Comments on: Financial Times: Things Likely to Get Worse Before They Get Better http://www.nakedcapitalism.com/2007/08/financial-times-things-likely-to-get.html Sun, 22 Nov 2009 22:11:10 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2007/08/financial-times-things-likely-to-get.html#comment-408 Anonymous Fri, 17 Aug 2007 12:34:00 +0000 http://www.nakedcapitalism.com/2007/08/financial-times-things-likely-to-get-worse-before-they-get-better/#comment-408 Both the weak and strong hands in this market have an incentive to game for intervention through the financial press and their sponsored politicians before they have to engage each other in trade. <br/><br/>A clear signal that there will be no bail-outs of any sort, will unfreeze any frozen markets. Uncertainty on this front will clog the markets with regulatory uncertainty and prolong the "liquidity crisis/credit crunch". Both the weak and strong hands in this market have an incentive to game for intervention through the financial press and their sponsored politicians before they have to engage each other in trade.

A clear signal that there will be no bail-outs of any sort, will unfreeze any frozen markets. Uncertainty on this front will clog the markets with regulatory uncertainty and prolong the “liquidity crisis/credit crunch”.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/08/financial-times-things-likely-to-get.html#comment-407 Anonymous Fri, 17 Aug 2007 09:40:00 +0000 http://www.nakedcapitalism.com/2007/08/financial-times-things-likely-to-get-worse-before-they-get-better/#comment-407 Pershaud makes some kaufmanesque points.<br/><br/>Bone of contention. The Japanese and Asian examples are inadequately, nay lazily, described to make the case. <br/><br/>Re: mark to market, this would mean I presume that much of the upswing marking gains would have fallen through to equity (if not heId to maturity), rather than have had no impact before securitisation. An argument for symmetry (and the recognition of, and pricing of risk over the full cycle) calls for the hit in the downswing to similarly go through to equity. In other words some of prior year earnings are the consequence of not recognising full cycle risks in pricing of these securities. This might also help explain the siezure in markets. Even strong hands are weak because they do not wish to take the hit to earnings that an active market will signal. Pershaud makes some kaufmanesque points.

Bone of contention. The Japanese and Asian examples are inadequately, nay lazily, described to make the case.

Re: mark to market, this would mean I presume that much of the upswing marking gains would have fallen through to equity (if not heId to maturity), rather than have had no impact before securitisation. An argument for symmetry (and the recognition of, and pricing of risk over the full cycle) calls for the hit in the downswing to similarly go through to equity. In other words some of prior year earnings are the consequence of not recognising full cycle risks in pricing of these securities. This might also help explain the siezure in markets. Even strong hands are weak because they do not wish to take the hit to earnings that an active market will signal.

]]>