Friday, January 29, 2010

US Federal Reserve holdings update

So the question remains how long the Fed will hold these bad assets for, to maintain the American financial bubble.

Monday, January 25, 2010

US government = Big-Ass hedge fund

Very informative video by Walter Burien, 2000, just go through the first 15 minutes and you'd get a very good idea of how Americans have been screwed via unjustified taxation. E.g. the State of New Jersey claimed a deficit from a budget of 11Billion, yet in their Comprehensive Annual Financial Report, the state government holdings had well over 100Billion...

Most of that money goes to investments in corporate America. Turns out the US government indirectly invests in higher volume than Wall Street!

Here's the Californian reality, $59.83Billion tax revenue just sitting there while the state slides deeper into deficit.

"Collecting more taxes than is absolutely necessary is legalized robbery" - Calvin Coolidge

Do other governments practice similar schemes, too? PROBABLY!

Thursday, January 21, 2010

Profiting off temperature changes

These numbers are from the CME Group weather derivative white paper, where the temperature measures come from local airport weather stations. It looks like an average decline of 14% has occurred in 2009 with respect to the past 10 year average.

Going against the (global warming) crowd, and betting on a cooler summer would have resulted in some nice profit. Just like how all other markets have worked. It's tragic how much politics has gotten involved with weather research.

Monday, January 18, 2010

Key to winning poker

It's about finding the worst players possible. There I "solved" it. So much poker literature on the same probabilities, do-this-if-that stuff yet forgetting to mention the required difference in skill levels.

Since I play Fixed-Limit poker, playing against math-incapable players usually gets me a huge edge where I can play less-than-optimal strategies and still retain a positive expectancy. Therefore when I do play a numerically optimal game, so far the most profitable sessions have occurred with the lowest skilled players.

Sunday, January 10, 2010

China Inc. credit risk

So the Chinese banks have been lending money carelessly, it feels like the sub-prime mortgage thing all over again. Warnings unheeded tend to end badly.

According to the Chinese Central Bank governor at Bloomberg,
Zhou Xiaochuan reiterated government warnings that investment in industries with excess capacity and in redundant infrastructure projects could threaten banks’ loan quality. China’s policy makers are seeking to contain risks from an unprecedented credit boom, in which banks extended 9.21 trillion yuan ($1.3 trillion) of new loans in the first 11 months of 2009.

Then James Chanos states,
China's hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like 'Dubai times 1,000 — or worse'...

It has happened in the west, why not in China, too? It's gonna be a few interesting years coming ahead.

Friday, January 1, 2010

Health Reform = Bailout in Disguise?

AIG and life insurance derivative Wall Streeters come to mind, when we explore those with the most to gain from the coming mandatory health insurance imposed upon Americans. All the while ARM problems (Adjustable Rate Mortgage) and the CRE crisis (Commercial Real Estate) have yet to be addressed, i.e. Wall Street NEEDS this bailout in the form of Health Reform to delay catastrophe a bit longer.

Economists at University of Missouri-Kansas City explain,

...Wall Street packages assets (home mortgages, commodities futures, and life insurance policies) so that gamblers can speculate on outcomes. If you lose your home through a mortgage delinquency, if food prices rise high enough to cause starvation, or if you die an untimely death, Wall Streeters make out like bandits.

Health insurance works out a bit differently: they sell you insurance and then the insurer denies your claim due to pre-existing conditions or simply because denial is more profitable and you probably don’t have sufficient funding to fight your way through the courts. You then go bankrupt (according to Steffie Woolhandler, two-thirds of US bankruptcies are due to healthcare bills) and Wall Street takes your assets and garnishes your wages.