This reads like 2008 all over again. How bad is this?
Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds
51–60 of 81 posts
Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds
#52Wait until Propublica learns that lenders are underwriting based on pro-forma forward Adjusted EBITDA net leverage, not past EBITDA leverage. The whole idea of Adjusted EBITDA is insane to me. We add back "one-time," expenses and other items, but the underlying business ends up seeing similar "one-time," costs every year. The result is that companies often borrow at a leverage ratio that looks 30% smaller than it act…
I think you're losing out if you only look at one metric or the other. Yes, companies can stuff recurring charges into the one-time column in their adjusted EBITDA metric. But there are certainly cases where an adjusted EBITDA metric gives you a better long-term view of the business.
The issue is not adjusted EBITDA per se, it's that stuff gets jammed in there dishonestly.
The only true answer is that if this matters to you then you need to dig into the adjusted EBITDA and see how they are really calculating it and decide how good of a picture of the business it's painting. But there is value there.
Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds
#53Wait until Propublica learns that lenders are underwriting based on pro-forma forward Adjusted EBITDA net leverage, not past EBITDA leverage. The whole idea of Adjusted EBITDA is insane to me. We add back "one-time," expenses and other items, but the underlying business ends up seeing similar "one-time," costs every year. The result is that companies often borrow at a leverage ratio that looks 30% smaller than it act…
That’s the beauty of working in finance, it’s all subjective. A janitor can’t fudge a dirty bathroom, a mechanic can’t fudge a broken car, a plumber can’t fudge cold water into hot water. But in finance, you can make whatever results you want come true for a long time. And if you have the government’s back who can print funds, that long time could be until the country blows up.
>And if you have the government’s back who can print funds, that long time could be until the country blows up.
I wonder about this. I suspect that if the fed keeps buying junk corporate bonds to prop up share prices, there's got to be a reckoning somewhere. For one, it incentivizes stupid & risky behavior among corporations. I wonder if even the fed can absorb the scope of real contractions in GDP with tricks like this. Color me extremely skeptical. Seems like something will have to give.
Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds
#54Wait until Propublica learns that lenders are underwriting based on pro-forma forward Adjusted EBITDA net leverage, not past EBITDA leverage. The whole idea of Adjusted EBITDA is insane to me. We add back "one-time," expenses and other items, but the underlying business ends up seeing similar "one-time," costs every year. The result is that companies often borrow at a leverage ratio that looks 30% smaller than it act…
That’s the beauty of working in finance, it’s all subjective. A janitor can’t fudge a dirty bathroom, a mechanic can’t fudge a broken car, a plumber can’t fudge cold water into hot water. But in finance, you can make whatever results you want come true for a long time. And if you have the government’s back who can print funds, that long time could be until the country blows up.
Disagree - every job has bad work that doesn't appear so until later.
The mechanic who just uses a cheap fix to get you out of there, the plumber whose work results in a frozen pipe that leaks behind a wall, etc.
Finance is no different. The only issue is that in a capitalist society, bankers hold a lot of political/economic influence, and this results in bad incentives for the rest of us.
Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds
#55Wait until Propublica learns that lenders are underwriting based on pro-forma forward Adjusted EBITDA net leverage, not past EBITDA leverage. The whole idea of Adjusted EBITDA is insane to me. We add back "one-time," expenses and other items, but the underlying business ends up seeing similar "one-time," costs every year. The result is that companies often borrow at a leverage ratio that looks 30% smaller than it act…
It’s almost as if economics of ephemeral ideas is just math itself and has nothing to do with the trade of stuff
I get a laugh out of men who say other ephemeral objects can’t exist but stocks and 401ks, indeed even a specific currency or finance is anything more than emotional belief of some hierarchy
“They’re value stores!”
No it’s functional fixedness.
Decades of denialism of science by the god heads and y’all still follow them along believing they’re anything more than just copies of the pasts god headed would be authoritarians
Neuroscience is revealing much about how we transfer and carry on activity in our brains from one another. To suggest history can’t repeat itself seems to not agree with science.
The masters of commerce back in the day bought off the average person with emotionally satisfying promises and literally abusive practices of deflating the value of their efforts to maintain power
The literal expressions in the form of nation state conquest need not exist for an idea like “history repeats itself” to mean something that’s true
It’s random annotations on numbers that don’t mean anything except what we define the annotations themselves to mean.
