Okay now that we have covered margin calls, here is where the supposedly safe idea of mortgage trading went awry. Here is how it is supposed to work. We all deposit $1 M in the local savings and loan. The S & L makes ten $100,000 loans and ten houses are built in the community. …

This is as good a summary of the sub prime crisis as I have read.  I have previously posted articles about MER and CITI. Okay let me attemtp to shorten all that. First one has to grasp the concept of a margin call. When one buys securities with borrowed money and the securities fall in…

Jerry Herrera asked in a blog post, who is buying Aston Martin, Jaguar, etc? Good question! David Richards, the British equivalent of America’s Roger Penske bought Aston Martin. I urge you to read both these articles.  Richards owns Prodrive Racing and has big plans for Aston, which has gone from 200 units sold in the…

The Editor of Motor Trend discusses the re invention of Ford in this article. Now my question is, will CITI have to do the same thing?  See the last post about CITI and its all of a sudden capital shortage.  Now CITI will have to do what Ford is doing, sell the good assets to…

CITI is undercapitalized.  Read this article and take note of how many concepts we have discussed that are in the article.  Too manyacquisitions, not generating income, increasing dividends, and all while the stock market was going up. In sort values were increasing and CITI was buying as prices went up, never a good strategy. And…

In the 1920s as the markets were going up up up, a New Yorker was showing an out of towner the famous J Boats (130 feet) lined up at the dock in the New York harbor.  The story goes, that one belongs to Mr. Morgan and that one to Mr. Hutton…..after this lenghty recital of…

The Center For Audit Quality  is runing a tv ad you might have seen. The ad features a yong lady suggesting that she is the investor’s best friend, she is a public company auditor. Watch the commercial here. The AICPA site is here.  This I think speaks to the scrutiny the profession is now feeling…

Robert Samuelson takes a look at George Clark’s new book. Clark suggests that societal culture has a great deal to do with the adoption of new models, ways of thinking and ways of getting things done.  Hence it may be that societies that are resistant to change, won’t!  There is nothing really revolutionary about that…

Speaking in New Dehili, Tsy Sec Paulson said the US is for a strong dollar.  One has to wonder if he isn’t refrrring to the Canadian dollar that just went to a premium over the US Dollar. This is the first time for the Canuck Buck to do that since the 1970s.  The US Dollar…

Cilck here to read about Merrill’s big write off. Stanley O’Neal, CEO just last week, is headed for the exits after trying to sell MER to Wachovia without Board authorization. Other ‘banks’ are also taking writedown.  This illustrates several concepts we have recently studied in Intermed I. Take a look at the effect on MER’s…