****posts will at time deviate from the financial theme.
*******this is a rough post, and will be edited later today. Forgive the errors and such.
He's not one of us. He's one of you. For some Muslims, the capture of the Norwegian bomber/ mass murder was a relief. He was not some Jihadist fundamentalist, but a Christian. For others, it was a point of vindication.
After 9/11, Muslims sought refuge in the actions of Timothy McVeigh, the Oklahoma City bomber. He was the Christian counterpart of Osama bin Laden. Islam wasn't to blame for the actions of few crazed fundamentalists. There are bad apples in every religion. But, that defense never took hold in the light of such a horrific and cold-blooded act of killing as was infiltrated on NYC and Washington DC.
On Friday, a man set of a car bomb in front of federal building, and then went on a killing spree at a youth leadership camp. In the days to come, as more details are relieved to his motive, we will again have that familiar discussion. Why doesn't the media use the term Christian terrorist?
However, those thoughts must be quieted now as the world morns the loss of innocents. And as we, again, are reminded about how religion, in the hands of zealots, becomes a weapon of mass destruction.
Sunday, July 24, 2011
Friday, July 15, 2011
Budgets
Haven't written for awhile. I've been preoccupied with finding a home for myself for next month. Yes, it's time for what was, until now, an annual migration. I've been at my current apartment for more than a year, a landmark event. Now, I have two weeks left to find an apartment. This week, that search hit a low after my roommate broke up with me. Rating agencies would definitely downgrade my ability to find a decent 1 br on my budget.
Talking about downgrades. S&P is warning of downgrading U.S. debt this month, not waiting until Aug 2, the deadline on increasing the debt ceiling cap. It's like the ratings agency is scolding the children up in the white house to stop bickering and start learning how to share. They need to come a decision on debt ceiling, and make a move towards a balanced budget.
If, I could only think like our government, I'd be living the baller life in some amazing Brooklyn apartment without a worry and paying my rent with my AmEx card.
Also, this week is the start of earnings season. This is when, for the next weeks, publicly trading companies such as GM and Apple, will send out quarterly reports on how much money they made, or didnt make. At my job, which shall remain nameless, we're told to only work on stories regarding the really big companies. The standard is sorta vague, based on how well-known the company is, to how much revenue. When I first started at this job, a few years ago, if the revenue was in the $100 millions, that was considered big enough. Today we're talking about billions. Not just one billion, that kinda small, but several billion. Citigroup, the biggest earnings story of the morning reported increased profits of a little over $3 billion, with revenue, which slipped, of around $16 billion.
That's all I have kids, back to craigslist.
Talking about downgrades. S&P is warning of downgrading U.S. debt this month, not waiting until Aug 2, the deadline on increasing the debt ceiling cap. It's like the ratings agency is scolding the children up in the white house to stop bickering and start learning how to share. They need to come a decision on debt ceiling, and make a move towards a balanced budget.
If, I could only think like our government, I'd be living the baller life in some amazing Brooklyn apartment without a worry and paying my rent with my AmEx card.
Also, this week is the start of earnings season. This is when, for the next weeks, publicly trading companies such as GM and Apple, will send out quarterly reports on how much money they made, or didnt make. At my job, which shall remain nameless, we're told to only work on stories regarding the really big companies. The standard is sorta vague, based on how well-known the company is, to how much revenue. When I first started at this job, a few years ago, if the revenue was in the $100 millions, that was considered big enough. Today we're talking about billions. Not just one billion, that kinda small, but several billion. Citigroup, the biggest earnings story of the morning reported increased profits of a little over $3 billion, with revenue, which slipped, of around $16 billion.
That's all I have kids, back to craigslist.
Thursday, July 7, 2011
Wanted to share my friend's explanation on ratings agencies
S&P and Moody's access the ability of borrowers' capabilities to pay back to the investors - that is how they rate the countries and companies - if they rated Portugal bonds as junk - it only means that after analyzing the counties deficits, inflation, revenues, potential investment, growth rates, they believe that it is highly possible that Portuguese government might not be able to pay the face value and the coupons for the bonds issued - this makes the yields* on the bonds go real high - investors consider junk bonds very risky investments and hence demand higher returns for the risks they take.
