BloggingStocks http://www.bloggingstocks.com BloggingStocks http://www.blogsmithmedia.com/http://www.bloggingstocks.com/media/feedlogo.gif BloggingStocks http://www.bloggingstocks.com en-us Copyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/<![CDATA[Which is worse? Bernard Madoff or bank executives who say they can't live on $500,000 a year? ]]>http://www.bloggingstocks.com/2009/02/07/which-is-worse-bernard-madoff-or-bank-executives-who-say-they-c/http://www.bloggingstocks.com/2009/02/07/which-is-worse-bernard-madoff-or-bank-executives-who-say-they-c/http://www.bloggingstocks.com/2009/02/07/which-is-worse-bernard-madoff-or-bank-executives-who-say-they-c/#commentsFiled under: ,

The two circumstances sort of symbolize the U.S.'s decade of descent, although opinions certainly will vary on what led to them. At minimum, they don't represent the most flattering moment in the nation's history.

Money manager Bernard Madoff, if proven guilty, will have substantially hurt, if not ruined, the financial lives of hundreds of investors -- from charitable organizations to Zsa Zsa Gabor -- in a $50 billion Ponzi scheme.

Meanwhile, on the heels of President Barack Obama's $500,000 compensation cap for executives and employees who receive federal government bailout assistance, criticisms have been voiced in and around Wall Street and in think tanks, with some executives complaining that the compensation is not high enough and/or that the federal government has no right to limit how much someone can be paid.

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Which is worse? Bernard Madoff or bank executives who say they can't live on $500,000 a year? originally appeared on BloggingStocks on Sat, 07 Feb 2009 11:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bailout billbanking sectorBernard MadoffCEO compensationexecutivesinthenewsMadoffObamaObama administrationponzi schemerescue billSECSat, 07 Feb 2009 11:30:00 EST<![CDATA[Traders preparing for another 'hang on to your hat' Friday ]]>http://www.bloggingstocks.com/2009/02/05/traders-preparing-for-another-hang-on-to-your-hat-friday/http://www.bloggingstocks.com/2009/02/05/traders-preparing-for-another-hang-on-to-your-hat-friday/http://www.bloggingstocks.com/2009/02/05/traders-preparing-for-another-hang-on-to-your-hat-friday/#commentsFiled under: , , , ,

It looks like tomorrow could very well become yet another "hang on to your hat Friday" or another edition of "As The U.S. Economy Turns."

Still, hopefully it won't become another 'down goes the Dow' day with an extended visit from our old friend, you guessed it, Dow 8,000. But analysts and economists haven't ruled the latter out.

The reason? The January 2009 jobs report, to be released by the U.S. Labor Department at 8:30 a.m. EST.

Following nearly a week in which a Fortune 500 company announced a major downsizing daily, and on the heels of December 2008's loss of 524,000 jobs, most professionals in economics and public policy circles are preparing for another sobering jobs report.

Continue reading Traders preparing for another 'hang on to your hat' Friday

Traders preparing for another 'hang on to your hat' Friday originally appeared on BloggingStocks on Thu, 05 Feb 2009 18:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bailout billbanking sectorbearsbullsfiscal stimulus packageinthenewsjobsrescue billU.S. Labor Departmentunemploymentunemployment rateThu, 05 Feb 2009 18:30:00 EST<![CDATA[Bailed out bank executives, if smart, will accept Obama's $500k cap]]>http://www.bloggingstocks.com/2009/02/04/bailed-out-bank-executives-if-smart-will-accept-obamas-500k/http://www.bloggingstocks.com/2009/02/04/bailed-out-bank-executives-if-smart-will-accept-obamas-500k/http://www.bloggingstocks.com/2009/02/04/bailed-out-bank-executives-if-smart-will-accept-obamas-500k/#commentsFiled under: , ,

With the Obama administration's $500,000 executive pay cap for bailed out companies imposed, the more important and more determining question concerns how the American people respond.

Ironically, the public's reaction may hinge on how Wall Street and the broader financial community reacts.

Historically, Americans have opposed pay caps and generally looked unfavorably on government -- particularly federal government -- efforts to interfere with market-based valuations of talent / labor. In a nutshell, the public favors a minimum wage but believes "the sky's the limit" regarding compensation; if a board of directors, business partner or negotiated contract says you're worth $10 million a year in salary and bonus, then you deserve $10 million year.

