ERICOPOLY

A few weeks ago BAC announced that they are forgiving an average of $150,000 on 200,000 loans. $30 billion dollars. Questions: A) Huge loss this quarter due to this? B) Loans already written down and/or losses reserved for?

Criminals are finding them useful: http://www.pcworld.com/article/241605/criminals_find_new_uses_for_3d_printing.html In response, another Thingiverse user posted a model for printing a part called the lower receiver for the AR-15. If, like me, you're not very knowledgeable about guns, that may not sound like much; but from a legal perspective, the lower receiver is actually a pretty interesting gun part. If you wanted to buy the parts for an AR-15, you could purchase at gun shows or from mail-order catalogs--without any sort of record--every part of the rifle except the lower receiver. By printing out the lower receiver of an AR-15 on a 3D printer, it's possible to complete construction a fully functional, unregistered AR-15.

Scope kills all of the bacteria in your mouth, even the ones that fight infection and disease. Why would you continue to purchase mouthwash that kills helpful bacteria? You wouldn't. The marketing campaign for the new mouthwash would inform you about the benefits of certain oral bacteria. http://en.wikipedia.org/wiki/Oral_ecology As mentioned, oral bacteria also help fight disease-producing germs that try to come in through the mouth. These bacteria work with our immune system to keep our bodies disease free. For example, some of these bacteria produce organic acids that kill the organisms that cause intestinal problems.[2] Without these good bacteria, our immune systems would be constantly bombarded by airborne and saliva-transferred germs. Bacteria are also needed to control the growth of fungus. “Balance between all the different bacteria and fungus are critical” or else the “fungus overgrows and takes over.”[10] So, ironically, though bacteria have the potential to harm us, our mouth and the good bacteria in it are the body’s first line of defense. Sure, I buy the argument that one product might be better than the other. What I am questioning is whether the introduction of the novel product would completely alter our oral hygiene routine. By that, I mean that it is somewhat difficult to believe that people would abandon the daily routine of brushing and rinsing, and instead use a new rinse that is required only twice per week. In my case, I tend to think that I'd continue brushing and continue using some sort of daily rinse...even if the daily rinse were some variation of the new product (at a higher price). All this to say that I'm having a hard time seeing how the newer superior product wouldn't result in incremental revenues (because you'd price it higher), but I acknowledge that it might cannibalize the existing rinse sales. In other words, it would be an incremental return from product differentiation in a market that is otherwise characterised by undifferentiated products (ie, Scope and Listerene are pretty much interchangeable). Now if they could just invent a wash that would completely eliminate the need to floss..... ::) Yes, that makes sense. Gingivitis is still a problem, as is yellow teeth, "furry feeling" on the teeth, bad breath, etc... The rinse that also controls gingivitis/gum disease is probably coming next -- it is a different bacteria that needs to be targeted.

Scope kills all of the bacteria in your mouth, even the ones that fight infection and disease. Why would you continue to purchase mouthwash that kills helpful bacteria? You wouldn't. The marketing campaign for the new mouthwash would inform you about the benefits of certain oral bacteria. http://en.wikipedia.org/wiki/Oral_ecology As mentioned, oral bacteria also help fight disease-producing germs that try to come in through the mouth. These bacteria work with our immune system to keep our bodies disease free. For example, some of these bacteria produce organic acids that kill the organisms that cause intestinal problems.[2] Without these good bacteria, our immune systems would be constantly bombarded by airborne and saliva-transferred germs. Bacteria are also needed to control the growth of fungus. “Balance between all the different bacteria and fungus are critical” or else the “fungus overgrows and takes over.”[10] So, ironically, though bacteria have the potential to harm us, our mouth and the good bacteria in it are the body’s first line of defense.

Shi has been working on the innovation for over a decade with support from Colgate-Palmolive and a company he founded, C3-Jian Inc. http://losangeles.cbslocal.com/2011/11/19/ucla-microbiologist-develops-smart-bomb-against-cavities-tooth-decay/

Hopefully P&G will not buy the patents... BeerBaron I don't get it? Why would it be bad if P&G bought the patents? They certainly have the production, distribution and marketing capacity to profitably deliver such a product to consumers.... Well, it does threaten the cavity-fighting toothpaste market. And a mouthwash that is effective for 4 days after a single rinse might threaten the twice-a-day rinse market. People buy fancy toothbrushes that vibrate or have special "reach" capability. They could be tempted to just buy the patent and never roll out a product.

Hopefully P&G will not buy the patents... BeerBaron Hadn't thought of that. What I'm wondering is how much will they need to charge for a child's braces if the dentists lose "the majority" of an annual $70b business?

A mouthwash that selectively kills only the cavity-causing bacteria -- leaves the other bacteria alone: http://www.dentistry.ucla.edu/news/new-mouthwash-targeting-harmful-bacteria-may-render-tooth-decay-a-thing-of-the-past Dental caries, commonly known as tooth decay or cavities, is one of the most common and costly infectious diseases in the United States, affecting more than 50 percent of children and the vast majority of adults aged 18 and older. Americans spend more than $70 billion each year on dental services, with the majority of that amount going toward the treatment of dental caries.

