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  • Bailout Talks Lose Sight of the Cost Question
    Some say the Treasury will offer artificial high prices and hurt the taxpayer. No, it's the other way around. Treasury does not determine a price somewhere above the non-existent fire sale market prices, the sellers at auction determine the prices and here is how it works:

    Treasury announces an auction of say $100B and break it into 4 categories - subprime, option-arm, other prime and home equity. Each category is broken into classes that give granularity to the underlying markets of pools that make up each MBS. Could be many per category, but lets say there are 5 per category for a total of 20 'bidding' traunches.

    But it is a reverse auction, so they are 'offer' traunches. Each holder offers a price they will take for $X face value of MBS's to derive a pennies on the dollar price. For each traunch, the Treasury takes the lowest price and works upward until the total dollars allotted to the traunch have been reached. Thus 'we the people' get the best and lowest price and thus the best upside potential as the Treasury can hold the MBS's to maturity.

    The prices will be higher than where institutions have been dumping and thus marks to market will be higher. So the holders of all similar MBS's will recover asset value and the credit markets open up.

    But here is what will happen after the first auction - hedge funds and vultures will offer to buy the MBS's the Treasury just bought! Why, because the auction established floor prices. Thus the Treasury makes a quick profit and recovers part of its $700B in purchasing power - yes it revolves!

    When the next auction is held, there could be lower prices in some traunches [but not likely] as some whose offers were not accepted the first time will make sure they get accepted the second time as they MUST get cash.

    The taxpayers will make out like bandits - but the Treasury cannot say this publicly.
    [note: JP Morgan gave some insight as to values of the 4 categories each in aggregate as part of their evaluation of WaMu. In a sense, they set a floor price.]

    Paulson pulled out the bazooka because of the seizing of commercial paper and not because of GS losing value, that was an effect of the collapsing credit markets. They had the bazooka all the time as simply an outline and had considered many other alternatives including, briefly, the non-workable insurance plan. The plan offered was purposely an outline as only Congress can add the flesh - as they are doing.

    There is no need for punitive actions against the institutions holding the MBS's - they are selling at the lowest price - that's punitive enough. Remember, the institutions include pension plans, insurance companies - not just banks! They thought they were buying the best rated traunches and still found out the value has dropped. They acted prudently with the information given to them by the rating agencies. So some would want these institutions that hold the people's retirement and annuity money to give a piece to the Treasury?

    This will liquify the banking system, but will not prevent recession.
    Sep 27 15:28 pm |Rating: 0 0 |Link to Comment |View article
  • Poor Coverage of the Republican Plan
    Some say the Treasury will offer artificial high prices and hurt the taxpayer. No, it's the other way around. Treasury does not determine a price somewhere above the non-existent fire sale market prices, the sellers at auction determine the prices and here is how it works:

    Treasury announces an auction of say $100B and break it into 4 categories - subprime, option-arm, other prime and home equity. Each category is broken into classes that give granularity to the underlying markets of pools that make up each MBS. Could be many per category, but lets say there are 5 per category for a total of 20 'bidding' traunches.

    But it is a reverse auction, so they are 'offer' traunches. Each holder offers a price they will take for $X face value of MBS's to derive a pennies on the dollar price. For each traunch, the Treasury takes the lowest price and works upward until the total dollars allotted to the traunch have been reached. Thus 'we the people' get the best and lowest price and thus the best upside potential as the Treasury can hold the MBS's to maturity.

    The prices will be higher than where institutions have been dumping and thus marks to market will be higher. So the holders of all similar MBS's will recover asset value and the credit markets open up.

    But here is what will happen after the first auction - hedge funds and vultures will offer to buy the MBS's the Treasury just bought! Why, because the auction established floor prices. Thus the Treasury makes a quick profit and recovers part of its $700B in purchasing power - yes it revolves!

    When the next auction is held, there could be lower prices in some traunches [but not likely] as some whose offers were not accepted the first time will make sure they get accepted the second time as they MUST get cash.

    The taxpayers will make out like bandits - but the Treasury cannot say this publicly.
    [note: JP Morgan gave some insight as to values of the 4 categories each in aggregate as part of their evaluation of WaMu. In a sense, they set a floor price.]

    Paulson pulled out the bazooka because of the seizing of commercial paper and not because of GS losing value, that was an effect of the collapsing credit markets. They had the bazooka all the time as simply an outline and had considered many other alternatives including, briefly, the non-workable insurance plan. The plan offered was purposely an outline as only Congress can add the flesh - as they are doing.

    There is no need for punitive actions against the institutions holding the MBS's - they are selling at the lowest price - that's punitive enough. Remember, the institutions include pension plans, insurance companies - not just banks! They thought they were buying the best rated traunches and still found out the value has dropped. They acted prudently with the information given to them by the rating agencies. So some would want these institutions that hold the people's retirement and annuity money to give a piece to the Treasury?

