Using Veritas to Construct the "Per…

29-04-2017 Hits:88628 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:82307 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:82197 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:86695 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:83117 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:85239 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:56345 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:84586 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:84278 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:84134 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:90639 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:88202 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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I must admit, I am a bit frustrated at the propensity of the market, the media and so many analysts towards totally disregarding basic math, not to mention the fundamentals of finance and capitalism. Thus, I have decided to do something about it. The forensic analysis of JP Morgan will be a doozy, and I have excerpted certain (non-valuation or directly investment related) portions of it as a pdf document to be distributed freely over the web. I have already released quite a bit of information in an attempt to educate the laymen about the extent of systemic risk that still abounds. From a risk perspective, we are worse off than ever before. Those who were claimed to be too big to fail are even bigger. Those who concentrated risks to the point that they held this country and the entire global financial system hostage are even more concentrated, and the lobbying machine that is Wall Street is even more focused and effective than ever.

On that note, I would like to congratulate Barney Frank for his uncharacteristically pleasing display of standing up for the people. Let's hope its for real. From Reuters:

WASHINGTON, Sept 16 (Reuters) - A top lobbyist for Wall Street giant Goldman Sachs (GS.N) has been barred from communicating with members and staff of the U.S. House of Representatives Financial Services Committee, an aide to the panel's chairman said on Wednesday.

Democratic Representative Barney Frank has banished Goldman's Michael Paese, a former committee staffer, from dealing with the panel while it considers a long list of financial reform proposals, some directly impacting Goldman.

"Mr. Paese left our offices in September 2008, and was not allowed to communicate with any committee members or staff for a period of one year due to normal ethics restrictions that apply to all House and Senate employees," said Frank aide Steven Adamske in a statement.

"Out of an abundance of caution due to the nature of financial regulation reform, the chairman has extended Mr. Paese's recusal for another year," Adamske said.

Frank's committee is dealing with a heavy load of proposed legislation put forward by the Obama administration to tighten regulation of banks and capital markets following the worst financial crisis in generations.

In an example of the Washington-Wall Street revolving door culture, Paese was the committee's deputy staff director before he quit to work for the Securities Industry and Financial Markets Association as a lobbyist. Goldman hired him in April.

I would also like to give a special shout out to Andrew Cuomo of the NY AG for outing the farce that was the B of A purchase of Merrill Lynch at what was probably a 300% premium (the company would have been filing for bankruptcy the following weekend. He is now preparing charges against the individuals in the company in lieu of allowing it to be swept under the rug. I, for one, am baffled at how Lewis is not guilt of securities fraud, but then again I am no longer. On that note, my greatest adulation of the week is directed towards US District Court Judge Jed S Rakoff who actually set precedent (to my layman's knowledge, anyway) in standing up directly for the people and against the cronyism that is the relationship between the big banks and certain sections of the government. Believe it or not, he is actually forcing the SEC to do their job, and believe it or not, they are stuck between a rock and a hard place - for in order to to their job they are going to have to really stick it to a few bank executives and/or directors. What makes things even more interesting is my brother, Congressman Elijah Cummings, has ordered the SIGTARP to perform a special investigation into exactly why the SEC didn't do their job in the first place. It is actually all farce, since we all know WHY they didn't do their job - cronyism, at the expense of the shareholder. The interesting part is what happens when a little sunlight is shed on this dark corner of regulatory shenanigism. See this sarcastic Washington Post desciption of the tale.

Now back to the bomb that I plan on dropping... I am about to release a forensic report on two banks. One of them is considered the most respected bank in the country. I actually respect Jamie Dimon, the CEO of JPM. He seems to be a serious guy who is about business, but his bank is really not so much different from the other banks that have failed, save for the fact that it is bigger and apparently better connected. The other bank is a potential FDIC takeover candidate that is actually trading over $16 per share.

Here are some tidbits from professionals that I follow in the banking industry. From The Institutional Risk Analyst:

Q2 2009 Bank Stress Test Results: The Zombie Dance Party Rocks On

"The causes were many: interest rates too low too long, allowing speculation on un-owned assets, a surplus of cash that begged to be invested, etc.; but the bottom line problem was one of perception. I grew up on a farm and a cow pie even if chopped into small pieces, mixed with other like items, painted gold, and doused in perfume is still manure. The market let the small pieces, paint and perfume confuse them. John Deere is a great company, but the one piece of equipment they won't stand behind is their manure spreader. Those investing in and creating new markets should be so wise."

