Using Veritas to Construct the "Per…

29-04-2017 Hits:82127 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:77755 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:77323 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:82072 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:78663 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:80955 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:47836 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:79666 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:79186 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:79736 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:84714 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:81662 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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The last standout to the Moral Hazard Brigade has finally joined ranks. The FDIC is considering bailing out the banks!!! From IDD Magazine:

WASHINGTON — As the number of bank failures continues to rise, some industry representatives are making a case that amounts to political heresy: the Federal Deposit Insurance Corp. should prop up dying institutions rather than letting them collapse.

They argue that the constant stream of failed-bank deals — in which the FDIC sells deposits on the cheap and guarantees some of the losses — has scared away potential buyers for open and operating institutions.

If the FDIC were to consider open-bank assistance in just a few cases, this thinking goes, it could slow the pace of failures and save the government money.

"I daresay that in some cases it will be the least-cost solution to provide some kind of open-bank assistance," said Ron Glancz, a partner at Venable LLP.

To say that regulators and Capitol Hill are skeptical about this argument is an understatement. The FDIC faces a high legal bar for providing open-bank aid — and doing so would be politically dangerous.

"Do you bet on a disciplined resolution to a very troubled institution … or do you give the guys who got you into this position a chance to do it again?" said Karen Shaw Petrou, the managing partner of Federal Financial Analytics Inc. "I don't mean to be unsympathetic, but I don't get it."

Still, some industry representatives said the loss-sharing deals the agency is cutting to resolve failed banks are so attractive that private-sector merger activity has all but evaporated.

"There have been some creative deals … but most buyers are just saying, 'I'll wait until it fails,' " said Dan Bass, the managing director in the Houston office of Carson Medlin Co.

I am almost (but not quite) at a loss for words. Hasn't it occurred to anyone that when businesses fail, it may just be because they should not be in business???!!!

The FDIC should stick to its knitting of protecting depositor's interests, up to the insured limits. If the deals being cut are too sweet, you don't cut sweeter deals to remedy it. What the hell is going on in DC?

"I daresay that in some cases it will be the least-cost solution to provide some kind of open-bank assistance," said Ron Glancz, a partner at Venable LLP.

To say that regulators and Capitol Hill are skeptical about this argument is an understatement. The FDIC faces a high legal bar for providing open-bank aid — and doing so would be politically dangerous.

"Do you bet on a disciplined resolution to a very troubled institution … or do you give the guys who got you into this position a chance to do it again?" said Karen Shaw Petrou, the managing partner of Federal Financial Analytics Inc. "I don't mean to be unsympathetic, but I don't get it."

Still, some industry representatives said the loss-sharing deals the agency is cutting to resolve failed banks are so attractive that private-sector merger activity has all but evaporated.

"There have been some creative deals … but most buyers are just saying, 'I'll wait until it fails,' " said Dan Bass, the managing director in the Houston office of Carson Medlin Co.

A majority of the FDIC's failed-bank resolutions this year, 140 as of late Friday, have included agreements that the agency and acquirer will share future losses tied to its assets. Typically, the FDIC will cover 80% of losses on a chunk of the assets, and then 95% beyond that level. (The agreements run for 10 years for mortgages, and three years for commercial-related assets.)

The agency says the agreements help draw more competitive bids for failed banks, mitigate the agency's short-term cash needs and help it unload a high volume of assets.

Yet observers say the tactic hurts the FDIC in the long run as it shoulders risks far into the future, bolstering the case for providing assistance to a private-sector recapitalization that would stave off the failure.

"The costs" of assistance "would have been far less than the FDIC is experiencing in connection with the losses that are being sustained going forward," said James Rockett, who co-heads the financial institutions corporate and regulatory group at Bingham McCutchen in San Francisco.

Perhaps proponents of this idea should read my latest blog post: Residential Lending Credit Losses Worsen as Unstainable Government Support Proves... Unsustainable. We are still very much in a housing bubble, and many of those banks that are anywhere near marginal and have RE exposure will fail. They need to be put to pasture.

Failed banks "are costly, but they would be costly on an open-bank basis as well," said John Douglas, a partner at Davis Polk & Wardwell and a former FDIC general counsel. "If you compare a closed-bank situation and an open-bank situation, invariably the closed-bank situation will turn out to be less expensive to the FDIC, because you wipe out so many liabilities in the receivership. You wipe out all contingent claims, subordinated debt and other types of debt. … You don't have to deal with it at all."

Bovenzi and Petrou said the mergers and acquisitions market eventually will recover on its own.

"Certainly for any institution that is flatlining, there is not private investment capital out there," Petrou said. "For entities that are weak but viable, there is. There is money out there and there is money moving."

Bovenzi said the pace of deals could pick up after the pace of failures slows.

"Down the road when you get to the point where there are fewer bank failures, you're still going to have winners and losers," he said. But "the winners should be able to buy some of the institutions that wouldn't necessarily otherwise fail, but would have their share price reduced to the point where it would become attractive to those acquirers. While this may not be the time where a lot of that's happening right now, it doesn't mean it won't down the road."

Lawmakers, many of whom have condemned the bailouts of larger institutions, are also highly unlikely to support giving the FDIC more room to assist dying banks. It could also encourage smaller institutions to engage in more reckless behavior, knowing they may be saved by the government.

"You'll have a significant moral hazard issue for smaller institutions to the degree that the FDIC supports institutions and subsidizes investments in entities that should have pulled themselves back from the brink," Petrou said. "If an institution is in need of open-bank assistance, the management that got it to that point is at least open to some question."

 To be fair, Sheila Bair has condemned this idea. Thank goodness.

For their part, FDIC officials have indicated they are not interested in providing financial help to open individual institutions that are troubled. Chairman Sheila Bair has expressed some interest in using resources left in the Troubled Asset Relief Program to benefit smaller banks, but she has also opposed open-bank assistance, and urged Congress to prohibit it for nonbank firms in the pending legislation to create a resolution regime for those companies.

"We're subject to least-cost. We can't provide assistance of any kind to an open institution absent a systemic-risk determination," Bair said Dec. 2.

Some observers said proponents of open-bank assistance are really just interested in getting FDIC help for deals that would not involve the highly competitive bidding process for institutions that want to acquire failed banks.

"There are plenty of people who want open-bank assistance," Douglas said.

"The reason sellers want it is because it gives their shareholders some hope of recovery in the future. … The reason acquirers want it is they want the institution without having to go through the bidding process."