Continue reading Bailed out bank executives, if smart, will accept Obama's $500k cap

Bailed out bank executives, if smart, will accept Obama's $500k cap originally appeared on BloggingStocks on Wed, 04 Feb 2009 19:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bailout billCongressDemocratsexecutive compensationGeithnerinthenewsObamaObama administrationpay cappublic opinionRepublicansrescue billTARPWed, 04 Feb 2009 19:30:00 EST<![CDATA['Bailout Bill' giving away money in Times Square -- big heart and wads of cash]]>http://www.bloggingstocks.com/2009/02/04/bailout-bill-giving-away-money-in-times-square-big-heart-an/http://www.bloggingstocks.com/2009/02/04/bailout-bill-giving-away-money-in-times-square-big-heart-an/http://www.bloggingstocks.com/2009/02/04/bailout-bill-giving-away-money-in-times-square-big-heart-an/#commentsFiled under: , , ,

Bad times can bring out the best and the worst of us. There is a character with a huge heart and apparently stacks of cash for needy folks willing to wait in line for it in Time Square.

He has been cast as "Bailout Bill" and he has created a stir because he is giving away money directly to those in need, figuring that the folks on the bottom rung of the ladder need just as much help as those at the top, that the government has been bailing out.

According to reports, In order to get the money people have to go to the 'Bailout Booth' in the heart of Manhattan's Times Square; to a small cubicle, where, depending on your story you can get a cash stipend to help out with a present financial dilemma.

Continue reading 'Bailout Bill' giving away money in Times Square -- big heart and wads of cash

'Bailout Bill' giving away money in Times Square -- big heart and wads of cash originally appeared on BloggingStocks on Wed, 04 Feb 2009 13:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Bailout BillBailoutBillBRK.ABRK.Bcashcharityhelping the poorHelpingThePoorSheldon LiberSheldonLiberWed, 04 Feb 2009 13:00:00 EST<![CDATA[Senate, House seen passing second-half of revised TARP]]>http://www.bloggingstocks.com/2009/01/15/senate-house-seen-passing-second-half-of-revised-tarp/http://www.bloggingstocks.com/2009/01/15/senate-house-seen-passing-second-half-of-revised-tarp/http://www.bloggingstocks.com/2009/01/15/senate-house-seen-passing-second-half-of-revised-tarp/#commentsFiled under: , , ,

The Senate is expected today to vote on the revised, second $350 billion TARP allotment, while the House Speaker also indicated she expects the U.S. Congress to approve the measure.

House Speaker Nancy Pelosi, D-California, indicated to ABCNews that Congress would approve President-elect Barack Obama's request for another $350 billion in bailout / rescue funds because this time it will be spent by "a president who will enforce the law." The House vote is expected to be close, however.

To block Obama's request, both the House and Senate must vote to withhold the money, assuming each chamber has the two-thirds vote to override a potential Obama veto.

On Wednesday, Senate Republicans won assurances from Obama administration officials that the administration would use the money for financial institutions, not for aid to auto manufacturers and other industries, Bloomberg News reported. Republicans have criticized the Bush administration's decision to lend $13.4 billion to assist the recovery of General Motors (NYSE: GM) and Chrysler.

Is tracking TARP money feasible?

Both Senate and House lawmakers have called on greater accountability and transparency to 'verify and track' where the money is going, but economist David H. Wang said that isn't feasible.

Continue reading Senate, House seen passing second-half of revised TARP

Senate, House seen passing second-half of revised TARP originally appeared on BloggingStocks on Thu, 15 Jan 2009 09:51:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bailout billCongressDemocratsHouseinthenewsRepublicansrescue billSenateTARPThu, 15 Jan 2009 09:51:00 EST<![CDATA[Barney Frank proposes TARP overhaul, including executive pay cap ]]>http://www.bloggingstocks.com/2009/01/10/barney-frank-proposes-tarp-overhaul-including-executive-pay-cap/http://www.bloggingstocks.com/2009/01/10/barney-frank-proposes-tarp-overhaul-including-executive-pay-cap/http://www.bloggingstocks.com/2009/01/10/barney-frank-proposes-tarp-overhaul-including-executive-pay-cap/#commentsFiled under: ,

If you think change -- and big change -- in Washington won't start until the gentleman from Illinois is inaugurated on January 20, think again.

U.S. Rep. Barney Frank, D-Mass. and chairman of the House Financial Services committee, late Friday announced the new, proposed restrictions for the release of the second $350 billion in TARP funds, and some are stunners.

Under Frank's bill:

  • The pay of executives employed by TARP would be capped in a standardized manner, regardless of what type of aid they received under the program. It would also make the pay limit provision retroactive to existing program participants.

"If they don't like it, they can give the money back," Frank said, referring to the retroactive limits on pay, Reuters reported Friday.

