Posts filed under “Books”

It’s official. Puerto Rico defaults

Puerto Rico Defaults – Our new Muni Book
Davd Kotok
Cumberland, August 1, 2015

 

It’s official. Puerto Rico defaults.

Here is a full list of discussions.

As my colleague and co-author, Michael Comes, has described in detail, this is a default on a “moral-obligation” bond. Litigation will certainly start next week. A moral ob. requires an appropriation, and the PR legislature failed to appropriate the money. The reason is simple: they don’t have it. Investors were warned in the documents that were issued with the bonds, so their claim may be a weak one.

But the headline risk of an actual default is serious enough. John Mousseau, the other co-author of our new book, Adventures in Muniland, has written a chapter on headline risk and how to deal with it in the management of portfolios. The new book has just been released and is available on Amazon right now. There is detailed work on Puerto Rico and an extensive review of the muni markets over the last seven years.

When my co-authors and I set up the month of August to release the book, we did not plan for a US jurisdiction and territory to default during the first week the book was available. But here it is: Adventures in Muniland by Michael Comes, John Mousseau, and me. Perhaps it will be a good addition to your summer reading list if you are interested in Munis.

We have a crunch schedule between now and Wednesday morning: Larry Kudlow radio, Alix Steel and Kathleen Hays at Bloomberg TV and radio, Reuters and Maria Bartiromo at Fox Business are scheduled. By Wednesday morning I will be flying to Bangor, Maine. The three authors and the book will be at the Camp Kotok annual gathering at Leen’s Lodge. PR’s default will certainly be a topic of discussion.

Whoddathunkit! Puerto Rico coincidentally defaults in the week that a new book on the financial crisis and the municipal bond market goes to print. Sometimes the timing can accidentally work out.

At Cumberland, we manage many millions in the municipal bond space. Our muni clients are in 49 states. These are all separate accounts. Not one of them owns a single uninsured PR bond. And the insured PR bonds that are owned are very carefully selected according to their structure and priority-claim nature so that we have good reason to believe we will be getting paid. We do not own any uninsured COFINA or GO. We haven’t owned them for some time. We are also avoiding many other American jurisdictions that are seeing deteriorating credit. That includes several states and many cities and agencies.

There are 90,000 possible muni-issuing jurisdictions in the US. This $3.7 trillion market sector requires research and detailed examination. For us this is a daily activity. For interested readers, our book may assist you.