    This will liquify the banking system, but will not prevent recession.
    Sep 27 15:25 pm |Rating: 0 0 |Link to Comment |View article
  • Paulson's Plan is About Marking to Market
    No, it's the other way around. Treasury does not determine a price somewhere above the non-existent fire-sale market prices.

    They announce an auction of say $100B and break it into 4 categories - subprime, option-arm, other prime and home equity. Each category is broken into classes that give granularity to the underlying markets of pools that make up each MBS. Could be many per category, but lets say there are 5 per category for a total of 20 'bidding' traunches.

    But it is a reverse auction, so they are 'offer' traunches. Each holder offers a price they will take for $X face value of MBS's to derive a pennies on the dollar price. For each traunch, the Treasury takes the lowest price and works upward until the total dollars allotted to the traunch have been reached. Thus 'we the people' get the best and lowest price and thus the best upside potential as the Treasury can hold the MBS's to maturity.

    The prices will be higher than where institutions have been dumping and thus marks to market will be higher. So the holders of all similar MBS's will recover asset value and credit markets open up!

    But here is what will happen after the first auction - hedge funds and vultures will offer to buy the MBS's the Treasury just bought! Why, because the auction established floor prices. Thus the Treasury makes a quick profit and recovers part of its $700B in purchasing power - yes it revolves!

    When the next auction is held, there could be lower prices in some traunches [but not likely] as some whose offers were not accepted the first time will make sure they get accepted the second time as they MUST get cash.

    The taxpayers will make out like bandits - but the Treasury cannot say this publicly.

    [note: JP Morgan gave some insight as to values of the 4 categories each in aggregate as part of their evaluation of WaMu. In a sense, they set a floor price.]

    Paulson pulled out the bazooka because of the seizing of commercial paper and not because of GS losing value, that was an effect of the collapsing credit markets. They had the bazooka all the time as simply an outline and had considered many other alternatives including, briefly, the non-workable insurance plan that. The plan offered was purposely an outline as only Congress can add the flesh - as they are doing.

    There is no need for punitive actions against the institutions holding the MBS's - they are selling at the lowest price - that's punitive enough. Remember, the institutions include pension plans, insurance companies - not just banks! They thought they were buying the best rated traunches and still found out the value has dropped. They acted prudently with the information given to them by the rating agencies. So some would want these institutions that hold the people's retirement and annuity money to give a piece to the Treasury?

    This will liquify the banking system, but will not prevent recession.
    Sep 27 11:15 am |Rating: 0 0 |Link to Comment |View article
  • The Hedge Fund of America, LP
    The plan will buy assets in clearly defined tranches by permitting the holders to offer selling prices [reverse auction]. This means the first sale, where say $50B will be bought, will attract those who most need to raise cash - WB for example. The first $50B of the best prices are taken in for cash. The next tranches will probably yield a higher price for the sellers as the more toxic stuff will go first, but those who missed the boat the first round may again push prices down since there will still be some desparate sellers.

    Such wholesale sales are great for the buyer, and this buyer has deep pockets. You will almost immediately see hedge funds wanting to get in on the action as the prices move up in successive auctions. Watch some stuff be sold immedaitely after purchase in some cases as the smart money will realize that the next sale will be at higher prices.

    Thus the $700B credit line revolves and more than $700B in stuff can be moved from the banking system to other hands - hands other than the government as well.

    The tax payers will win and win big as only the government can lend borrow at graet long term rates and hold for long term. The FED is the lender of last result, but the government is the buyer of last result.
    Sep 25 15:52 pm |Rating: 0 0 |Link to Comment |View article
  • Has the Sun Set on Solar Energy Stocks?
    jcordes - Polly is a nice name for a parrot and silicone makes a more realistic filling for breast inplants.
    If you cannot get it right, why post?
    try 'poly-si' or to be more versed, look up p-si and a-si.

    Stocks go up and down.
    When the whorehouse burns, the pretty ones run with the ugly ones.
    And the whorehouse IS burning.
    When the fire is out, the pretty ones have a better chance of 'employment' and the ugly ones wither away.

    Good work Dr Duru - keep it coming
    Sep 10 08:40 am |Rating: 0 0 |Link to Comment |View article
  • While the Solar Sector Bottoms in the Near Term, LDK Solar Stands Out
    "and on September 3 LDK Solar delivered approximately 550 MW of multicrystalline silicon wafers to Solartech over a five-year period."

    What a strange statement - time machine involved here?

    LDK, SOL, HOKU, REC are ones to watch for solar growth as they are pure plays to wafers.

    One question - will the a-si guys eventually win out with their lower cost 'printing' processes? FSLR, ENER, Nanosolar.

