John Hempton's Blog

John Hempton Commented on Fannie Mae's results - oh, and what if Bank of America reported the same way... by John Hempton

2009-11-10T20:20:03Z

Sorry to take so long to leave an answer to the question...

The question is have I considered the banking industry has changed in a way that makes it less likely to make operating profits.

Yes - continuously. However the answer - and I am pretty sure of this - is that banking profits will generally go UP after the crisis.

There is a simple reason - which is that the crisis will dramatically reduce the competition to banks that have their funding sorted out.

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There are two big exceptions - one of which applies to BofA.

Banks who are reliant on hot-money funding (brokered deposits or Wall Street funding) will have a hard time - but banks with big natural deposit bases (like BofA) will not. Fannie and Freddie will not because their funding carries a more explicit guarantee.

The other exception (which applies to BofA) is that banks that a dependent on ripping off consumers on late fees and hidden charges (say with credit cards) will have a rougher time because the government will legislate many of these practices out of existence.

But as a general rule basic banking should be more profitable.

I should answer questions in both this place and my blog in future.

John

John Hempton Commented on Are the Spanish banks hiding their losses? Looking at the American data by John Hempton

2009-10-06T07:07:55Z

Ah - alas - as TPM changed my feed to avoid my adverts winding up as blog posts they lost a bit.

Yes - the Hungary/Austria imbalance is real. The two banks are one which begins with R (name escapes me) and Erste Bank.

I always liked Erste Bank less. But it has gone from 40 to 28 via 7...

Its a classic crisis affected bank.

John Hempton recommended Are the Spanish banks hiding their losses? Looking at the American data by John Hempton

2009-10-05T15:45:03Z

John Hempton Commented on Are the Spanish banks hiding their losses? Looking at the American data by John Hempton

2009-10-05T12:26:06Z

They have 10 percent non-accrual in their commercial property business.

This is not subprime securitisation - but it is the form of voodoo.

Caution is not that rate of balance sheet growth.

There is NO ISSUE here of whether the company is facing pretty sharply increasing losses in the US. Spain however is the issue.

John Hempton Commented on Are the Spanish banks hiding their losses? Looking at the American data by John Hempton

2009-10-05T11:09:06Z

Thank you for that feedback.

Living in Spain you will have seen the business overbuild... its clearly enormous.

The question is not whether there are losses - but how large. I really have little opinion - as I just have no basis for judging...

But that they are cool as cucumbers in the US... that is intriguing.

NOBODY in US banking is as cool as a cucumber - but if they are then - hey they are not noticing. Everyones book is STILL getting worse - particularly in commercial property. This bank is overloaded in the US with commercial property - and its numbers are bad.

I guess I have seen a dozen regioanl banks where the mid-ranking execs do not realise there is a problem until there is... but there is clearly a problem here.

John Hempton Commented on Are the Spanish banks hiding their losses? Looking at the American data by John Hempton

2009-10-05T10:27:25Z

That format was not my choice. TPM took my feed.

But - hey - you can scroll. I wrote it which was a little more difficult.

John Hempton Commented on Ducks in sewerage treatment works, drug resistance, dumb luck and investing by John Hempton

2009-10-04T22:47:38Z

Actually Syvanen - it looks to be quite well documented. The issue is that the ducks get a low background level of Tamiflu - not a dose which prevents them from getting the flu.

If they got the full dose the drug would be prophylactic - and the flu would not take hold. Its the flu transferring to them in the presence of low background levels of Tamiflu.

Tamiflu resistance is becoming quite widespread - look it up. This appears to be the mechansim...

(Contra: some Tamiflu resistent swine flu has been noticed - and swine flu unlike most flus seems to avoid birds...)

John Hempton Commented on Ducks in sewerage treatment works, drug resistance, dumb luck and investing by John Hempton

2009-10-03T06:01:17Z

The concentrations are likely to be problematic ONLY in rivers and sewerage treatment works. The water once it gets to the ocean is probably so dilute that it does not matter.

The entire dose winds up in the river - it does not break down and sewerage treatment works remove none of it. Its probably OK in Sydney for instance as there is high grade treatment followed by ocean outfall. China would be the other way around.

There is a nice paper on the web which measures concentrations by a bunch of Swedish scientists.

John Hempton Commented on Ducks in sewerage treatment works, drug resistance, dumb luck and investing by John Hempton

2009-10-02T15:40:47Z

I know there was some self promotion in it. TPM take my blog feed automatically - but the blog is explicitly the blog of an investment company.

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I have written this email to TPM...

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There are a few blog posts on my blog which really are not aimed at a TPM crowd - today for instance - which I would have written very differently for the TPM audience.

Is it possible to work out a way of selectively feeding to TPM? Some I figure are right up your alley - others are not.

I just do not want to waste your readers time.

John Hempton recommended The Anti Public Option Pledge: No Health Care For Me! by Katie Halper

2009-09-30T11:19:44Z

John Hempton Commented on The new rapid SEC by John Hempton

2009-10-01T22:47:26Z

Its exactly that - a simple effective scam with very little consequences except for the people who put $5000 in at the advice of a cold-call broker or a fradulent stock tipping sheet or the like.

My blog used to have Google adverts on them. I removed them after finding penny stock bloggers advertising on them.

I have found frauds advertising on the website of the New York Post with monotonous regularity. The margins for theft are mouth-watering.

Short sellers (and I am one) are not doing something particularly ethical - but they are reducing the margins of the scamsters - which reduces their incentives... and that is a good thing.

John Hempton Commented on The new rapid SEC by John Hempton

2009-10-01T01:00:08Z

The real game here is that the stock was about 80 percent owned by insiders at a guess.

The insiders probably sold $5-10 million in shares.

Those shares would normally be worthless - but they were pumped.

The $5-10 million they won - they were losses to someone else.

Any speculator that was lucky to buy it on the way to $4 and to sell it - they were also winners.

Anyone who could get a short sale done (alas not me) they were also winners.

The losers were the people who purchased it on the pump.

There were plenty of them.

There are few easier ways to steal ten million dollars than via stock fraud. Its a crime that is usually unpunished.

At the moment all we have is a stock suspension. My guess is that the malefactors get away with this one too.