We don’t get to have say so of course you’re confused. The narrative around economics is out of your hands.
None of these fellows seem to have understood Godel wasn’t talking about the universe. He was putting constraints on consciousness. They keep trying to find that complete recursive set of axioms for economics by ignoring it’s all just people
Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds
#56Earlier quoted context omitted.
That’s the beauty of working in finance, it’s all subjective. A janitor can’t fudge a dirty bathroom, a mechanic can’t fudge a broken car, a plumber can’t fudge cold water into hot water. But in finance, you can make whatever results you want come true for a long time. And if you have the government’s back who can print funds, that long time could be until the country blows up.
Disagree - every job has bad work that doesn't appear so until later. The mechanic who just uses a cheap fix to get you out of there, the plumber whose work results in a frozen pipe that leaks behind a wall, etc. Finance is no different. The only issue is that in a capitalist society, bankers hold a lot of political/economic influence, and this results in bad incentives for the rest of us.
*crony capitalist society
There is a difference.
Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds
#57Wait until Propublica learns that lenders are underwriting based on pro-forma forward Adjusted EBITDA net leverage, not past EBITDA leverage. The whole idea of Adjusted EBITDA is insane to me. We add back "one-time," expenses and other items, but the underlying business ends up seeing similar "one-time," costs every year. The result is that companies often borrow at a leverage ratio that looks 30% smaller than it act…
It’s almost as if economics of ephemeral ideas is just math itself and has nothing to do with the trade of stuff I get a laugh out of men who say other ephemeral objects can’t exist but stocks and 401ks, indeed even a specific currency or finance is anything more than emotional belief of some hierarchy “They’re value stores!” No it’s functional fixedness. Decades of denialism of science by the god heads and y’all sti…
Wut?
Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds
#58Earlier quoted context omitted.
That’s the beauty of working in finance, it’s all subjective. A janitor can’t fudge a dirty bathroom, a mechanic can’t fudge a broken car, a plumber can’t fudge cold water into hot water. But in finance, you can make whatever results you want come true for a long time. And if you have the government’s back who can print funds, that long time could be until the country blows up.
Disagree - every job has bad work that doesn't appear so until later. The mechanic who just uses a cheap fix to get you out of there, the plumber whose work results in a frozen pipe that leaks behind a wall, etc. Finance is no different. The only issue is that in a capitalist society, bankers hold a lot of political/economic influence, and this results in bad incentives for the rest of us.
You are correct. But the intention of my comment is that those failures are evident quickly and more easily, and don’t have as much of a shield from plausible deniability.
Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds
#59This makes complete sense and there’s no question commercial restate is turning into a bit of a house of cards. In some big cities you have many large buildings where their primary tenant was WeWork, which appears to be imploding, and now adding onto that the whole covid WFM shift where companies are starting to cancel and downsize future leases. When you start to dig into the revenue streams behind these buildings a…
What would be interesting is if those holding commercial property in high rent cities start converting commercial properties to residential. It may not be easy or cheap, but I reckon it's mostly rezoning and just putting up walls and adding plumbing.
If this happens, I wonder what happens to cities afterwards where the ratio between residential to commercial in a city shifts permanently. I reckon we could end up with more WFH or flexible work arrangements because commercial real estate becomes scarcer and more expensive.
Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds
#60Earlier quoted context omitted.
The first step is to stop bailing out all this fuckery. Look at your politicians stance on wall street bailouts.
And then look at all the voters’ stances when they find out their 401k don’t look so great, or when their governments have to raise taxes to pay for pensions since the pension fund isn’t worth much.
I think we made a huge mistake going from pension to 401k for retirement. Pensions have a strong incentive to maintain solvency and so will be risk-averse, while with a 401k you are expected to be sophisticated enough to know how risk-averse you are given your retirement time horizon. A lot of people are not sophisticated at all with investing. So the upshot of that is that the 401k becomes a lever to encourage people to get angry when the stock market doesn't do so well. And then you have this artificial propping up of something that's supposed to be an equity market for sophisticated investors. It's great if you're a financial services company because you can hold peoples' retirements hostage with your stupid decisions.