Using Veritas to Construct the "Per…

29-04-2017 Hits:87187 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:81109 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:80950 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:85424 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:81924 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:84111 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:55172 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:83364 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:83107 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:83000 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:89250 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:86970 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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From Bloomberg: Fed's Bear Stearns Losses Dominated by Commercial Mortgages, Report Shows

The biggest losses in the $25.7 billion portfolio of Bear Stearns assets as of the end of last year came from commercial and residential mortgages. The Fed released the report in Washington today. The central bank agreed in March 2008 to buy the assets so JPMorgan Chase & Co. would acquire Bear Stearns and avert the broker’s bankruptcy.

The Fed wrote down the value of commercial mortgage holdings by 28 percent to $5.6 billion and residential loans by 38 percent to $937 million as of Dec. 31, the central bank said in a report today.

The Senate voted 96-2 earlier this month to urge greater disclosure by the Fed, including on the collateral taken on in the bailouts of Bear Stearns and American International Group Inc.

Now that's what I call a writedown. They wrote down those commercial assets by 28% BEFORE the 2nd largest holder of commercial real estate filed for bankruptcy. Be awared that I have probably peformed more analysis on GGP than GGP itself. Many of GGP's properties are underwater, and they are bankrupt. This means that those mortgages are going to take HUGE haircuts, and some of those non-recourse loans (there were a lot) will literally get beheaded. 28% just won' t do it. Let's be conservative and just apply this haircut to Goldman's numbers, though.

Q4-08

Off balance sheet hit to assets

     

 

Off balance sheet (VIE) RE assets

The hit to be taken if one applied the gov's writedown to VIE/on balance sheet assets

GS's share of the losses (#)

GS's share of the losses, %

Mortgage CDOs

 $   13,061,000,000

 $               3,657,080,000

 $    1,645,686,000

45%

Real estate

 $   26,898,000,000

 $               7,531,440,000

 $       979,087,200

13%

 

       

Mortgage and other asset-backed loans and securities

 On balance sheet

     

 

 $   22,393,000,000

 $               6,270,040,000

 $    6,270,040,000

100%

Totals

 $   62,352,000,000

 $              17,458,560,000

 $    8,894,813,200

 
         
   

Goldmans Tangible equity

 $  57,923,000,000

 
   

Sans writedowns before bankruptcy

 $  49,028,186,800

 
   

Percent difference

15.36%

 
         

Off balance sheet hit to assets

38%

   

 

Off balance sheet (VIE) RE assets

The hit to be taken if one applied this year's potentil losses to VIE assets (38% markdown - conservative)

GS's share of the losses (#)

GS's share of the losses, %

Mortgage CDOs

 $   13,061,000,000

 $               4,963,180,000

 $    2,233,431,000

45%

Real estate

 $   26,898,000,000

 $              10,221,240,000

 $    1,328,761,200

13%

 

       

Mortgage and other asset-backed loans and securities

 On balance sheet

     

 

 $   22,393,000,000

 $               8,509,340,000

 $    8,509,340,000

100%

Totals

 $   62,352,000,000

 $              23,693,760,000

 $  12,071,532,200

 
         
   

Goldmans Tangible equity

 $  57,923,000,000

 
   

Sans writedowns before bankruptcy

 $  45,851,467,800

 
   

Percent difference

20.84%

 

  So looking forward just a little bit, Goldman has lost 20% of its equity, and that is just on real estate exposure. But wait, I just heard that the government is serious about pushing the auto manufacturers into bankruptcy. GM's 8.375 percent notes due in 2033 fell less than 1 cent on the dollar on Tuesday before last (and probably lower now) to 9 cents, yielding more than 91 percent, according to MarketAxess data. Goldman has another $59.5 BILLION dollars of exposure to corporate loans, and I am sure a decent direct exposure to GM an Chrysler. Just imagine a 91% writedown to just a small portion of that and a 30% writedown to 80% of the balance. If you see what I see, then you see Goldman's equity quickly approaching zero! The bankruptcies are just getting started, and we are just in the first few innings of the commercial real estate downturn. Hey, we are not even halfway through the residential real estate downturn. Is this enough to kill a big bank? Ask the CEOs of Bear Stearns or Lehman, or better yet ask the CEO's of Goldman and Morgan Stanley why they had to rush to get a bank charter expedited. Did they really intend to give away toasters with free savings accounts???

Well, we know that we aren't playing on a level playing field, don't we?

 


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