A reader of The IRA in TX

The second quarter FDIC data is online for consumer and professional users of The IRA Bank Monitor. The results of our Q2 2009 stress test of the US banking industry are pretty grim. Despite all of the talk and expenditure in Washington, the US banking industry is still sinking steadily and neither the Obama Administration nor the Federal Reserve seem to have any more bullets to fire at the deflation monster.  With the dollar seemingly set for a rebound and the equity and debt markets looking exhausted, one veteran manager told The IRA that the finish of 2009 seems more problematic than is usual and customary for the end of year.

Plain fact is that the Fed and Treasury spent all the available liquidity propping up Wall Street's toxic asset waste pile and the banks that created it, so now Main Street employers and private investors, and the relatively smaller banks that support them both, must go begging for capital and liquidity in a market where government is the only player left. The notion that the Fed can even contemplate reversing the massive bailout for the OTC markets, this to restore normalcy to the monetary models that supposedly inform the central bank's deliberations, is ridiculous in view of the capital shortfall in the banking sector and the private sector economy more generally.

As with Q1 2009, the Q2 preliminary Stress Index calculated by IRA jumped to over 6.7 or more than half an order of magnitude above the 1995 base year of 1, but then subsided down to "only" 3.11 vs. 2.8 in Q1 2009. As in the previous period, the preliminary score reflects the tough reality facing smaller community and regional banks, while the final score of 3.11 reflects the huge subsidies flowing through the top institutions. Whereas in past years the inclusion of the larger money center banks would skew the risk profile of the banking industry to a more risky posture, today, as zombie GSEs, the top banks make the industry look more conservative.

 

IRA Banking Stress Index Distribution -- Q2 2009

A+

A

B

C

D

F

Preliminary Stress Index 6.77 (7,622 banks)

3,297

1,350

395

377

53

2,012

Final Stress Index 3.11 (8,643 banks)

3,518

1,449

417

421

72

2,256

Source: FDIC/The IRA Bank Monitor

 For those who are interested, I have performed my own stress tests and offered my opinions of a few of the government's favored banks:

Be aware that the simulated government stress tests were my attempt at guessing what the government's results would have been. Subscribers should look to the download section for the "realistic" stress test that show what practical capital raises were needed for the respective banks in question.

IRA sponsors a blog that also has an interesting post in it from its CEO. here's an excerpt:

Today I’m pondering next week’s expected beginning of the removal of government subsidies from the U.S. banking system. The stock market has been showing off its’ new found love for driving up equities regardless of the fact that computed stockholder’s equity numbers are now driven not by top line revenue improvements but by the modeled mathematics of cutting back on expenses. According to the Wall Street Journal, economists buoy about the world getting better. Exactly for whom I’m not quite sure because unemployment benefits are soon to permanently run out on people (and their families) for whom these same economists say no jobs are forthcoming for at least another year. I'm not sure I would advise the President to stand between the pitchfork wielding public and the “Black Swan” academicians with Christmas approaching.

And so into this "theoretically improving" world President Obama is expected to inform Wall Street next week that the one of the government's bank subsidy programs ends in October. The Troubled Loan Guarantee Program (TLGP) is a less well known subsidy vehicle than the Troubled Asset Relief Program (TARP) but it is nevertheless one of the pillars of the rescue plan that was put into place by the combined efforts of the Bush/Obama administrations.

TLGP is another one of those things that never really took off in the way people imagined it would. Like TARP it was meant to encourage banks to continue to lend under extraordinarily stressful conditions. However, we’ve all seen that credit availability dried up anyway because ultimately banks backed away from subprime lending as they collectively de-leveraged and shut down the exposure manufacturing aspects of their business models. So because there was no new lending the opportunities to make use of TLGP by the industry were relatively sparse.

So now here’s where it gets a little interesting.

Over the past year we’ve been tracking the system wide trends in defaults, non-accruals and finally other assets owned by banks and we’ve been seeing continued degradations in net lending assets quality. That means that the business need to eventually take advantage of trouble loan guarantees has been growing not receding. The TLGP concept may have been instituted before it’s time and that time may be still be in the future, probably not that far. One might ask, “are we pondering confiscating subsidy tools just as banks might be on the verge of using them?” And of course the even more fun questions "Why?" and “Is this a good idea?”