Using Veritas to Construct the "Per…

29-04-2017 Hits:88631 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:82310 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:82199 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:86697 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:83119 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:85241 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:56346 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:84588 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:84280 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:84135 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:90641 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:88204 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'm going to try and get to this in detail today, sharing a part of my model to show how bad the earnings actually were from Morgan Stanley and Lehman last quarter. Lehman actually took a loss, while Morgan practically doubled their "real" earnings in their reported numbers. They both played "hide the sausage", shifting assets from level 2 to 3 to generate non-cash gains, as well as using FAS 159 to manufacture unreal accounting profits.

When reading the following article, consider the level 3 assets as proportion of tangible equity, and not total assets, and you will see that these companies are playing a dangerous game of chicken.

From Dan Denning at the Daily Reckoning :

A tawdry game of "hide the garbage assets" continues to play out in New York. "One look at the Goldman Sachs' numbers Wednesday should tell you the credit crunch is far from over," reports Liz Moyer at Forbes.

"Despite the Federal Reserve's dramatic efforts to shake loose the financial system, banks still can't come up with accurate prices for hundreds of billions of dollars' worth of mortgage securities, corporate loans and other assets."

These assets that can't be traded and which no one wants to buy are called Level Three assets, named for the part of the balance sheet on which they reside. The banks have stuck them there the way some people might stick a crazy Aunt in the attic to avoid being embarrassed in front of the neighbours. Shut up Aunt Tilda!

There are a lot of Aunts in the attic. "Level 3 assets now make up 13% of the $771 billion of assets Goldman holds at fair value, according to regulatory filings. Of the $96 billion, Goldman is on the hook itself for $82 billion, and that 'economic exposure' is up 50% from the fourth quarter." And it's not just Goldman.

"The increases from the fourth quarter in Level 3 exposures weren't as stark at Morgan Stanley or at Lehman Brothers. Morgan Stanley had $78 billion of Level 3 assets, or 17% of its assets held at fair value, up 6% from last November. Lehman had $42.5 billion in Level 3 assets, 14% of assets held at fair value, up 1% from November. The three investment banks are the first of a series of banks to file their quarterly reports detailing Level 3 exposures. The total is only expected to rise."

Well that's not good news. We were asked yesterday if the Day of Reckoning for the banks and brokers has been postponed by Fed action. The trouble is these Level Three assets aren't going away. The banks, the Fed, and the brokers hope that by letting these sleeping dogs lie, they will eventually wake up and not be any particular harm to anyone.

They hope that by stashing the loans out of sight, investors will stop worrying about them and get back to buying stocks. But three-day old fish doesn't get fresher or more appetizing just because you've hidden the refrigerator in the back room. Yet that seems to be the solution pursued by the Fed and the banks.

Instead of chucking out the garbage loans, the Fed wants to put all the garbage in a hermetically sealed room deep in the bowels of its offices in New York. But just because you can't see something doesn't mean it's stopped stinking.

Eventually, we reckon the Feds will approve of, or even create, new off-balance sheet vehicles for banks to keep these garbage loans in. The loans won't count against the bank's capital requirements. And like a bad memory, the bad loans will be forgotten, sequestered away in their own quiet little cavern like so much captured carbon dioxide.

But this unwillingness to deal directly with the bad loan problem and write down the value of level three assets does not bode well for the U.S. dollar or dollar denominated assets.

Dan Denning
The Daily Reckoning Australia