  • The U.S. Treasury would have to dedicate at least $40 billion to reduce home foreclosures, with a plan developed by March 15.

Continue reading Barney Frank proposes TARP overhaul, including executive pay cap

Barney Frank proposes TARP overhaul, including executive pay cap originally appeared on BloggingStocks on Sat, 10 Jan 2009 10:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bailout billbank sectorBarney FrankCongressDemocratsinthenewsObamaRepublicansrescue billTARPSat, 10 Jan 2009 10:10:00 EST<![CDATA[Once again, in auto dispute, it's 'rhetoric for dollars' time in Washington ]]>http://www.bloggingstocks.com/2008/12/12/once-again-in-auto-dispute-its-rhetoric-for-dollars-time-in/http://www.bloggingstocks.com/2008/12/12/once-again-in-auto-dispute-its-rhetoric-for-dollars-time-in/http://www.bloggingstocks.com/2008/12/12/once-again-in-auto-dispute-its-rhetoric-for-dollars-time-in/#commentsFiled under: , , , ,

Could 10 or 12 economically conservative Republican Senators prevent a Big Three auto rescue and the cessation of domestic auto manufacturing operations?

Indeed they could. Many of the conservative Republicans come from states where General Motors (NYSE: GM), Ford (NYSE: F) and Chrysler do not have a large manufacturing presence. Hence, there's likely to be little home-front pressure.

That fact, combined with the filibuster era - - whereby lawmakers routinely abuse the Senate's unlimited debate power to oppose any legislation that does not have 60 votes - - the total need to invoke 'cloture' or cut-off debate - - means a dedicated cadre of Senators has the political and procedure power to defeat any legislative item below the 'sweet 60.' Hence, in that sense a dedicated, numerical minority can undermine the will of the majority, the will of the people.

Now the real auto rescue debate begins

What's more likely is that the economic conservative Senators will use the filibuster weapon as a means to extract additional concessions from Big Three stakeholders - - primarily the United Auto Workers. And their goal is obvious enough: a UAW defeat will drive labor costs lower and represent another victory for those who believe the lower wages fall for the typical person and worker, the better. In this argument, wages are merely another cost in the production machine, and the less money allocated for this expense category - - as with any expense category - - the better.

Conversely, the UAW will argue that any attempt to weaken them - - or bypass them - - will hurt/eliminate the only organized power that the typical person and worker has at the bargaining table and in the American economic system. They'll also argue that a living and decent wage for all working Americans is the foundation for a strong, stable U.S. economy, with sustainable GDP growth.

Each side is likely to offer exaggerated business and economic statistics in favor of their arguments, in a Washington process known as 'rhetoric for dollars' that frequently accompanies appropriations bills and government loans. The economic conservatives are likely to argue that UAW total compensation costs are 'wildly above' those for auto workers in Japan and Germany. The UAW will likely argue that it's already made 'major concessions' in previous contracts, without noting that work rules haven't changed that much.

Continue reading Once again, in auto dispute, it's 'rhetoric for dollars' time in Washington

Once again, in auto dispute, it's 'rhetoric for dollars' time in Washington originally appeared on BloggingStocks on Fri, 12 Dec 2008 14:42:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>auto sectorbailout billBush AdministrationDemocratsfeaturedObama AdministrationRepublicansrescue billUAWUnited Auto WorkersFri, 12 Dec 2008 14:42:00 EST<![CDATA[Week ahead to feature grim stats: Will stocks rise?]]>http://www.bloggingstocks.com/2008/12/07/week-ahead-to-feature-grim-stats-will-stocks-rise/http://www.bloggingstocks.com/2008/12/07/week-ahead-to-feature-grim-stats-will-stocks-rise/http://www.bloggingstocks.com/2008/12/07/week-ahead-to-feature-grim-stats-will-stocks-rise/#commentsFiled under: , ,

Last Friday, the big economic news was the shocking loss of 533,000 jobs which spurred President Bush to accept this weekend a bailout plan for the automobile industry likely to be announced in the week ahead. So did stocks crash on Friday as a result of the bad jobs news? No -- the Dow rose 259 points. And despite the daily failure of the stock market to fit the simple storyline that stocks go down with bad news and up with good, this media mental model persists.

In the week ahead, there is likely to be more bad news. Here are three such items:

  • Spiking unemployment filings. On Thursday, first time unemployment filings are likely to top 500,000 for the fourth straight week.
  • Slumping retail sales. On Friday, retail sales are likely to decline for the fifth month in a row -- the longest such streak since the numbers were first collected.
  • Non-forecasting companies. A few companies are expected to report their results and claim that they lack visibility -- code for the future looks dark and they don't want to speculate publicly about just how dark.

