Monthly Archives: April 2009
Unemployment Update
Unemployment rates rose in all of the nation’s largest metropolitan areas for the third straight month in March, with Indiana’s Elkhart-Goshen once again logging the biggest gain. The United States Labor Dept. reported Wednesday all 372 metropolitan areas tracked saw … Continue reading
The Connection
It was surely a surprise when the WSJ hired Thomas Frank to write an opinion column. Anyone who has read either of his bestsellers, What’s The Matter With Kansas? or The Wrecking Crew understands that his view of American politics … Continue reading
How Government Guaranteed Bank Debt May CRUSH Public Borrowing
http://www.businessinsider.com/will-government-guaranteed-bank-debt-hurt-public-borrowing-2009-4 It’s no secret the the federal government’s need to borrow has sky-rocketed. Thanks to the various bailouts and stimulus measures, expenditures by the feds have increased by one third and are likely to grow even higher. Meanwhile, the economic … Continue reading
Swine Flu Deflation
http://blogs.telegraph.co.uk/ambrose_evans-pritchard/blog/2009/04/28/swine_flu_deflation The markets have been remarkably relaxed about the rise in the World health Organization pandemic alert Phase 4 (sustained human to human transmission) – and tonight perhaps to Phase 5. They seem not to care that confirmed cases of … Continue reading
ONE QUARTER OF “GOING CONCERNS” TO FAIL!
The auditors of nearly one-quarter of companies feel that the companies may not live out the year. Auditors have become increasingly doubtful about their clients’ ability to continue as going concerns, according to the most recent report on the subject by Audit … Continue reading
“Those who hope for a swift return to normalcy are deluded”
We appear to be less than halfway through writedowns, and the fundraising and recapitalizations to date are falling short of the equity hits. Wolf thinks the ability to raise funds privately is nada. Banks also have significant maturing debt in … Continue reading
Potential Costs of Next Pandemic
…..beside all the pain and suffering….. From Reuters’ Tan Ee Lyn this past weekend: … health experts have long warned that the next flu pandemic was overdue and urged countries around the world to prepare for the dramatic economic impact … Continue reading
How libertarian dogma led the Fed astray
http://www.ft.com/cms/s/0/705574f2-3356-11de-8f1b-00144feabdc0,s01=1.html The Federal Reserve has been hobbled by at least two major shortcomings that were primarily responsible for the current and several previous credit crises. Its failure to spot the importance of changing financial markets and its commitment to laisser … Continue reading
Plight of Carmakers Could Upset All Pension Plans
http://www.nytimes.com/2009/04/24/business/24pensions.html?_r=1&ref=your-money Decisions that the government will make soon on the future of General Motors and Chrysler could accelerate the decline of traditional pension plans, which have sheltered generations of workers from an impoverished old age. Ron Bloom, a member of … Continue reading
Geithner Death Watch Continues
From the New York Times: Last June, with a financial hurricane gathering force, Treasury Secretary Henry M. Paulson Jr. convened the nation’s economic stewards for a brainstorming session. What emergency powers might the government want at its disposal to confront … Continue reading
Regulators are supposed to tell you to obey the law
Regulators are supposed to tell you to obey the law, not to disobey the law. If you’re the CEO, your first obligation is not to your regulator, it’s to your institution and shareholders.” -Jonathan R. Macey, deputy dean of Yale … Continue reading
In The News
As if the global economy, let alone the world itself, needed another thing to worry about, swine flu comes along. Having lived through the experience of SARS 6 years ago, the Hang Seng and Shanghai stock markets were hard hit. … Continue reading
Accounting rules say the darndest things
So the accounting rules say that a decline in the market value of a bank’s debt thanks to increased credit default swap spreads — that is, because investors think you’re more likely to fail — counts as a a profit. … Continue reading
Trickle Down…..
Check out this photo from today’s Times, about Iceland’s rejection of the free-marketeers.
Useless Finance
Useless finance A derivative is a contingent claim whose payoff depends on the performance of some other financial instrument or security. For instance, an American equity call option gives the purchaser of the call the right (but not the obligation) … Continue reading
A Rant
Get used to it… Slacker Friday: “I have now lived through three major episodes in my life where the political elite have told me quite plainly that neither I nor my fellow citizens are sufficiently mature to suffer the public … Continue reading
Securitization is broken
Finger of blame points to shadow banking’s implosion Gillian Tett, Financial Times. Makes the oft forgotten point that what has imploded is securitization, not so much bank lending. But I still think she misses the point a tad. Securitization ex … Continue reading
Control Without Accountability
I’ve been unimpressed with this oft-quoted bit from Phillip Swagel’s insider account of the Paulson Treasury. Legal constraints were omnipresent throughout the crisis, since Treasury and other government agencies such as the Federal Reserve must operate within existing legal authorities. … Continue reading
The Quiet Coup
The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs … Continue reading
Pension Fund Crisis
Morneau Sobeco released the results of its Performance Universe of Pension Managers’ Pooled Funds for the first quarter of 2009: According to the report, in the first quarter of 2009, diversified pooled fund managers posted a median return of -2.2% … Continue reading
Too Insolvent Not To Fail
WASHINGTON (Reuters) – Insolvent financial firms must be allowed to fail regardless of size, a top Federal Reserve official said on Tuesday, as two prominent economists urged Congress to break up the biggest U.S. banks. In blunt criticism of the … Continue reading
Mortgages Falling to 4% Become Bernanke Housing Focus
http://www.bloomberg.com/apps/news?pid=20601213&sid=aMtoObmwHi74&refer=home
Strategizing Acquisitions In Bad Times
In these times of unprecedented economic turmoil, an opportunity exists for small businesses to utilize the current financial “perfect storm” to grow through strategic acquisitions. With changes in the economic climate and the halt in highly leveraged lending, companies that … Continue reading
Year End Strategies
One thing is certain: It was a very bad year for investors. And while this will probably come as cold comfort for most people, your investment losses will serve up certain tax benefits. It’s worth spending some time now, before … Continue reading
Damned If You Do…..
Google the expression “damned if you do, damned if you don’t,” and a picture of Timothy F. Geithner ought to pop up. The Treasury secretary embodies everything that’s perceived to be wrong with the government’s response to the economic and … Continue reading →