Remember the advice I gave way back in September 2008…..

And that advice was to sell in May and go away.  I follow that rule religiously and especially when I see the price of gas go through the roof.

The DC crowd is evidently still completely out of touch with what average Americans are going through financially day-to-day as most have seen their standard of living erode significantly since 2004 as the country speeds down the bankruptcy highway in debt to the tune of 6 figures for every man, woman and child.  When all the chickens come home to roost it will be very bad folks.

The way I see it Obama has about 9-12 months left to turn things around.  Since he chose to pay bonuses to the Wall Street crowd instead of locking them up  for what they did he is in reality no different from the republicans that bailed them out to begin with meaning the public has nothing to lose by throwing his sorry ass out next year unless he turns things around.

So in a change of pace from our recent emphasis on more local topics, I’ll add that my latest foray into Ginnies has exceeded my expectations from a pricing standpoint and in today’s day and age the 3.18% YTD yield isn’t half bad either. For those familiar with the work of Nassim Taleb, a good part of the trick is to manage downside risk and ginnies do that right now.

Some recent headlines that partially explain why I’ll be on the sidelines with my long-term money until there is a substantial market correction: Continue reading “Remember the advice I gave way back in September 2008…..”

Jim Brown's Weekly Column: Risk Takers Stick it to the Taxpayers

Thursday, June 17th, 2010

Baton Rouge, Louisiana

RISK TAKERS STICK IT TO THE TAXPAYERS!

And if thou stare long enough into an abyss, The abyss will also gaze into thee.”

Nietzsche

Melville’s Moby Dick is a popular semblance right now for our unquenchable search for oil, and, like Captain Ahab, the consequences that often lead to self destruction. In days of old, whalers ventured further and further into unchartered waters to become excavators of oceanic whale oil that stroked the furnaces of the Industrial Revolution. The same unchartered path has been followed by oil companies pushing technology to new limits. But are they responsibility assessing the risk involved?

The BP gang has continually told us that such a spill never happened before, and therefore they had not anticipated such bleak scenario. That’s the same argument we heard during the financial meltdown from Ben Bernanke and Alan Greenspan when they argued that the housing market would not plummet because “it had never happened before.” But stuff happens. Part of the process is to assess the risk. Time and time again, both industry and government have minimized risk and, in a highly irresponsible way, just played the odds. And much too often, it has turned out to be a bad bet.

Lay the blame for BP’s irresponsible risk taking right at the feet of the United States Congress. Our representatives in Washington passed a little known 1990 law that capped an oil company’s liability, after cleanup costs, at $75 million. For now at least BP has agreed to waive the cap. But who knows for how long? BP stockholders, many of whom have retired on BP dividends, may well feel full justification to challenge disbursement of BP assets when the law says the company is not required to do so. Continue reading “Jim Brown's Weekly Column: Risk Takers Stick it to the Taxpayers”

Slabbed news miscellany: AROD remanded without bond. Backlash against government subsidized property and casualty insurers. UPDATED with scoop from the Ladder – Dr. Van Heerden filing suit against LSU!

We have so much going on here at Slabbed right now we could literally spend all our waking moments authoring posts on the various topics we’re covering but since Nowdy, Bam Bam and I all have day jobs that won’t happen. In order to save a bit of time I’m combining today’s other news in one post thus the title. Nowdy will be along later to chip in her two cents.

We start with a reader tip on Ashton O’Dwyer, a troubled man who now is in deep trouble. He has been remanded to federal custody without bond. Hopefully he is also being pumped full of meds and receiving some badly needed counseling.

Next up and certainly in keeping with today’s theme of folks that are delusional, here is a story from the National Underwriter on that Property Casualty Insurers Association of America meeting held last month in San Antonio which we began profiling yesterday. This report, written by my main man Sam Friedman, covered the remarks of David Sampson, president and chief executive officer of the Property Casualty Insurers Association of America. Here are some excerpts:

Property and casualty insurers could easily be trapped in the “wave of political populism” sweeping the country in the wake of the nation’s economic and leadership crises, an insurer association leader warned.