I did the opposite -- last week I ditched the Macbook and bought an HP laptop with fingerprint login (the fingerprint login alone is a convenience that made it worthwhile). That puts an end to the two year chapter of frustration in my life of trying to figure out how to work that stupid thing (I know a lot about Windows and it drove me crazy at times not knowing how to do various tasks with MacBook, or being forced to use Perl in the absence of a Jscript engine). The thing that bothered me the most is that they cut it from a block of aluminum so that the edges would rub the underside of my wrists raw. Would it kill these guys to bevel the edges of the laptop for comfort? The Apple designers would have women wearing corsettes again if it were stylish.

Inspired by the thought, my colleagues and I ran an experiment at the University of California, Los Angeles. We took a group of 450 participants, split them into two groups and set them loose on our usual matrix task. We asked half of them to recall the Ten Commandments and the other half to recall 10 books that they had read in high school. Among the group who recalled the 10 books, we saw the typical widespread but moderate cheating. But in the group that was asked to recall the Ten Commandments, we observed no cheating whatsoever. We reran the experiment, reminding students of their schools' honor codes instead of the Ten Commandments, and we got the same result. We even reran the experiment on a group of self-declared atheists, asking them to swear on a Bible, and got the same no-cheating results yet again. This experiment has obvious implications for the real world. While ethics lectures and training seem to have little to no effect on people, reminders of morality—right at the point where people are making a decision—appear to have an outsize effect on behavior. Another set of our experiments, conducted with mock tax forms, convinced us that it would be better to have people put their signature at the top of the forms (before they filled in false information) rather than at the bottom (after the lying was done). Unable to get the IRS to give our theory a go in the real world, we tested it out with automobile-insurance forms. An insurance company gave us 20,000 forms with which to play. For half of them, we kept the usual arrangement, with the signature line at the bottom of the page along with the statement: "I promise that the information I am providing is true." For the other half, we moved the statement and signature line to the top. We mailed the forms to 20,000 customers, and when we got the forms back, we compared the amount of driving reported on the two types of forms. People filling out such forms have an incentive to underreport how many miles they drive, so as to be charged a lower premium. What did we find? Those who signed the form at the top said, on average, that they had driven 26,100 miles, while those who signed at the bottom said, on average, that they had driven 23,700 miles—a difference of about 2,400 miles. We don't know, of course, how much those who signed at the top really drove, so we don't know if they were perfectly honest—but we do know that they cheated a good deal less than our control group. http://online.wsj.com/article/SB10001424052702304840904577422090013997320.html?mod=WSJ_hp_mostpop_read

This is one time when he is incorrect. Nothing has a 100% chance. But they love to hear that kind of stuff in the press.

Oh, and I don't just discard people who are bearish. This other guy is a world-class doofus as well: http://www.thestreet.com/story/10766588/citigroup-bofa-to-sextuple-by-2015.html Assuming the same price-to-book ratio for Bank of America in 2015, Bove believes the bank's shares will be worth $99.37 in 2015, well over six times Monday's closing price of $15.40. Bank of America currently trades at 0.73 times book value. The common thread between Bove and Whalen? They both know that grandiose and ridiculous claims get you on the news, because news of course is really entertainment. You have to be entertaining to get invited back on the show. Getting on the show earns you visibility. Being visible is valuable. Then there is "Bad Boy" Mike Mayo too. I saw that guy in a photo where he had his sleeves rolled up, arms folded, rippled veins and showing muscles. I mean, it's completely absurd (he isn't really a big guy, but when you hold a fish you've caught right up to the lens it looks like a trophy). Works for Dennis Rodman, but this is supposed to be boring financial bank analysts. Not this persona where lone wolf bad boy analyst takes on the big banks like a fabled giant slayer. That's entertainment.

Some Bank Stocks Are So Cheap, That Even Christopher Whalen Can't Resist Running A Bank Fund http://articles.businessinsider.com/2011-12-06/wall_street/30480966_1_bank-stocks-bank-fund-institutional-risk-analytics My personal thoughts: the reason why he continues to suggest that the big 4 banks are zombies is that it gets him on TV. Getting on TV gets his name out there. Getting his name out there gets him clients. Last fall it was the absolute worst time for BofA in terms of public opinion. So he gets on TV and says it needs to go bankrupt. He also said last fall that Bank of America doesn't need to close any branches or fire any employees -- that's also the popular thing to say. Now, do you think that Bank of America, operationally, has absolutely nothing wrong with it as Chris Whalen contends? Or is Moynihan the wiser man in righting the expense vs revenue equation? Note that in December of 2010 Whalen said that the banks were in trouble because of their expense vs revenue issue. He argues that declining NIM and regulation was crushing them -- so as BofA begins to address the expenses to bring them in line with the new revenues, Whalen then shifts his posturing and argues that firing employees and closing branches is not the right approach, but rather it's all about bankruptcy now because of legacy liabilities? Would the bankruptcy option somehow fix the NIM and regulation? Whalen has stated that the top four banks are zombies. That of course includes Wells Fargo.

