Ben_H's Profile
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Entry: Is The AIG Tax Constitutional?
posted by Ben_H
Mar 19, 2009 6:13PM
@24- It has been structured as an excise, not as a part of the income tax, so it is definitely more of an "entirely new tax" than an extension of an existing one.
@17 - yes, indeed, the bar for the "ex post facto-ness" of a law rising to a due process violation is very high in tax or civil law as opposed to criminal law, but the bar is not infinitely high, as you can see in Carlton, Hemme, Millikin, etc. It's just that Congress and state legislatures have generally not been unreasonable in the taxes they have tried to levy retroactively; generally we are talking about retroactive closing of loopholes or changing of rates on existing schemes back to the beginning of a calendar year or back to the year of the last legislative session. I suspect that if Congress decided to, say, impose an excise tax on income from mortgage securitization back to the year 2002 (to come up with an extreme example), it would indeed run into due process issues.
Entry: Is The AIG Tax Constitutional?
posted by Ben_H
Mar 19, 2009 6:18PM
@17 -- yes, you're right... not really ex post facto per se, just the fact that retroactivity can raise due process issues.
Entry: Is The AIG Tax Constitutional?
posted by Ben_H
Mar 19, 2009 6:27PM
Interesting that Senate brought the threshhold down to $100mio in TARP funds. Was thinking before that the House version would inadvertently spare smaller institutions that took more money relative to their size (to the extent that such institutions exist).
Entry: Is The AIG Tax Constitutional?
posted by Ben_H
Mar 20, 2009 6:49AM
You have to imagine that firms will think twice about participating in TALF, lest consequences for participation be imposed retroactively.
Entry: Why Not Just Turn Off Their Heat And Hot Water 'Til They Return The Money?
posted by Ben_H
Mar 20, 2009 9:08AM
I wonder if employment/compensation contracts have "illegality" clauses in them?
Entry: More Fun With The Treasury
posted by Ben_H
Mar 23, 2009 5:42PM
Ms. Goodman used to be at Moore. She knows her stuff.
posted by Ben_H
Mar 24, 2009 10:37AM
@33
Hear, hear. I can't tell you how many times GS has called up to pitch some deal that we two weeks later read has gone tits-up; or to buy some tail risk for I-swear-the-trader-just-needs-a-mark-purposes which somehow then winds up in the money. I very quickly learned not to be the sucker at GS's table. But other people in the firm TO THIS DAY come to me and whine "the GS relationship manager wonders why your area doesn't do much business with them" and lecture me how if we don't do more biz with them we won't be "in the club" that gets to look at their "juicy deals." Geez, it's like some club, with always another level of VIP behind yet another door or velvet rope. But the doors never end...
Entry: New York Tea (Treasuries) Party?
posted by Ben_H
Mar 25, 2009 4:07PM
@11 levered ETF rehedging means that you have a position in serial correlation. High vol and high mean-reversion and you'll be screwed.
Entry: Opening Bell: 03.26.09
posted by Ben_H
Mar 26, 2009 8:58AM
Whatever navy captures the pirates should indeed hang them from most convenient yard-arm. Of course, the second-guessing, victim-mongering pukes of the MSM will shortly thereafter start running stories along the lines of "The last time Fatima Faarah saw her husband Mohammed, he was setting off from this small port in Puntland on a fishing voyage. He never returned. Mohammed was hanged aboard the U.S.S. Whatever as an alleged pirate. But people in the village say he and the 6 men hanged alongside him were simple fishermen..."
Entry: Special Scamming Rights?
posted by Ben_H
Apr 03, 2009 2:01PM
This is negative for GBP, EUR, JPY, and USD and positive for every overlevered EM country's currency. Before, the EM country would face a torrent of hard currency buying from USD (or EUR) indebted local corps/individuals. The EM country had a limited level of reserves to meet that demand. Now, with a grant of SDRs, the country's reserves are higher -- it can get hard currency by using the SDRs and can then intervene to meet hard currency demand from the locals. One reason USD has held up well in this crisis is that EM countries are USD-indebted and deleveraging requires local agents to buy USD (or default). Now they can get the USD via the SDR route rather than via the market. Unequivocally EM bullish and USD bearish.
