Using Veritas to Construct the "Per…

29-04-2017 Hits:82209 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:77819 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:77393 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:82132 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:78726 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:81015 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:47896 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:79726 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:79243 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:79797 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:84797 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:81730 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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My blog has been quite popular as of late, most likely because it may appear to some that I have a crystal ball. My last 5 or so warnings have resulted in 50 point or so price drops in the shares of the companies in questions. Let me be both modest and honest. I am not that smart and do not have a crystal ball. There is a simple premise behind all of this that allows me to understand what is going on, but this premise does not get any press play and is not harped on by the analyst community. Many major players in our financial system are simply insolvent. Plain and simple. The liquidity issues that you see are simply a result of that insolvency, not a cause. When you lever up on assets at the top of a bubble and that bubble pops, you become insolvent, delevered or not. If forced to delever, the balance sheet insolvency now becomes an income statement insolvency as the cash outflow outstrips the cash inflows, but it all stems from the original balance sheet insolvency - not the other way around.

Borrowing more money, no matter what the terms, will not aide you in your dilemma. That is, of course, unless you can borrow large amounts of that money quickly on non-recourse terms. But that is not really borrowing money, it is someone giving you money with the option to pay it back. It is the equivalent of a straight bailout, isn't it? That is what just happened last weekend, which leads me to the next paragraph...

I have been alleging that many investment banks, monoline insurers, home builders and commercial banks are effectively insolvent. Nouriel Roubinin wrote an accurate piece on the topic. Between that and the the five or six major analytical pieces that I put together, I believe a pattern emerges (please take note of the dates the pieces were written and the share prices at the time of the post). I believe the pattern is indisputable. You could have made a fortune on the short side of these analyses, and you could have lost a fortune on the long side, just ask the employess and shareholders of Bear Stearns, Ambac, MBIA, Lennar, etc. My condolences go out to the rank and file employees of all of these companies whose savings have been lost in the share price devalution. Hopefully, there is a lesson to be learned here:

More on Insurers and Insurance

 

More on Commercial Real Estate

 

More on Residential Real Estate


More on Investment Banks

As you can see, the path was not impossible to determine as practically all of these companies shared the same catalyst to their downfall - excessive leverage at the top of an asset and credit cycle bubble. Now, the Fed is attempting to lend directly to institutions that it has no jursidiction over. If I am not mistaken, the Fed's balance sheet is only good for $400 billion dollars or so. There are a lot of potential "runs on the non-bank" coming down the pike, enought to drain the coffers. This is an ingenious, albeit very risky endeavor. Moral hazard abounds. I know the Fed believes that they have nixed the moral hazard argument in the butt by wiping out the Bear Stearns shareholders, but this is an imperfect argument. The shareholders have to approve this $2 buyout deal, and $2 is low enough to risk a battle with the Fed and their agents. This is a major flaw in the plan that I see as coming back to bite the markets. If this happens when the next shoe drops, I can see the Fed getting overwhelmed.

As an investor and analytical pundit, I will be looking for the next shoe to drop, which I believe I have found. I will keep you posted.