“Many may believe that because people are so focused on bashing the bankers and Wall Street that the public and politicians will leave insurers alone, but I am not so sanguine,” said David Sampson, president and chief executive officer of the Property Casualty Insurers Association of America.

Of course Mr Sampson is not so sanguine as he certainly is aware the public is paying attention even though his script is not based in any sort of reality as we continue: Continue reading “Slabbed news miscellany: AROD remanded without bond. Backlash against government subsidized property and casualty insurers. UPDATED with scoop from the Ladder – Dr. Van Heerden filing suit against LSU!”

Wall Street paternalism and disconnect at it’s finest and on display. A Skadden partner writes about shareholder ignorance and displays plenty in the process.

I’ve written a series of posts on the disconnect from reality between the Wall Street fantasy land and Main Street, which has made modern day Wall Street possible. The problem is systemic in my opinion, from trade publications like the National Underwriter whose editor in chief believes spending yet more money on public relations is the answer to bad faith insurer claims handling, to their trade groups and shills like Robert Hartwig that try to convince the fleeced taxpaying public that insurers really didn’t screw people here after Katrina. As is his custom, however, it was Mr CLS who gives us almost more googling to do than time but in this instance a post of his on Yahoo Allstate provided me the catalyst to author this post which will illustrate again the disconnect of which I speak and it is there we begin:

sop, check out the “Winners” of the 4th Annual U.S. Securitization Awards…….

Don’t know what happened to the 5th Annual U.S. Securitization Awards, guess they cancelled and took “the 5th”.

The links he gave listing the winners was 404, no doubt broken on account of the financial crisis but undaunted I did a quick search and found them. This of course resulted in one of those patented Ah Ha moments for me but before I connect the paternalistic dots lets examine some of those that Wall Street honored back in April 2008 at the 4th annual U.S. Securitization Awards:

Deal of the Year: IHOP Corp./ Applebee’s International Securitization. Underwriter: Lehman Brothers

Deal of the Year – CMBS: Equity Office Properties Securitization Financing. Underwriters: Bear Stearns, Goldman Sachs and Bank of America

Deal of the Year – CDO: Genesis CLO 2007-1 and Genesis CLO 2007-2. Underwriters: Genesis 2007-1: CDO manager: Ore Hill Partners, Underwriter: Deutsche Bank. Genesis 2007-2: CDO manager: Levine Leichtman Capital Partners, Underwriter: Deutsche Bank

ABS Firm of the Year: Goldman Sachs

Outstanding Contribution Award: The American Securitization Forum / Dept. of the Treasury

As if these ironies aren’t delicious enough the final one is over the top.

Lifetime Achievement Award Recipient: C. Thomas Kunz, Retired Head of Structured Finance, Skadden, Arps, Slate, Meagher & Flom

We are well familiar with State Farm’s main US based law firm Skadden, Arps, Slate, Meagher & Flom from their great work revising the history of the Katrina litigation planting falsehoods such as the oft repeated meme that Jim Hood used his criminal investigation of State Farm to assist Dickie Scruggs in cramming the first big settlement down State Farm’s throat (with help of ignorant bloggers such as Mississippi’s own Tom Freeland  who still repeats such propaganda on occasion despite reams of contemporaneous press reports to the contrary). Our readers will also no doubt recall I once lamented the impact of layoffs at Skadden on our daily readership earlier this year.

While reading the award winners and the Skadden connection to the toxic paper industry (makes one wonder how much work the boys at Skadden did on State Farm’s Merna Re) a recent post on Greenbackd came to mind that featured the work of Skadden partner John Carney who evidently is in charge of shilling for the firm and it is to the Greenbackd post we go next: Continue reading “Wall Street paternalism and disconnect at it’s finest and on display. A Skadden partner writes about shareholder ignorance and displays plenty in the process.”

Breaking: SEC Charges Subprime King Angelo Mozilo with Civil Fraud

This post is a personal indulgence. Though the Yahoo board is long gone and $30 puts a distant memory I’ll never forget “Quislingman”, Pete Frampton Live, Subprime Usury Scam, and the rest of the gang. I sometimes wonder what ever happened to the bean counter from Jersey who was recommending CFC to his brokerage clients. The difference between Benjamin Graham and that fellow was that Ben could actually spot an undervalued stock. Yahoo! Finance has the A/P story:

The government is charging Angelo Mozilo, the former chief executive of mortgage lender Countrywide Financial Corp., and two other company executives with civil fraud.