So what will the market do this week? I have absolutely no idea. But it would not surprise me if it rose and fell wildly for no apparent reason.

Continue reading Week ahead to feature grim stats: Will stocks rise?

Week ahead to feature grim stats: Will stocks rise? originally appeared on BloggingStocks on Sun, 07 Dec 2008 10:56:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bailoutbailout billBailoutBillbailoutsearnings reportsEarningsReportspresident bushpresident obamaPresidentBushPresidentObamaretail salesRetailSalesunemploymentunemployment rateUnemploymentRateSun, 07 Dec 2008 10:56:00 EST<![CDATA[Major central banks seen tolerating gradual dollar decline, but no 'brutal' moves]]>http://www.bloggingstocks.com/2008/10/05/major-central-banks-seen-tolerating-gradual-dollar-decline-but/http://www.bloggingstocks.com/2008/10/05/major-central-banks-seen-tolerating-gradual-dollar-decline-but/http://www.bloggingstocks.com/2008/10/05/major-central-banks-seen-tolerating-gradual-dollar-decline-but/#commentsFiled under: , , ,

With passage of the rescue bill, and the U.S. Treasury's upcoming actions to stabilize credit markets through a variety of tools/mechanisms, one area that is likely to experience negative consequences is the dollar.

Simply, more dollars borrowed (or more dollars printed) almost always means each dollar is worth less. Economist Richard Felson said a gradual, orderly decline in the dollar "would be expected, and is almost considered the default response, given increased U.S. government borrowing." The dollar closed Friday down about one-half cent to $1.3775 and $1.7713 versus the euro and the British pound, respectively.

Central banks monitoring dollar's level

However, leaders of the world's major industrialized economies will not, in Felson's interpretation, accept a sudden and/or inordinate decline in the dollar. "Along with increased stress on the financial system, 'brutal' currency movements, as [European Central Bank President Jean-Claude] Trichet has said, throws everything out of whack by making it hard for companies to project costs of foreign operations," Felson said. "For these reason and others I believe the major central banks will intervene to support the dollar, should the U.S. Treasury's extra borrowing or the U.S. Federal Reserve's extra lending for the bailout lead to too large or too quick of a decline in the dollar."

Continue reading Major central banks seen tolerating gradual dollar decline, but no 'brutal' moves

Major central banks seen tolerating gradual dollar decline, but no 'brutal' moves originally appeared on BloggingStocks on Sun, 05 Oct 2008 09:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bailout billBank of EngandBank of JapanBOEBOJBritish poundcurrenciesdollarECBeurofeaturedFedforeign exchangemonetary policyrescue billU.S. TreasuryyenSun, 05 Oct 2008 09:10:00 EST<![CDATA[It's probably best to not watch sausage or legislation being made ]]>http://www.bloggingstocks.com/2008/10/04/its-probably-best-to-not-watch-sausage-or-legislation-being-mad/http://www.bloggingstocks.com/2008/10/04/its-probably-best-to-not-watch-sausage-or-legislation-being-mad/http://www.bloggingstocks.com/2008/10/04/its-probably-best-to-not-watch-sausage-or-legislation-being-mad/#commentsFiled under: ,

Much has been written about the add-ons or 'pork' in the rescue package passed by the U.S. Congress and signed President Bush.

The add-ons, which increased the bill's projected cost by $130-$165 billion, depending on the analysis, have been viewed as another example of "special interest lobbying," "sneaky ways to get pet projects passed," "ripping off the taxpayer" and/or as simply un-American.

Well, the truth is, add-ons in the United States have taken place in every Congress since the nation was founded. Further, no one really knows who made the first legislative "deal," but to say that senators in ancient Rome or officials in Greece, did not trade votes for projects or patronage would be a stretch.

"Democracy is the worst system ...

Of course, it's much more ethical -- some would call it virtuous -- to propose a bill, then get a large majority to render a decision on the program/policy/law solely on its merits, driven by whether the bill is in the nation's interest.

And likewise, add-ons/pork can increase federal spending by substantial amounts, which makes it harder for the federal government -- or any government, for that matter -- to live within its means.

