FDA and ANDRO

When I played baseball in high school in eastern Henrico County in 2000, weight lifting was the focus of the offseason.  Certainly, if you played football, you would essentially live in the weight room on a year round basis.  It was practically a mandatory practice where you were expected to be there at least 2 days per week, if not 3 or 4. Baseball and football players alike would take Creatine (http://en.wikipedia.org/wiki/Creatine) or Andro (http://en.wikipedia.org/wiki/Androstenedione) on a regular basis in order to 'bulk up' and build muscle mass.

Andro was later banned by the FDA in April of 2004 for significant health risks commonly associated with steroids.  Were the people who purchased Andro prior to April 2004 doing anything illegal? Were they taking steroids?  Mark McGwire was the spokesperson for this product that was perfectly legal at one point in time.  Now it is not.

Whether it is 'The Cream', 'The Clear', 'Andro', the changes that occur in the pharmacology industry will always occur at a faster rate than the U.S. Congress.   This is a fact.  When Andro is developed by a pharmaceutical researcher, we praise the free market.  After it is banned, we crucify perfectly good people for fighting for the jobs and trying to be the best they can be at their profession.  If high school kids can do it to gain an advantage, major league baseball players will certainly be doing it.  That does not make the substance good for you, but is not a criminal act.

At what point did weight training become commonplace? When do we recognize the changes in support are because we pay super human athletes to do super human things and lift super human weights to do those things that we like to see.  

http://finance.yahoo.com/news/First-Person-Losing-Big-65-ac-2690070448.html?x=0
Kris, I'm sorry for your loss. However, there is opportunity and a positive outlook on life, depending on where you live. Even in real estate. 

My wife and I purchased a 340K fixer upper in Arlington VA in OCT 2008. At appraisal, 4400 square foot lot was valued at 270, and structure was valued at 90K. Our mortgage was 2300/month, with prin, 5.875% int, taxes, insr included. We have remodeled a kitchen, 2 bathrooms, stained hardwood floors, changed an electrical panel box, put down sod, painted etc. Altogether we probably have put an additional 35k into fixing it up. Accoring to zillow, we are estimated at 488K. Recently we refinanced at 4.375% 30 year fixed, dropping piti to a bit over 2000/month. I knew it was a good investment because rental prices in the area, high land leverage ratio, (tear me downs indicate land is undervalued), and we purchased well under the assessed value, all while the stock market was declining about 500 pts a day. We took a huge risk at an extremely opportune time and came out for the better. Counter-cyclical and counter-intuitive always creates the best opportunity. Hold your head up, you'll get 'em next time. livedevelopment.blogspot.com

My title is King of All Kings..

My name is Muammar Muhammad al-Gaddafi. I am badass. 
http://en.wikipedia.org/wiki/Muammar_Gaddafi


I am a close supporter of Ugandan President Idi Amin. In gratitude,  he even married my daughter while in Libya, but she then divorced him.

What exactly is the NCAA?

The NCAA is the National Collegiate Athletic Association, created to profit and exploit the individual rights of young adults at colleges and universities in United States of America. The problem of the NCAA would be easily solved with the creation of a minor league system that pays athletes according to the services they provide.  The cartel collects monies, imposes punishment, and violates the privacy of the members whose services they exploit.

The 14-year 11-billion dollar contract is evidence of the money that is involved in college athletics:
http://www.ncaa.org/wps/portal/ncaahome?WCM_GLOBAL_CONTEXT=/ncaa/NCAA/NCAA+News/NCAA+News+Online/2010/Association-wide/NCAA+signs+new+14year+TV+deal+for+DI+mens+basketball_NCAANews_04_22_10

ABC, CBS, ESPN, BIG10 NETWORK, COMCAST, TIME WARNER (I cold go on) provide services by broadcasting college athletics on television. They collect advertising revenue from NIKE, REEBOK, PEPSI, BUDWEISER, MILLER LITE, PG, GEICO, COCA COLA, and other sponsors to market their products to the public.

Some athletes are compensated fairly by receiving the free education, while others are clearly not. Do people believe we truly have free markets?

What is your favorite cartel?
OPEC
BCS
NCAA
NFL
GULF
SINALOA
TIJUANA
EUROPEAN UNION
FEDERAL RESERVE
IMF
WORLD BANK

The Gap Between Government and Private Securitizaton

The Gap Between Government and Private Securitizaton

Tom Toles' piece in the Washington Post today (<http://www.washingtonpost.com/wp-dyn/content/article/2011/02/12/AR2011021203363.html>)  neglects any mention of the gap between Public and Private Securization, as defined by the GSEs and FHA role in the secondary market vs. the private market.  The government dominates the secondary market today with over 90% of all securitization.  The gap between the two is what needs to be fixed.  During the Housing Crisis of 2007, the GSEs generated less than half  (HMDA, 2007, Loans Sold by Purchaser Type) of all  loans sold.  One of the differences was the standards for loans originated by the GSEs and private market. The securization function of buying whole subprime loans versus subprime securities also offered different results.  Although the GSEs leverage ratios were too high, they insure around half of all loans, they represent a much smaller portion of delinquent loans, and enable the market to provide lower interest rates with their funding advantage.  The creation of a government entity such as the FDIC acts to insure bank deposits would go a long way and play an important role in bridging the gap between the public and private market.