S&P and Moody's access the ability of borrowers' capabilities to pay back to the investors - that is how they rate the countries and companies - if they rated Portugal bonds as junk - it only means that after analyzing the counties deficits, inflation, revenues, potential investment, growth rates, they believe that it is highly possible that Portuguese government might not be able to pay the face value and the coupons for the bonds issued - this makes the yields* on the bonds go real high - investors consider junk bonds very risky investments and hence demand higher returns for the risks they take.
As apposed to the AAA bonds, the returns are not high as the risk involved is also not high - so, the initial price an investor pays is inversely proportional to the yields.
Having said that - yes, rating agencies create a speculation in the market - both equities and fixed income - as the ratings drive the yields* and the stock prices. Although for me, they warn the investors who otherwise would consider an investment a less risk/high risk - helps them diversify their portfolios...
My question: Buying unsafe debt because of a higher yield* means you are purchasing a debt that you know will not get paid back. So who ends up taking the fall?
*Yields are interest or dividends, the income on your return. The riskier the bet, the bigger the return.
My question: Buying unsafe debt because of a higher yield* means you are purchasing a debt that you know will not get paid back. So who ends up taking the fall?
*Yields are interest or dividends, the income on your return. The riskier the bet, the bigger the return.
Tuesday, July 5, 2011
Mean Girls
I should've published yesterday's post, because it prefaces what's going on today. It's all about the rating agencies...and also Ireland and Portugal are back stepping into crisis quicksand. First, a little bit about the rating agencies, as I rejigger yesterday's post.
Moody's and Standard & Poors are rating agencies. These agencies forecast the future. They are the so-called prophets of profit, upgrading and downgrading corporations and countries on scale from AAA (not the auto club) to junk (very literal). When a rating agency downgrades, investors get scared and pull their money. When they upgrade, investors jump in balls first. So, it's sort of what comes first, chicken or egg. Do the agencies accelerate the downfall, and what if they make a mistake?
Moody's downgraded Portugal debt/bonds to junk yesterday- old news. This scared investors into thinking twice before buying. Now Europeans are thinking maybe its not a good idea to depend so heavily on this agencies. In theory, they are supposed to be the safety guard. In reality, dad they done their job correctly a few years ago, by predicting, as is their purpose, the mortgage meltdown, we may not be in this situation. Good or bad, these agencies are the little voices that whisper into the ears of the money movers as they throw the dice.
I don't want to give the impression that Greece is the only bad apple in the bunch. There are a lot of compromised Granny Smiths. Countries experiencing similar issues are Iceland, Ireland, Spain and Portugal. Not to mention our own little deficit problem here on this side of the Atlantic. The Greeks are just most recent, and the most dramatic.
Ireland: Already working its bailout, is asking for a cost reduction.
Portugal: Able to sell its debt/bonds despite downgrade.
Greece: Creditor banks are meeting today on a plan to ease Greece into its reform, this includes a debt rollover.
France: AAA rating is in jeopardy if it doesn't meet its budget deficit leve.
US: Pres. Obama, the eternal optimist, is seeing a light at the end of the deficit negotiations tunnel. Deadline to increase the deficit cap is Aug. 2.
Tomorrow, I promise, less Greece, more anything else.
Moody's and Standard & Poors are rating agencies. These agencies forecast the future. They are the so-called prophets of profit, upgrading and downgrading corporations and countries on scale from AAA (not the auto club) to junk (very literal). When a rating agency downgrades, investors get scared and pull their money. When they upgrade, investors jump in balls first. So, it's sort of what comes first, chicken or egg. Do the agencies accelerate the downfall, and what if they make a mistake?
