NDFI is a acronym for "non deposit taking financial institution" and then there's this . . . .
Investment bank, hedge fund and broker balance sheets are about half the size of the commercial banks in the US and about one-quarter the size in Europe. Both assets and liabilities of NDFIs are dominated by repos, meaning that NDFIs lend and borrow based upon collateral of assets that are constantly marked to market. As asset prices fluctuate, leverage must constantly be adjusted.
Which gets me back to the media and a recommendation that I respectfully suggest to every host on CNBC, Bloomberg and Fox Business Network -- when interviewing a member of the bullish cabal, ask the following questions:
2. Do you have the flexibility to raise or reduce the cash component of your portfolio?
3. What was your cash position two years ago, what was your cash position a year ago and what is your cash position today? And why were your cash positions at those levels?
4. Have you ever been bearish?
5. How have the deteriorating economic conditions and worsening profit picture affected your market and economic views?
6. What change in conditions from current expectations would lead to a further change in your market views?
I might add, in bull markets, the obligation of the media is to ask the bears the same questions.
Borrowers in California who fight foreclosure can stretch the process to 18 months, said the chapter president of the California Association of Mortgage Brokers and president of Cal-Pro Mortgage Inc. in Stockton.
That doesn't take into account the woman he knows who hasn't made a mortgage payment in eight months and hasn't heard from her lender.
``Now she's afraid to mail in a payment for fear it'll come to somebody's attention,'' he said.
April 3 (Bloomberg) -- Bear Stearns Chief Executive Officer Alan Schwartz said the fifth-largest U.S. securities firm might have survived if the Federal Reserve had acted earlier to lend money directly to investment banks.
Since we can never know, it's totally ridiculous that a major media outlet would even give this type of thinking credibility by printing it. This is like me saying, I might not have been hurt walking down the street if the ball hadn't rolled in front of me . . . duh.
It's time to convert retirement savings from an IRA to a Roth IRA model. Collect the estimated $5.8 trillion of deferred taxes now and apply this to resolving the Social Security and Medicare shortfalls.
If we wait, expect as much as half of that money to disappear. The Treasury and Congress can simplify rollovers from mediocre investment choices to brokerage accounts, and simplify conversions to Roth IRAs. This way, the government could collect trillions in deferred taxes before the money is lost to a bear market.
The rollover and conversion choices should be voluntary, and premature withdrawals should be discouraged. Investors would be wise to remember that the reason they lost money in the last bear market was the rigid buy-and-hold investment strategies forced on them by traditional advice.
Congress could provide incentives to simplify the process by spreading the taxes over a three to five-year period, capping the income-tax rate for Roth IRA conversions, and removing the current income and age tests to qualify. Savers should look before they leap, of course, but they should be allowed to "leap."
British Airways, based in London, has canceled more than 200 flights since the terminal opened March 27, after computer log-on failures for baggage handlers and delays at staff car parks sparked turmoil at the airport, Europe's busiest.
British Airways already is Europe's worst airline for lost luggage and the second-worst for delayed bags, according to the Air Transport Users Council. The flights canceled today were domestic or European. All long-haul services were scheduled to operate as normal, the airline said.
In 1993, Berkshire paid $433 million for the Maine-based company. Rather than use cash, Buffett used Berkshire Class A stock to fund the purchase. That Berkshire stock is worth eight times more now, giving the Omaha, Nebraska-based insurance and investment company a $216 billion market value.
Dexter didn't make it that long. It ended shoe production in the United States and Puerto Rico in 2001, and Berkshire folded what was left into its H.H. Brown Shoe Group unit.
"What I had assessed as durable competitive advantage vanished within a few years," Buffett wrote on Friday. "By using Berkshire stock, I compounded this error hugely. That move made the cost to Berkshire shareholders not $400 million, but rather $3.5 billion. In essence, I gave away 1.6 percent of a wonderful business -- one now valued at $220 billion -- to buy a worthless business."
"To date, Dexter is the worst deal that I've made," Buffett went on. "But I'll make more mistakes in the future - you can bet on that. A line from Bobby Bare's country song explains what too often happens with acquisitions: 'I've never gone to bed with an ugly woman, but I've sure woke up with a few.'"
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