    Do the 'ribbon' makers have a better production scheme? ESLR

    As c-si is currently the volume production leader, will they set the pace as more poly-si production comes online and thus wafer prices begin to drop as market continues to expand? Still good for LDK as revenues and eps outpace dropping ASPs.
    Sep 08 08:22 am |Rating: 0 0 |Link to Comment |View article
  • Three Reasons Solar Sell-off May Be in Early Innings
    This one really hit somes nerves.
    1) who can find another industry growing faster?
    2) markets and stocks go up and down
    3) there's a time to be short and a time to be long - both work
    4) when the whorehouse burns the pretty ones run with the ugly ones
    5) If O wins, all stocks get slaughtered to lock in cap gains rate
    Sep 04 09:30 am |Rating: 0 0 |Link to Comment |View article
  • Solar and Oil, Part Deux
    What do you say about 2 stocks with very low PEs [08 est], especially on 2009 estimates? CSIQ [10.3, 7.6] and SOLF [15.5, 10.6] ?

    LDK supplies both with wafers, thus as LDK's production continues to ramp above expectations, it is providing more [than estimated] wafers to its customers. So if they can expand their production lines at a faster rate, they will show better than currently estimated revs and eps.

    Now that SOLF has cooled from its massive pre-eps run, it is poised to move again - and has the revenue growth and earnings growth to back it up. Remember - all of their figures are in RMB not $ and I used a rate of 7.5 in pe calculations.

    CSIQ is much more interesting as its major criticism is its low margins. Good news is that it has gotten a handle on costs related to locking in its supply chain. Even with this accomplished however, the markets still tend to relate negatively to CSIQ's habit of being extremely conservative in its estimates.

    CSIQ had a strange day last Friday bucking the trend, but continues to bounce off its rising and supportive 200dma. Technically it is getting pinched by the declining 50dma and something has to give - soon! A solid close above the 50dma should propel a breakout confirmed by a daily close above 33.24 and a weekly close aboe 33.58 - just not this week.

    Here's a different play - who makes the assmebly line equipment for doping wafers and module assembly? If there is a pure play, its revenues are indicactive of industry capacity growth.

    It's the old pick and shovel play.
    Sep 04 09:22 am |Rating: 0 0 |Link to Comment |View article
  • SunPower, Solar Stocks Hit By Panel Price Prediction
    Lower ASPs means you reach a larger market - revenues expand at a higher rate provided you have the production capacity - econ 101.

    Smart analysts factor this into their estimates. Solar is here to stay and when the US finally votes on the Renewables Bill, with increased solar tax credits by the way, the uncertaintly is removed and the demand floodgates will open.
    Sep 04 08:47 am |Rating: 0 0 |Link to Comment |View article
  • What's Up with the China Solar Stocks
    Stocks go up and down - most solar stocks have had nice moves from their recent lows prior to the past 2 weeks of earnings announcements
    - with ENER left for tomorrow.

    While a pause was exepected [and may be over this morning] the worries over polysi supply is waning [LDK increasing production forecast for example] and module makers will be able to ramp and push out more revenues at ASP's around $4 per peak watt.
    Solar may be the only group with real growth [50+] in earnings and revenues as the economy falls off the cliff.
    Where are you going to get your alternative enregy as more and more state and country mandates are being made?
    If you do not like solar, then you might as well buy SBUX how smart is that when people will no longer pay-up for $4 coffe?
    Aug 27 09:46 am |Rating: 0 0 |Link to Comment |View article
  • Real Estate Bubble Is Only in 4 States: CA, FL, NV, AZ
    I am in Greensboro, NC - Charlotte for months has faired the best on the Case Shiller reports. But all is not good. A major regional production builder of modest homes just went bankrupt and I can show you new developments one after another with McMansions not sold. Builders drewn down their construction loans and finished the houses. But no buyers! It's just a matter of time before they can no longer carry the loans and the banks foreclose [BB&T for example].

    The 'bubble' is only part real estate, as it's the result of financial engineering run amuck. The banks are scared and know what is about to happen in the commercial markets. They react the only way they can by over-tightening credit. It will take a lot of bank failures and consolidations before things become 'normal' again.

    At some point lending standards will have to loosen. As many people have lost their credit - no one will be left to qualify for that F-150, much less a mortgage. Who has 20% down anymore?

    I cannot even sell the last starter home I have even though I am offering 20% seller financing for 3% interest and will quarantee to take over the buyer's obligation if they default. The total monthly cost to own is $700, but no one can qualify. So now we are going to rent - they will gladly pay $850! Last house we sold was $101,900 and no takers at $97,900. These are not inflated prices and thus illustrate the real problems. I have no bank financing, but am a victim of a distressed market.

