhaps not as bearish as you are). But let’s stick to the topic, shall we?
Banks using TAF funds doesn’t bother me at all (again, it’s logical under the circumstances). However, the mere EXISTENCE of the TAF does bother me. But so does a 3% Fed Funds rate. As do all of these ridiculous “bailout” plans being proposed by our Congress. As did the now failed SIV Superfund. As does the idea of the monoline bailout. As does the $143 billion stimulus plan. As does the… and so on and so on…
My point is that the TAF is a tree. One single tree. And by itself it isn’t that important, frankly. It only has any meaning at all in the context of the forest, which is comprised of those issues in the previous paragraph and many many more. And even in the context of the forest, the TAF is one of the smaller trees. That’s why I’m suggesting that spending a lot of time on this one issue is not particularly worthwhile. If the TAF disappears tomorrow the banks can replace these funds with deposits, albeit they’ll probably have to pay an additional 100 – 150 bps to get the same money. So, yes, their margins will get hurt, but it’s not the end of the world. The TAF is an enabling mechanism but the banks can live without it… just less comfortably. So I’ll say it again, the TAF in the whole scheme of things is a bit of a red herring.
(Also, I didn’t ask whether you were a CEO. I asked whether you were the CEO (etc.) of a BANK. That’s pertinent as we’re discussing BANKING.)
stx,
I think I addressed your issues above as well.
kdenninger, you wrote above that: “None of this is difficult to figure out if you approach it from an analytical basis and know how to read financial data.”
I’m going to completely disagree with you here and explain why. I’ve found that any reasonably intelligent person can learn/understand about 90% of almost any industry fairly quickly. The economics, critical profit drivers, financials, etc. The problem is that the last 10% is the only part that matters. That’s what distinguishes real expertise from amateurs. There are a LOT of ninety percenters out there that don’t even know what they don’t know, although they will be quite dogmatic regarding those things that they think they know (but don’t). Personally, I’ve exceeded the 90% threshold in two industries, one of which is banking. If I’m really lucky that number might get to three (or maybe four) before I die. As Mark Twain once said, “It ain’t the things you don’t know that get you in trouble; it’s the things you know for sure that just ain’t so.” Just something to think about.
Participantkdenninger,
You’re dragging this thing way off track. The original topic here was, in simple form, “Banks (over)using TAF funds – signs of imminent danger or not?” My point was, simply, that the TAF is a source cheap, easy capital so a logical banker will use the funds instead of paying more, both in rates and operating expenses, to raise deposits. Nothing wrong with this.
Now, before I address the TAF a bit more, let me say that I actually agree with a lot of your previous post (maybe I differ in degree – I’m bearish, but perhaps not as bearish as you are). But let’s stick to the topic, shall we?
Banks using TAF funds doesn’t bother me at all (again, it’s logical under the circumstances). However, the mere EXISTENCE of the TAF does bother me. But so does a 3% Fed Funds rate. As do all of these ridiculous “bailout” plans being proposed by our Congress. As did the now failed SIV Superfund. As does the idea of the monoline bailout. As does the $143 billion stimulus plan. As does the… and so on and so on…
My point is that the TAF is a tree. One single tree. And by itself it isn’t that important, frankly. It only has any meaning at all in the context of the forest, which is comprised of those issues in the previous paragraph and many many more. And even in the context of the forest, the TAF is one of the smaller trees. That’s why I’m suggesting that spending a lot of time on this one issue is not particularly worthwhile. If the TAF disappears tomorrow the banks can replace these funds with deposits, albeit they’ll probably have to pay an additional 100 – 150 bps to get the same money. So, yes, their margins will get hurt, but it’s not the end of the world. The TAF is an enabling mechanism but the banks can live without it… just less comfortably. So I’ll say it again, the TAF in the whole scheme of things is a bit of a red herring.
(Also, I didn’t ask whether you were a CEO. I asked whether you were the CEO (etc.) of a BANK. That’s pertinent as we’re discussing BANKING.)
stx,
I think I addressed your issues above as well.
kdenninger, you wrote above that: “None of this is difficult to figure out if you approach it from an analytical basis and know how to read financial data.”
I’m going to completely disagree with you here and explain why. I’ve found that any reasonably intelligent person can learn/understand about 90% of almost any industry fairly quickly. The economics, critical profit drivers, financials, etc. The problem is that the last 10% is the only part that matters. That’s what distinguishes real expertise from amateurs. There are a LOT of ninety percenters out there that don’t even know what they don’t know, although they will be quite dogmatic regarding those things that they think they know (but don’t). Personally, I’ve exceeded the 90% threshold in two industries, one of which is banking. If I’m really lucky that number might get to three (or maybe four) before I die. As Mark Twain once said, “It ain’t the things you don’t know that get you in trouble; it’s the things you know for sure that just ain’t so.” Just something to think about.