Moody's downgraded Portugal debt/bonds to junk yesterday- old news. This scared investors into thinking twice before buying. Now Europeans are thinking maybe its not a good idea to depend so heavily on this agencies. In theory, they are supposed to be the safety guard. In reality, dad they done their job correctly a few years ago, by predicting, as is their purpose, the mortgage meltdown, we may not be in this situation. Good or bad, these agencies are the little voices that whisper into the ears of the money movers as they throw the dice.
I don't want to give the impression that Greece is the only bad apple in the bunch. There are a lot of compromised Granny Smiths. Countries experiencing similar issues are Iceland, Ireland, Spain and Portugal. Not to mention our own little deficit problem here on this side of the Atlantic. The Greeks are just most recent, and the most dramatic.
Ireland: Already working its bailout, is asking for a cost reduction.
Portugal: Able to sell its debt/bonds despite downgrade.
Greece: Creditor banks are meeting today on a plan to ease Greece into its reform, this includes a debt rollover.
France: AAA rating is in jeopardy if it doesn't meet its budget deficit leve.
US: Pres. Obama, the eternal optimist, is seeing a light at the end of the deficit negotiations tunnel. Deadline to increase the deficit cap is Aug. 2.
Tomorrow, I promise, less Greece, more anything else.
Friday, July 1, 2011
A Man, A Maid and A Hotel Room
It's funny how France, a country hell-bent on liberating Muslim women from their headscarves and their oppressors, is now backing a man who has been accused of attacking multiple women. They've not only set this misogynistic former head of the IMF (aka the great seducer) free, but saying he should be the leader of their country. Seriously.
Former IMF managing director, Dominique Strauss-Kahn, was accused in May of attacking a maid in a NYC hotel. You remember the IMF, they are pretty much heading the talks about the Greece bailout. DSK was a major player in those talks and now everyone is calling foul. He lost his position, which, ironically, has been filled by a French woman. Yes, DSK, the entire female contingency is out to get you. The defense says the woman in the middle is not credible for the following reasons: A) she lied on her political asylum papers saying she was raped in Africa B) she knows an alleged drug dealer C) there was a large amount of money added to her bank account.
The judge did not throw the case out of court, but did release DSK. He was on house arrest previously. Her lawyer says she came forth with this evidence earlier on in the case, and that there is a lot of physical evidence to show she was attacked.
Where is Greece in all of this? No more protests. The people have pretty much accepted their fate and it looks like the vote for the bailout is going to come through. The Euro zone has pushed up its meeting to Saturday from Sunday to vote on the bailout. I may be home for Fourth of July.
Just want to clear up one thing. What they are voting on this weekend, is the next tranche of the first bailout. Tranches are portions of a loan. Each tranche (let's say there are five) is given out once certain requirements (reforms) are fulfilled. They will also be discussing the second bailout at the meeting, after voting on what I believe is the last tranche of the first bailout.
Former IMF managing director, Dominique Strauss-Kahn, was accused in May of attacking a maid in a NYC hotel. You remember the IMF, they are pretty much heading the talks about the Greece bailout. DSK was a major player in those talks and now everyone is calling foul. He lost his position, which, ironically, has been filled by a French woman. Yes, DSK, the entire female contingency is out to get you. The defense says the woman in the middle is not credible for the following reasons: A) she lied on her political asylum papers saying she was raped in Africa B) she knows an alleged drug dealer C) there was a large amount of money added to her bank account.
The judge did not throw the case out of court, but did release DSK. He was on house arrest previously. Her lawyer says she came forth with this evidence earlier on in the case, and that there is a lot of physical evidence to show she was attacked.
Where is Greece in all of this? No more protests. The people have pretty much accepted their fate and it looks like the vote for the bailout is going to come through. The Euro zone has pushed up its meeting to Saturday from Sunday to vote on the bailout. I may be home for Fourth of July.
Just want to clear up one thing. What they are voting on this weekend, is the next tranche of the first bailout. Tranches are portions of a loan. Each tranche (let's say there are five) is given out once certain requirements (reforms) are fulfilled. They will also be discussing the second bailout at the meeting, after voting on what I believe is the last tranche of the first bailout.
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