The Securities and Exchange Commission’s case also accuses Mozilo of illegal insider trading, an agency spokesman said Thursday. Continue reading “Breaking: SEC Charges Subprime King Angelo Mozilo with Civil Fraud”

SLABBED Daily – April 13

A happy -but belated – 50th birthday to Chip Merlin. If you’ve ever wondered what to give a man who has everything, you’ll be interested in knowing his “family gift” was a two-week holiday in Italy; his staff gave him two-weeks of great blog posts, and, I tore a page describing windstorm damage in Galveston from a magazine.

Merlin bookended his trip to Italy with some great posts on wind damage following Ike and the not-so-great response from the Texas Windstorm Insurance Association. It appears TWIA has been blowing off wind damage for some time, as far back as Hurricane Rita!

Allstate/Pilot Claim Servise (and State Farm) have successfully and invisibly shifted their liability for paying for the repair or replacement of Hurricane Rita damaged roofs, back onto their trusting clients shoulders, and the general insured publics shoulders via the TWIA premium pool, and the Texas General Fund tax payer shoulders.

I wouldn’t have written a word about this if the Editilla K-Ninaaa hadn’t corrected the spelling to Beaux! Continue reading “SLABBED Daily – April 13”

The first bail-out: NFIP accessed by manipulation of construction price data following Hurricane Katrina

Connect the dots.  Russell left a big one in his recent post, Where insurance finally meets the big bailout – AIG a massive ponzi scheme?

They [AIG]would sign a reinsurance contract with an insurance company, take a certain amount of money, and at the same time form a side agreement that essentially said: “We will not pay you on this policy.” Why would the insurance company do this: to lower their capital requirements. And since AIG did not perform much in the way of the services, they could kick some of the money back to the insurance company via an offshore entity which would allow the insurance company to write off all the money paid off to AIG, and then accept back part of the money back as tax free profits.

CLS has been leaving dots on the ALL Board for some time – here’s one from October 2007, for example.

Connect the dots in any fashion and they lead to a  bottom line “short” on reinsurance in the face of the nation’s largest disaster; a legal storm as claims were denied; and to the scheme for a bail-out from the US Treasury via the NFIP.

In a February 2007 report, Congressional Research Service identified two broad sets of post-Katraina claims-adjustment issues that might be relevant to Congress… One set of these relevant issues is centered on the previously discussed policy language on causation; and, the other…

…is the alleged adverse impact on insureds of computerized claims settlement systems and products. Continue reading “The first bail-out: NFIP accessed by manipulation of construction price data following Hurricane Katrina”

April Fool – the joke’s on Allstate

Allstate Corporation announced a quarterly dividend of twenty cents ($0.20) on each outstanding share of the Corporation’s common stock – on Fat “cat” Tuesday, no less!  The dividend is payable in cash on April 1, 2009 to stockholders of record at the close of business on March 13, 2009. h/t ClS

Hopefully, Allstate didn’t tap whatever they might have set aside as a qui tam reserve.  If the 5th Circuits recent Opinion in error does move the government to intervene in Rigsby and Branch, we do not yet have the change we need.

Sop just  posted Insurers Kill the Rally Once Again over at the All finance board.  See if you don’t agree this further begs the government’s attention.

Here we go again with the insurance crash. This time it is fueled by the slash in the Allstate dividend off of life insurance worries. It comes right after Lincoln National almost eliminated its dividend yesterday. We have to understand that the pressure from these companies — and they include Prudential and Hartford (oh, man, is that one down) — is now coming directly from these firms’ investing portfolios. We are now in the throes of a remarkably vicious circle, in that these companies cannot raise enough capital to offset their commercial real estate holdings, which seem to decline by the day. It looks like all of these companies had the same optimistic playbook. Right now the focus is on Citigroup and Bank of America and nationalization. I am far more concerned right now about a life insurer or an annuity company going bust….

Now, for the rest of Allstate’s announced April Fool prank. Continue reading “April Fool – the joke’s on Allstate”