Participantkdenninger,
You’re dragging this thing way off track. The original topic here was, in simple form, “Banks (over)using TAF funds – signs of imminent danger or not?” My point was, simply, that the TAF is a source cheap, easy capital so a logical banker will use the funds instead of paying more, both in rates and operating expenses, to raise deposits. Nothing wrong with this.
Now, before I address the TAF a bit more, let me say that I actually agree with a lot of your previous post (maybe I differ in degree – I’m bearish, but perhaps not as bearish as you are). But let’s stick to the topic, shall we?
Banks using TAF funds doesn’t bother me at all (again, it’s logical under the circumstances). However, the mere EXISTENCE of the TAF does bother me. But so does a 3% Fed Funds rate. As do all of these ridiculous “bailout” plans being proposed by our Congress. As did the now failed SIV Superfund. As does the idea of the monoline bailout. As does the $143 billion stimulus plan. As does the… and so on and so on…
My point is that the TAF is a tree. One single tree. And by itself it isn’t that important, frankly. It only has any meaning at all in the context of the forest, which is comprised of those issues in the previous paragraph and many many more. And even in the context of the forest, the TAF is one of the smaller trees. That’s why I’m suggesting that spending a lot of time on this one issue is not particularly worthwhile. If the TAF disappears tomorrow the banks can replace these funds with deposits, albeit they’ll probably have to pay an additional 100 – 150 bps to get the same money. So, yes, their margins will get hurt, but it’s not the end of the world. The TAF is an enabling mechanism but the banks can live without it… just less comfortably. So I’ll say it again, the TAF in the whole scheme of things is a bit of a red herring.
(Also, I didn’t ask whether you were a CEO. I asked whether you were the CEO (etc.) of a BANK. That’s pertinent as we’re discussing BANKING.)
stx,
I think I addressed your issues above as well.
kdenninger, you wrote above that: “None of this is difficult to figure out if you approach it from an analytical basis and know how to read financial data.”
I’m going to completely disagree with you here and explain why. I’ve found that any reasonably intelligent person can learn/understand about 90% of almost any industry fairly quickly. The economics, critical profit drivers, financials, etc. The problem is that the last 10% is the only part that matters. That’s what distinguishes real expertise from amateurs. There are a LOT of ninety percenters out there that don’t even know what they don’t know, although they will be quite dogmatic regarding those things that they think they know (but don’t). Personally, I’ve exceeded the 90% threshold in two industries, one of which is banking. If I’m really lucky that number might get to three (or maybe four) before I die. As Mark Twain once said, “It ain’t the things you don’t know that get you in trouble; it’s the things you know for sure that just ain’t so.” Just something to think about.
ParticipantActually, Karl, I didn’t read your whole post or the entire thread. (Who’s got that kind of time?) However, here is a direct quote from your post, which I think cuts to the heart of your position:
“But what it does indicate is that the banks are continuing to lend into a locked “hard money” environment – that is, they are failing to attract capital against which to lend, and are instead borrowing from The Fed to keep the debt initiation cycle going.”
I happen to agree with a lot of what you wrote in your post. What I think you’re doing here, however, is creating causation where none exists. That is, “Because the banks are borrowing from the Fed and only maintaining “X” in liquidity then there’s a problem.”
My point is that there’s nothing sinister about borrowing from the Fed when the rates are (relatively) attractive. Anyone would do this almost regardless of the economic climate.
This is a SEPARATE issue, however, from paying a big price for equity capital which Citigroup – as you point out – and others are doing. The TAF is about liquidity; equity capital via Abu Dhabi (or whomever else) is about solvency. Two largely separate issues in the banking world… UNTIL there’s a run on the bank, as in the case of Countrywide.
Anyhow, I think we agree that the banking complex is in deep trouble. Where we disagree is that you think the Fed borrowing is indicative of something sinister going on while I do not. It’s merely expedient.
However, if you want to continue to believe this, it’s ok with me. No skin off my back. I mean, hell, if you’re bearish on banks – as I am – I think you’ll end up being right, even if it’s partially for the wrong reason. In investing, luck often trumps (faulty) reasoning. Fortunately.
Although I am curious, since you seem very sure of yourself on this topic, what’s your background in banking? Former CEO, CFO, loan officer, Director, private equity investor, examiner? Personally I’m generally wary of providing strong opinions outside of my very few areas of expertise, one of which is banking. But that’s just me.
-
AuthorPosts