The gap between the public and private market could be bridged over a time horizon of 7-10 years, with the ultimate goal of reducing government involvement to less 50% of all insurance and new production of home purchase and refinance loans. The Consumer Financial Protection Bureau created standards for qualified mortgages to be insured by the public and private market.  Deviation from these standards would invite cream-skimming and cherry picking by private insurers (Calem, et. al), whose risks could become opaque over time, positively correlated with the rate of change in house prices. The trade off between government and private securitization is the insurance risk, counterparty credit risk, transparency, and funding costs involved in a given transaction.

Currently the funding costs are determined in bond auctions by FHLMC and FNMA securities. Liquidity considerations would need to be considered, given the function represented in the price.

http://www.washingtonpost.com/wp-dyn/content/article/2011/02/12/AR2011021203363.html

Information Asymmetries exists between counterparties in the securitization of mortgages.   These risks could be mitigated with additional transparency and information provided in the TBA market.  Complete transparency could be established in a bond trading over public exchanges providing details of a security. For example, a generic ticker symbol could represent all 30-year fixed rate mortgages with FICOs above 700 originated by entity Z in the state of NY.

All mortgages meeting this criteria would be packaged into this bond and traded in the open market, just like any other stock.  The securities would be grouped with similar loan amounts and other characteristics as deemed necessary and serve as a future proxy for the credit characteristics of new househoulds or U.S. consumers in a specific geographic region (U.S. national, Census region, State).

Currently the funding costs of mortgages are determined in bond auctions by FHLMC and FNMA securities. Liquidity considerations would need to be considered, given the function represented in the price.  The transition to an entity that combines the FHLMC and GSE securities to one entity could take a significant period of time given the infrastructure, technology and resources that enable them to insure 30 year fixed rate mortgages at significant funding advantages in the bond market.  The price passes through to consumers when they obtain a mortgage because of the governments ability to tap bond markets and baseline funding cost advantages.  


Throughout history, governments have always stepped in when markets (and other governments) fail.  The investment in U.S. military resources is the ultimate provider of insurance in the event of a crisis (Ferguson, N., Ascent of Money: Financial History of the World) . 

Market Information Asymmetry (M.I.A.) Hypothesis

The Information Asymmetry Hypothesis is a form of counter-argument to the Efficient Market Hypothesis.  In economics, information asymmetry occurs in a transaction when one party is privy to more information than the other.  The information may be collected voluntarily or involuntarily, but markets do not adjust to equilibrium until the information is disposed to both sides of the parties involved in the transaction.  In an asymmetric market, one could achieve returns in excess of the market average if they possess knowledge of information that has not been accepted by the public.

This information could be possessed in common knowledge with insiders. The ex-post structure of private label securities sold by Wall Street investment banks is an example of an asymmetric market. The  collapse of Bear Stearns is an example of a bank that profiteered and failed because of information asymmetries during the boom and bust that transpired from the Financial Crisis of 2007-2008.

When a bank such as BS (pun intended) sells a PLS rated AAA to investors, they are able to produce a profit from the asymmetric market.

In a crowd mentality, it may be difficult at first to convince the insider that security is not truly what it appears to be on the surface.  Only when the cash flows fail to materialize for a large cohort of investors with access to capital, does the information become transparent, at which point the market may or may not adjust efficiently. A sufficient time lag may exist between the point that cash flows and information passes through to the investors. The time lag is correlated with the remittance cycle of the security and the share of their portfolio that the security represents.  An investor with large capital position in a PLS security may/may not liquidate immediately. They could choose to act on their new information and buy a put option or credit-default swap as insurance.  The investor cohort creates a liquidity run and the market adjust to the information as it dissipates through the economic system.

The Efficient Market Hypothesis assumes that all information publicly available is transparent.  The information can be publicly available and opaque until the investor cohort acts on the information with real capital.  This creates even greater information asymmetries because of the large position and access to liquidity of the investor cohort in the failed security. The investor cohort has first mover advantage resulting in a cascading effect as the information transforms from translucent to transparent through market pricing.

The investor cohort experienced information asymmetry when they purchased and liquidated the PLS.  The herd mentality piggy-backs off the liquidation creating a liquidity run as the bottom falls out of the infected markets.
http://en.wikipedia.org/wiki/Information_asymmetry
http://en.wikipedia.org/wiki/Efficient-market_hypothesis

Ranking the jurisdictions: Power Outages in Washington DC

Dominion 1,944
PEPCO 29,000
as of 1/29/2011 at 9:00am