More tabloid worthy information from Chris Whalen -- this time about Wells Fargo and written a couple of weeks ago: http://www.theburningplatform.com/?p=33943 One former Wells banker said to me at the HousingWire REthink conference: “At Wells you do the business first, then figure out the issues later. They are the most aggressive lender in the U.S. and have been for some time.” The only significant business line that Wells can use to support its earnings and balance sheet is real estate lending. Like all of the largest banks, Wells has been dragging its feet on resolving bad assets because delay is the only option. Since the start of the crisis, Wells has made an art form out of failure to disclose, particularly when it comes to the credit loss, doubtful and past-due experience on the bank’s retained loan portfolio and related loss reserves. While Wells’ peers among the largest banks have increased written and oral disclosure regarding loan losses and related data during the past three years, Wells consistently has stonewalled the investment and analyst communities. Most recently, Wells has even defied a subpoena from the SEC, failing to produce documents for a formal investigation regarding possible fraud in the creation of residential mortgage backed securities that the bank sees as “inappropriate.” A representative of one of the largest buy-side mortgage conduits in the U.S. told Institutional Risk Analytics that the accounting treatment of “customer relationships” by Wells is allowing the bank to take market share from all other lenders, large and small, but that the medium-term impact on the bank’s balance sheet and earnings could be decidedly negative when the bank eventually is forced to moderate its aggressive sales tactics.

18 months ago Chris Whalen said the top 4 banks are insolvent and should be restructured. http://dailybail.com/home/chris-whalen-we-understand-bank-of-americas-problem-they-are.html

It does seem like a good thing: The weighted average interest rate on loans in the securities listed in Freddie Mac’s statement as most affected by the buybacks is 5.91 percent, compared with typical rates on new loans of less than 4 percent, according to Bloomberg data.

The mark-to-market loss on Fairfax's CDS hedges years ago, and now on Fairfax's deflation hedges... Are they much different from JPM's hedges being in a temporary loss position? Or is it an entirely different thing? How much safer would JPM be if they were to be unhedged for whatever event they were hedging for? That's what I don't hear the media asking.

That's the audio webcast. My complaint is that every single time, EXCEPT THIS TIME, they post the slides here: http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-presentations Citigroup does a much better job. Citigroup posts not only the slides, but the entire transcripts of the presentations including the Q&A. They leave them up there as an archive, whereas BofA is going to permanently remove that webcast replay link before they have the next presention. And BofA has never posted the transcript. Come to think of it, this time there doesn't seem to have been any presentation. They seemed to go straight into the Q&A.

I wonder if "Project New BAC" cut the position of the guy who's job it is to put the presentations up on the Investor Relations website.

I wonder what Moynihan said today at the Deutche Bank presentation. I take it there weren't any positive surprises.

Sure, after Sanjeev teaches me how to go to 50% cash when it's at the top of these little mini-rallies.

http://www.cnbc.com/id/47503768 The banks argued that the Fed stress tests and capital plans taken together don't make sense because it doesn't allow for the banks to cut their repurchase program during times of losses. The banks argued they would eliminate/curtail share buybacks if they were taking on water.. The Fed argued that even as the losses were mounting in 2008, the banks kept on buying back shares. So they effectively told the banks that past behavior says otherwise. So, is JPM going to buy back shares now when they said they would act otherwise? Might be related to the spat with the Fed over the capital planning, might not be.

I've been on Fidelity's website today reading about their "Personal Retirement Annuity". There is a 0.25% annual annuity charge, but if your contract is in excess of $1m then the charge is only 0.1%. That 0.1% annual fee could quite easily be a much better deal than paying taxes on your gains every year. Their pitch: • Tax-deferred growth potential of investment • Low annual annuity costs • Any earnings not taxed until withdrawn • The ability to invest as much as you want—no IRS contribution limits • Array of investment options, many rated highly by Morningstar® Here is the list of funds: http://fundresearch.fidelity.com/annuities/category-performance-annual-total-returns-quarterly/FPRAI My complaint is that our tax laws have given this to us -- it's basically an unlimited-contribution IRA plan. Why can't they just go the extra mile and let us make unlimited contributions to our IRA plans? It's like the law was written by an insurance company. I'll bet if somebody proposed to have unlimited contributions to IRA plans, the insurance industry would lobby hard to have the idea killed.

Read some good accounts of extreme stress conditions. Such as the account of Sgt. Paul McGee's experience in Korea as told in The Coldest Winter by David Halberstam. I found it gave me perspective. Also, remember that you are going to die, and so is everyone you love. Now, go back to worrying about your money the most...

It's a lot easier to be patient if you like your day job. What's the worst that can happen? Keep doing what you love? Now, if instead you hate your day job... it can be very hard waiting for your ship to come in.