Using Veritas to Construct the "Per…

29-04-2017 Hits:87194 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:81115 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:80956 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:85428 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:81928 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:84116 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:55177 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:83373 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:83112 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:83004 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:89256 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:86977 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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To begin with, I and my team have been working on a response to this draft bill since about midnight. It was over 130 pages, and was released sometime around midnight. I wonder how many people who feel it was mistake to vote the bill down actually took the time to carefully read and understand all 130+ pages between 12 am EST and now. Do the yaysayers even know what it is they were saying yay to?  Do the senators and congressman that I did not speak to really have a firm grasp of what they are doing here? It truly appears that independent economists, actuaries, market and investment professionals were not consulted in the drafting of this plan that is rife with holes and ambiguities.

As for solutions... Well, I hate to say this but the solutions should have been started last year at the latest. This WAS NOT hard to see coming. I sold off my real estate holdings in 2004 and 2005. I then shorted residential and commercial real estate companies, mortgage insurers, leveraged loan issuers, investment and commercial banks, etc., and freely published my research, findings and opinions for over a year. Did I have a crystal ball or next quarters Wall Street Journal? Of course not! Was I just that lucky? Well, I was lucky, but not that lucky. Am I just one of the smartest men alive? Decidedly not! As a matter of fact I may not even be the smartest person in a 7 foot radius. What I am is a man that just paid attention to facts and details. I use spreadsheets instead of emotion and I can tell when someone is lying. It's just that simple. I created this blog in September of 2007 to chronicle my investment actions and to warn the world of the "BUST" portion of the Boom-Bust economic cycles. BoomBustBlog.com!

Speaking of warnings, the writing was on the wall a long time ago yet members of the administration and even the Fed have openly denied the gravity of the situation for over a year, and as lately as a few weeks ago. Now, they want to scream Armageddon! Let me excerpt a portion of "Shock and Awe, 2.0!":

Paulson's past statements, specifically, his declaration six months ago that "our institutions, our banks and investment banks, are strong," or his statement four months, "I do believe that the worst is likely to be behind us," can lead one such as myself who disliked Bush politics before it was cool to do so to wonder about this man's credibility. Stage exit left every major investment bank in this nation, the largest mortgage bank (Countrywide), the largest bankruptcy in the history of this country (Lehman, the 2nd largest was about 1/8th the size of Lehman), the largest THREE bailouts of any single company (Fannie, Freddie and AIG), and the imminent failure of the largest thrift (WaMu), not to mention all of the trash paper sitting on the books of banks, brokers and hedge funds (see Counterparty risk analyses - counterparty failure will open up another Pandora's box, Banks, Brokers, & Bullsh1+ part 1, and Banks, Brokers, & Bullsh1+ part 2).

Now he declares that we face a virtual financial armageddon if we do not immediately give him a revolving credit line of $700 billion+ dollars and immunity from the law and the legislature? Have I missed something here? Now, I've been known to doubt this man in the past (see Reggie Middleton says don't believe Paulson: S&L crisis 2.0, bank failure redux), but this most recent ballsy move is actually disturbing my sleep (and as cute as I may be, even I need what little sleep I can get!).

His extreme flip-flopping leads me to believe that he is either disengenious or incompetent. After all, I have considerably less resources at my disposal, and I declared as far back as April that "The worst is behind us, unless massive bank failure is considered a bad thing!".

Here are some ideas for concrete solutions...

 

1.      Banks are not guaranteed to lend to each other, even after the government spends a trillion dollars or so of tax payer monies. Any bank that get's relief from the government needs to be legislatively mandated to pass a significant portion (to be explicitly defined) to consumers, corporations and fellow lending institutions. This scenario played out negatively Australia, where the government bailed out banks and the banks said "thank you" and failed to pass on the economic benefits. Government money effectively vanished from a consumer economic benefit perspective.

2.      Risk taking investors should be expected to take, and accept, risk. What the hell is so hard to understand about this? Credit and equity investors assumed x units of risk in a bid to attain y units of reward. Why should the government underwrite the risk the investors took? Any government investment should not be consumed until the previous investors have been wipted clean! The government is not the recipients of the rewards pursued by said investors, thus they should not be the recipients of the risks either. That's right! The same old mantra - Privatized Profits and Socialized Losses. The government should invest directly into the most solvent institutions by buying super senior securities - at the top of the hierarchal ladder. This supplies capital directly where it is needed. It doesn't attempt to distort market valuations of securities. If the market says they are worthless over a period of a year, there is a pretty good chance that they may be worthless that year. Tell me, my fellow blogophytes, how much are the common shares of the many dot.coms that crashed in 2000 worth now? Imagine if the government had swooped in and spent $750 billion to prop those shares up to keep the aisles of Silicon Valley packed. Chances are that the companies would have crashed and burned anyway, the fire would have taken longer to ignite and would have burned $750 billion hotter. The super senior securities purchase should accompany an offer of warrants to the existing investors, with maturities staggered according to the hierarchy of the existing capitalization. These warrants create an incentive for investors to stick in there, and if not they create and incentive for new investors to come in. The government gets paid back by selling their securities to the market at a profit when (or if) business and macro conditions permit. Yes, a lot of money will be spent this way, but the effects of the monies will be direct, in lieu of diluted as in the buying of near worthless mortgage derivatives that nobody currently wants.

3.      The acceptance of the super senior investment binds the institution to lend to other institutions, consumers, and corporations. This solves the dilemma of rescuing banks that fail to take lending risks, even after the rescue.

4.      No more secrets and games. This off balance sheet, VIE and SPE (special purpose entities) nonsense needs to stop now. If you take risks, the shareholders, markets, investors and regulators need to know exactly what those risks are, period! They need to be plainly and explicitly stated right on the balance sheet right next to the words that say cash and debt. No one really knows what the leverage of a company is if they have significant off balance sheet holdings powered by leverage, now do they?

5.      In no way, and I mean in no way, should the mark to market rules be modified to the lax side. As a matter of fact, the current rules should be promulgated and potentially strengthened. By repealing the rules, one is basically saying "If stick my accounting head in the sand when a economic hurricane approaches, I will not get hurt since I can't see it coming!" Let's be adults here. The truth, the whole truth, and nothing but the truth! Or should I say, "The Truth! The Truth! You can't handle the truth!!! (as I channel Jack Nicholson in "A Few Good Men").