Entry: Small Texas Firm Picks Off JPM, BAC, and RBS
posted by Ben_H
Jun 11, 2009 2:16PM
Guys on our ABS desk had this idea a while back, but legal shot it down... *sigh*
Entry: Structured Products Back In The Line Of Fire
posted by Ben_H
Jun 16, 2009 10:42AM
@4
Seems different to me. You could have a principal-protected note where the issuer is a bankruptcy-remote SPV or is secured with Treasuries or whatever. It's surely dumb for an investor not to do the work to figure out who is offering the principal-protection, but not inconceivable by any means. On the other hand, how exactly can a sentient human buy a reverse-convertible and not know that one can end up with stock? Why is YHOO mentioned? Why is your coupon 11%? This geezer's looking for a litigation do-over, seems to me.
Entry: Mad Max Is Back At It
posted by Ben_H
Jun 19, 2009 5:00PM
Amazing that an American legislator tries to legislate protection for foreign governments -- the very *hardest* debtors for creditors to collect from -- against creditors who are often managing American money. Anything to stick in the capitalist "man." I'm reminded of when Ecuador defaulted back in '99. The author of that default, Jamiel Mahuad was ousted from the presidency a few months after defaulting. He found refuge at Harvard's KSG thanks to his buddy Jeff Sachs, whose opinion of Mahuad probably soared for Mahuad's having defaulted on foreign creditors. Of course, one of Ecuador's bigger bondholders was Harvard's own endowment!
Incidentally, those same Ecuadoreans, having managed a 35% haircut on the debt they defaulted on in '99 (which itself was the product of a debt deal with something like 40% NPV reduction in the early 90s) recently defaulted on the bonds that came out of the 2000 restructuring. This, despite the fact that they are sitting on billions in foreign currency reserves and have just enjoyed years of stratospheric oil prices. The president convoked some cockamamie "debt commission" that decided that the bonds were somehow "illegitimate" and that Ecuador could simply stop paying. Having created FUD among bondholders, the Ecuadoreans bought back a substantial portion at or below 30 cents on the dollar. Then, they defaulted on the rest and made a tender offer for the rest. It cleared at 35, backed by the threat of continued non-payment. Now, if creditors found themselves stripped of what little recourse the Foreign Sovereign Immunities Act leaves them, where do you suppose that auction might have cleared? And how many countries might follow Ecuador's willful default.
Oh well... perhaps Maxine is really thinking far, far ahead... hoping that some Chinese legislator will return America the courtesy when Chinese bondholders sue on their devalued Treasuries years hence...
Entry: $2 Trillion Debt Is "Manageable"
posted by Ben_H
Jun 23, 2009 10:11AM
Was at a presentation held by one of the big IBs where ratings agency analysts responsible for US and Western Europe talked about their outlook. Interestingly, the audience was 100% emerging markets investors. The vultures are circling!
Entry: Caption Contest Tuesday
posted by Ben_H
Jun 23, 2009 10:16AM
"I, Fuld, am a hero to my own valet"
Entry: Kazakh Bankers Get Back To Basics
posted by Ben_H
Sep 23, 2009 11:19AM
A nice scheme. These guys had Alliance provide guarantees to offshore companies that in turn borrowed from offshore banks using the Alliance guarantee. ALliance collateralized the guarantee with its portfolio of US Treasury securities. The treasuries remained on balance sheet, with no disclosure that they were pledged. When Alliance finally blew up, the offshore banks seized the treasuries. Unpleasant surprise for Alliance's creditors and bondholders!
Entry: Kazakh Bankers Get Back To Basics
posted by Ben_H
Sep 23, 2009 12:53PM
@Portable. Yup, still here. My comments are on hiatus though (except here, of course!)
Entry: Is The AIG Tax Constitutional?
posted by Ben_H
Mar 19, 2009 5:56PM
From the opinion in Hemme:
"One of the relevant circumstances is whether, without notice, a statute gives a different and more oppressive legal effect to conduct undertaken before enactment of the statute."
Ummm, in the AIG case, YES.