heifetz

15 - 20% of subprime borrowers defaulted on their mortgages. That's a lot of people! Imagine, 1 in 5 of your neighbors defaulted and were foreclosed upon. This is not suppose to happen.

https://www.chicagofed.org/publications/profitwise-news-and-...

no it's not, and I know the two are different definitions. However, what I'm saying is that a 7x 1st lien leveraged loan against a company that is trading at 14x P/E is essential 50% the market value of the company. Of course, the hard assets of the company is probably a lot less than that.

You can short or buy puts on high yield ETFs, such as HYG and there are probably some others. However, unless you know what you're doing, and have risk management, it's probably not advisable to hold longer duration short positions. The market may ultimately go down, but in the mean time, you'll be losing money and may not profit very much when it ultimately does go down.

The derivatives were created and rated on the assumption that the borrower's default rates were consistent with historical default rates. Of course that was not the case, and losses became multiples higher, and blew up derivatives that were highly levered. However, derivatives didn't cause the losses, borrowers defaulted!

most companies also have hard assets, e.g. inventory, real estate, IP, equipment, etc. If you're ok with paying 15x P/E which is the average S&P P/E, then 7x leverage isn't so bad...

Although the companies with these levered loans are a lot smaller than S&P 500 companies.

Sure companies will and can do that, there has been pretty good history of really large companies committing financial fraud. However, I don't think there ever has been systematic fraud in the US, unlike with subprime mortgages

no it's not.

The subprime crisis was precipitated by a lot of people taking out mortgages with either blatantly or coerced false income information in their mortgage applications on homes that had inflated values. Once home prices stopped going up as much and interest rates started increasing, these people were no longer able to make their mortgage payments.

Leveraged loans at 7x ebitda are still less leverage than someone taking out 90% LTV mortgage (90% LTV can be thought of as 9x leverage against your equity). Companies usually also have more flexibility to increase their income, or decrease their expenses compared to an average person. And mortgages have required amortization where as most levered loans to my knowledge are interest only.

All in all, unless a significant % of companies taking out levered loans are submitting fraudulent financial filings, this is nothing like the subprime crisis.

I think the reason why this is a story that is causing a lot of interest and outrage is that Soros was right! Sandberg, Zuck and co, instead of reflecting on what was actually happening, and investigating the issues that Facebook was causing, or was being used for, chose to try to play defense and attach the people and organizations that were criticizing them. If Facebook was serious about becoming a "good" platform, then it would have acted sooner. Instead, we can look back and say that they pretty much only care about growing revenue and did not care too much about these issues, until they because front and center after Trump was elected. There is probably some sexism towards the over criticism of Sandberg over Zuck. But at the same time, Zuck was more hands off while hosting facetime live from his backyard, and traveling around the US, and proclaiming how great Facebook was, while Sandberg is suppose to be the day to day operator. I think Zuck deserve a lot of the same blame for this, as the CEO and the founder.

it's 2018, but Saudi Arabia is pretty much stuck in the middle ages. The curse of having natural resources that pays for everything the country needs.

makes sense, wondering why it took so long to roll out this feature, isn't this one of the original uses that Zuck had in mind when he created Facebook?

funny how billions of dollars brings out the worst in people (or the worst people)

and BTC is becoming less useful in the real world (unless you convert it to a real world currency)

just because someone put in a bid, it doesn't mean that the owner of the assets have to sell to the highest bid. In this case, why does the owner have to sell to Thiel just because he has the highest bid?

how is the raw spring water described in the article any different from bottled spring water like Perrier?

why are transaction costs so high? I thought one of the selling points was that the transaction cost is negligible because miners main incentive comes from mining new bitcoins?

lol, I guess there are three or four people in the world willing to pay that price. I'll be interested to see if this ever gets sold again and at what price.

I'm guessing the buyer (if it's a single person) is a royal, oligarch (could even be Putin) or someone in China.

except that Uber and Lyft are operating companies with revenue, expenses and earnings. Bitcoin is a "currency" without inherent value, or cashflow potential. I admit, Bitcoin may have some utility, but is that utility any different from another cryptocurrency? To rephrase my question, if someone was able to clone Gold, why should Gold be worth more than the clones?

Can someone explain why bitcoin should be worth more than any of its forks, or any of the other cryptocurrencies? It feels to me that if anyone can fork bitcoin and create a parallel currency then I don't see why bitcoin should be valued differently, other than if people feel that it is much more "useful". But even in that case, vendors and trading markets will support multiple currencies. It seems to me that bitcoin might be useful as a conduit for transactions, but not as a store of value.

ehh, the author is a co-founder of Ably, a real time messaging platform, which competes with Slack in some areas.

Anyone thought Trump had the "best" security on his servers and networks? How long before we find out that his entire network has been hacked by the chinese, russians and many other countries.

how much value do the venture capitalists add?

And regardless of how much good you think a leader actually does. Two big warnings signs of corruption and self enrichment.

- staying in power for a very long time. Putin and Erdogan. - Self enrichment during the time in power.

People should be automatically suspicious why these two want to stay in power for so long, as well as change the laws to give them more power while they're in office.

this is a bit outside looking in, but you get a sense of how easily people can be manipulated, or intimated in a democracy, without proper safeguards. Look at our election results!

this is an article from Jan 31st!

Militarization of our society. Airports are like warzones, with warzone like police and military and security process. Whenever there is a security issue at the airport or the plane, it's taken to the extreme. Where is the common sense in this case? Has the airliners lost their minds? If something like this happens again in the future, I hope other passengers would rise up and prevent security from doing this.

Since Bannon is preparing for a nuclear winter, anything other than defense and military spending is non-essential.

nothing that is happening to this administration is garden variety or normal

The Trump administration will just get more and more desperate as they 1. get totally nothing done, and nothing passed, except singing a bunch of worthless EOs. 2. get caught in various scandals, and the investigations get more and more intense 3. economy stalls

I'm sure Trump / Bannon's ideal scenario would be to have only Breitbart report on Whitehouse news, and Trump will communicate through Twitter. They'll also manipulate various data released through official channels to reinforce their reality. This is the first president that has been arguing that the unemployment rate is higher than the official recognized rate (I know there are various measures) while he is in office.

I doubt trump actually drafts anything. His alt-right neo-nazi minions Bannon will draft it up, and he'll just sign it. I doubt he actually even reads what he signs. He's too busy looking at himself on tv and twittering.