Summer in Muniland is going to get hotter.

~~~

David R. Kotok, Chairman and Chief Investment Officer, Cumberland Advisors

Category: Books, Fixed Income/Interest Rates, Think Tank

My 2015 Summer Reading List

Summertime is here. The days are still getting longer, the kids will soon be in camp, the beach beckons. With Memorial Day behind us, we have 12 weeks before Labor Day sneaks up on us. My goal each year is to read three books a month between the holidays that mark the unofficial start and…Read More

Category: Books, Economy, Investing, Psychology, Science, Weekend

Fragile By Design: A Review

For over 20 years, Fiderer has been a banker covering the energy industry. Before that he was a tax lawyer. He wrote extensively about the crisis in Huffington Post until early 2011, when there was blowback in response his characterization of claims made by Peter Wallison, about Fannie and Freddie’s role in the mortgage crisis, as “lies.” He is currently trying to finish a book on the rating agencies in his spare time.

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Pundit-Level Arguments Dominating Elite Business Schools Financial Crisis Discussions

by David Fiderer

 

Fragile By Design: The Political Origins of Banking Crises and Scarce Credit is a tour de force, and not in a good way. The book’s history of U.S. banking is troubling. The narrative covering the period from the Civil War until the 1990s is highly selective and misleading. Worse, the section that covers U.S. banking over the past 25 years is a set of distortions and falsehoods that should be obvious to anyone with a basic knowledge of the recent financial crisis.

Yet the book has been greeted enthusiastically. It was recently considered by the Financial Times and McKinsey for the Business Book of the Year Award, and its thesis about the recent financial crisis has been presented by the authors at events hosted by the World Bank, the Bank of England, the San Francisco Fed, the Atlanta Fed and the SEC. “[I]f you are looking for a rich history of banking over the last couple of centuries and the role played by politics in that evolution there is no better study,” wrote The New York Times reviewer. “It deserves to become a classic.” The book’s false portrayal of the recent crisis, left unchallenged, is likely to be used as a standard reference work for conservatives intent on rewriting history.

The two authors, Prof. Charles Calomiris of Columbia and Prof. Stephen Haber of Stanford, are well known. Calomiris’s 67-page CV cites, among many accomplishments, his stints as a Visiting Research Fellow at the International Monetary Fund and as a Senior Fellow at the Bank of England, as well as his 21-year affiliation with the American Enterprise Institute. Haber, who teaches Political Science at Stanford, is a Senior Fellow at Stanford’s Hoover Institution.

The book’s central argument is that the proximate cause of the financial collapse was the risky lending mandated by Community Reinvestment Act (CRA) and by affordable housing goals set for government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. This familiar narrative, identified as “The Big Lie” by Joe Nocera, Barry Ritholtz, and others, is still deemed valid by a lot of people who should know better. Simply put, loan performance at Fannie and Freddie has always been exponentially superior to that of any other sector in residential mortgages, whereas the loan performance of private label residential mortgage securities has been radically worse than that of other sectors in the mortgage market. Most of the credit losses were tied to private mortgage securities. To state otherwise is a lie.

Calomiris and Haber embrace The Big Lie, and double down by tracing everything to Bill Clinton’s grand strategy of income redistribution as a response to economic inequality or as a sop to community activists at ACORN. Their story is as follows: in the 1990s banks sought government approval for proposed mergers and soon recognized that such approval was subject to certain conditions set by Clinton and his urban activist allies. The banks were compelled to book vast numbers of recklessly imprudent loans extended to the urban poor, by way of the CRA and GSE affordable housing goals.

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Category: Books, Think Tank

Open Secret of Libor Manipulation

open secretOpen Secret: The Global Banking Conspiracy That Swindled Investors Out of Billions is the new book written by Erin Arvedlund.

The book goes behind the scenes of the elite firms that trafficked in LiBOR based products, including Barclays Capital, UBS, Rabobank, and Citigroup to show the negative impact they had on both ordinary investors and borrowers.

Erin’s claim to fame was a column she wrote in Barron’s in the early 2000s outing Bernie Madoff as a fraud. It was a national bestseller titled Too Good to Be True.

Here is Yahoo:

“LIBOR, the London Interbank Offered Rate, is a global benchmark for interest rates. It’s tied to everything from mortgage rates and student loan rates to complex financial derivatives. And guess what? For a very long time it was rigged.

Now, multiple lawsuits are pending, and that could mean some money back for some investors, traders and consumers.

LIBOR is set each day by a group of bankers, based on estimates of rates at which banks would expect to borrow money from each other. It’s a system built on trust, not math. Regulators were tipped off back in 2007 that banks were fixing rates, and by the summer of 2012, an ugly scandal was revealed. An estimated $300 trillion in financial securities worldwide are based on LIBOR.

Video after the jump . . .

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Category: Books, Fixed Income/Interest Rates, Legal

Mauldin: Bubbles, Bubbles Everywhere

Bubbles, Bubbles Everywhere By John Mauldin August 15, 2014     Easy Money Will Lead to Bubbles Excess Liquidity Creating Bubbles Humans Never Learn Anatomy of Bubbles and Crashes A Few Good Central Bankers Jack Rivkin at His Best Dallas, San Antonio, and Washington DC     The difference between genius and stupidity is that…Read More

Category: Books, Sentiment, Think Tank

Priceonomics: Everything is Bullshit

I am about halfway through this, whose title reminded me of Sturgeon’s Law (90% of Everything is Crap):   Check it out on Amazon.

Category: Books, Digital Media

Clash of the Pundits: Morgan Housel Interviews Josh Brown

Hey now:

clash

Morgan speaks with Josh about Clash of the Financial Pundits: How the Media Influences Your Investment Decisions for Better or Worse.

There are a lot of smart investors. There are a lot of entertaining people. There are few of both. Josh Brown, The Reformed Broker blogger is one of them. He is as insightful as he is hilarious, which, after bursting onto the scenes a few years ago, made him almost overnight one of the biggest names in the financial media.

Josh’s new book, Clash of the Financial Pundits, co-written with Jeff Macke, digs deep into the financial punditry business to show why pundits talk and investors listen. It’s a incredibly good read.

Josh sat down with Morgan earlier this week.

Have a look:

 

 

 

 

Category: Books, Video

How to Build a Better Bailout

“To avert panic, central banks should lend early and freely, to solvent firms, against good collateral, and at ‘high rates.’ ” -Walter Bagehot, Lombard Street   Former U.S. Treasury Secretary Timothy Geithner has been promoting his new book, “Stress Test: Reflections on Financial Crises.” I haven’t read it, and based on what I have heard…Read More

Category: Bailout Nation, Bailouts, Books, Really, really bad calls, Taxes and Policy

Piketty vs John Stuart Mill’s Marketplace of Ideas

Source: Amazon Any reader of this site has likely heard about the book currently setting the world of economics aflame. “Capital in the Twenty-First Century” was written by a French economist named Thomas Piketty. It is on the New York Times best-seller list and is currently sold out, with its publisher scrambling to print more…Read More

Category: Books, Philosophy, Really, really bad calls, UnGuru

24 Books You’ve Never Heard Of But Will Change Your Life

24 Books You’ve Never Heard Of But Will Change Your Life 24 Books You've Never Heard Of – But Will Change Your Life from Ryan Holiday

Category: Books, Digital Media