    Yes, this article is way off-base, just as our astute government officials a year ago 'swore' that things were confined to sub-prime and it would not infect other areas.

    Sub-prime is small compared to when commercial loans start to collapse. Drive around your area and see how much is on the market. Strip centers, malls, freestanding businesses. When malls had to offer free rent just to get businesses to open a store to create foot-traffic and give the appearance of a healthy mall - the end was here. Sam Zell got it right, he sold - everything!

    We are about to face a major deflatoionary period as cash becomes king. Be careful of how you interpret the numbers, too many will 'pick' a bottom before it occurs.
    Aug 24 17:29 pm |Rating: 0 0 |Link to Comment |View article
  • Canadian Solar Swoons, Despite Beat and Raise
    Let's see, hmmm.
    Stock was up 16% the day before [8/12] - due to supplier LDK's report
    Ended on high of the day [8/13] after its report
    Moving higher today [8/14] they said several times in confernece call that they purposely understate projections
    Since i bought in at 26.47 on 8/5 - I like this kind of pounding
    My target - 35 in this move [1 to 2 weeks], I hold 1440 shares.

    CSIQ has low gross margins compared to rest of industry as they purchase doped cells from others - thus their value added is less.
    While they build out polysci and cell doping lines, they have strongly ramped module lines and filling most of the capacity with components from suppliers. They said they will always have extra module capicity in order to meet dmeand spikes of customers by buying fininshed cells from suppliers. As they ramp polysci production and begin to rely more on their own wafers and doping, their margins will continue to expand as the percentage of in house cells increases over those purchased. Is such a balanced approach reasonable? It is more conservative, but also more stable as they can adjust module production to meet demand.
    Aug 14 09:56 am |Rating: 0 0 |Link to Comment |View article
  • Earnings Preview: Crocs
    Alll you need to do is watch the change in the short position to be reported in 2 weeks. If the shorts covered, then they think they got all they could out of it. Risk to the shorts is, that despite the core products, the new products in shoes and apparel are selling. The features of support, comfort and odor resistance are compelling still. Watch for Crox to license its Croslite to other shoe manufacturers - a whole new game. It can also be woven as fabric - into armpits of clothing for example.
    Aug 07 08:22 am |Rating: 0 0 |Link to Comment |View article
  • Infamous Anniversary - Cramer's Stop Trading! (8/1/08)
    Will Cramer fall on his sword? One year from now, will he admit he got it wrong? That he knew nothing, that he had no idea!

    SBUX just sells over-priced coffee. Over-priced was a fad that has faded as the 'new rich' those who had money to through around like water to live a pretend lifestyle now find their gravy train of home-equity and credit card cash is at an end. To this end, SBUX has tried to reinvent itself through selling food??? Why compete with the likes of McDonalds? So what did McDonalds do, they began to sell 'up-scale' coffee as a simple menu move for big profits and a crush of SBUX's core business. If McDonalds find it necessary, they will put in WiFi areas with an intimate atmosphere - and then SBUX has nothing unique to offer. SBUX is having to close stores - stores that were put in 'trendy' spots with high rents as everyone trampled each other to sell premium items at 'fluff' prices. $4 scoops of ice-cream come to mind as well.

    Now for CROX, sure the shoes were 'fad' but the redeeming qualities of Croslite is being supporting, comfortable and most importantly odor-proof are unique and hard to duplicate. Court victories against the rip-offs are falling to CROX. As a relatively small company, although some 800MM in sales this year, it has broadened it product line in shoes and apparel and is moving form its core products. This process takes time, but not much. As a brand it is not a fad. As it garners shelf-space and a growing presence through company owned stores to showcase its entire product line, it will return as a cash machine and will likely be taken out instead of being allowed to be a competitive force. As for scare talk about bankruptcy, they are far from it. This talk enables the bears to cover their shorts and even go long. What the short position fall over the next couple of months as the shorts find something else with downside potential. The smart money will tell what it going to happen.

    In the near term, market rallies that make the public assume that all is well, will raise all boats, including the likes of CROX and SBUX. So let's see the percentage moves for each using Friday's close as the benchmark - SBUX 14.42 and CROX 4.44. Timeframe - by the election.

    I do not have a position in either stock. My position was long CROX at around 7 and sold at 9.88 the day it ran to 10.55 as the shorts got gunned before the shoe was dropped the next day. Pun intended. I believe that CROX presents a better chance of a 50% trade in the next couple of months than does SBUX.
    Aug 03 10:40 am |Rating: 0 0 |Link to Comment |View article
  • Five Stocks to Own Now that the Dow Has Bottomed
    squashnut, I believe he said MER was selling for 24 cents on the dollar, and the stuff they sold was 22 cents on the dollar - read twice before giving opinions
    Jul 31 08:05 am |Rating: 0 0 |Link to Comment |View article

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