Continue reading It's probably best to not watch sausage or legislation being made

It's probably best to not watch sausage or legislation being made originally appeared on BloggingStocks on Sat, 04 Oct 2008 17:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bailout billcomityDemocratsearmarksfeaturedgdplegislative processlobbyinglogrollingpatronageporkRepublicansrescue billU.S. CongressU.S. economyU.S. TreasurySat, 04 Oct 2008 17:10:00 EST<![CDATA[Comfort Zone Investing: Don't call this a bailout]]>http://www.bloggingstocks.com/2008/10/04/comfort-zone-investing-dont-call-this-a-bailout/http://www.bloggingstocks.com/2008/10/04/comfort-zone-investing-dont-call-this-a-bailout/http://www.bloggingstocks.com/2008/10/04/comfort-zone-investing-dont-call-this-a-bailout/#commentsFiled under: , ,

Ted Allrich is the founder of The Online Investor and author of the book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

The bill to buy assets from banks and other institutions, just passed by the House and the Senate, is not a bailout for them. Now we can look forward to some liquidity flowing into the markets. And here are the benefits of the bill:

First, it doesn't simply throw money at a huge problem, and it certainly doesn't buy pools of mortgages or securities at values that are above market, at least it's not supposed to. What it does do is give the Treasury the authority, limited at first, to buy certain types of securities with stipulations attached. The first one is that the assets are purchased by negotiation and at prices determined by the buyer, not the seller. If the government uses the best minds from the mortgage markets, especially in the fixed income and mortgage-backed securities fields, there will be professional valuations done on each purchase.

Continue reading Comfort Zone Investing: Don't call this a bailout

Comfort Zone Investing: Don't call this a bailout originally appeared on BloggingStocks on Sat, 04 Oct 2008 10:35:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>Bailout billComfort Zone Investingfeaturedfinancial crisisTed AllrichSat, 04 Oct 2008 10:35:00 EST<![CDATA[Martin Wolf: Wall Street and Main Street are streets that meet]]>http://www.bloggingstocks.com/2008/10/02/martin-wolf-wall-street-and-main-street-are-streets-that-meet/http://www.bloggingstocks.com/2008/10/02/martin-wolf-wall-street-and-main-street-are-streets-that-meet/http://www.bloggingstocks.com/2008/10/02/martin-wolf-wall-street-and-main-street-are-streets-that-meet/#commentsFiled under: , , , ,

Financial Times columnist Martin Wolf inquires, do Americans understand their financial and economic system?

Anger at Wall Street's - - and regulators' - - lapses is justified, but at the end of the day to oppose the rescue package is at once self-defeating, contradictory, self-punitive, and borders on nihilism, Wolf states. Take your pick regarding which is the most damaging.

Congressional representatives, particularly conservative Republicans, but also others, opposed the flawed rescue plan as a bailout for the rich, and as a statement against 'socialism.' Socialism? Yes, the plan is flawed, Wolf states, but the ruin that will result from rejecting the plan will destroy the legitimacy not of socialism, but of the market economy. Exactly what are the packages' opponents fighting?

The Congressmen/women also say that they are 'taking a stand for Main Street and against Wall Street.' A contradiction, Wolf writes. Wolf: Wall Street and Main Street are streets that meet. That is what streets do.

Then there is the future. What is the opponents' alternative? The loudest voice here appears to be 'let the market sort things out by itself,' under the assumption that the damage, costs, and negative consequences really won't be that bad. Wolf: This is not prudent, if the early 20th century's experiences are a guide.

Continue reading Martin Wolf: Wall Street and Main Street are streets that meet

Martin Wolf: Wall Street and Main Street are streets that meet originally appeared on BloggingStocks on Thu, 02 Oct 2008 14:16:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bailout billbanking sectorbond marketcapitalismcorporate capitalismcredit marketsDemocratsEuropean Unionfeaturedfiscal policyforeclosuresgdpglobalizationinterest ratesMain Streetmain street u.s.a.MainStreetMainStreetU.s.a.Martin Wolfmixed capitalismmonetary policymortgage backed securitiesRepublicansrescue billsocialismU.S. CongressU.S. economyU.S. TreasuryThu, 02 Oct 2008 14:16:00 EST<![CDATA[AT&T says credit market stress crimping operations]]>http://www.bloggingstocks.com/2008/10/01/atandt-says-credit-market-stress-crimping-operations/http://www.bloggingstocks.com/2008/10/01/atandt-says-credit-market-stress-crimping-operations/http://www.bloggingstocks.com/2008/10/01/atandt-says-credit-market-stress-crimping-operations/#commentsFiled under: ,

AT&T Chairman / CEO Randall Stephenson said Tuesday that his company was unable to sell any commercial paper last week for terms longer than overnight.

"Your ability to plan for investment is obviously affected. You kind of don't know what your cost of capital six months from now is going to be," Stephenson told The AP. "We'll just be very guarded, cautious in terms of where we invest, very guarded and cautious in terms of hiring and capital spending. We'll see where this situation goes."

Economist David H. Wang told BloggingStocks Wednesday AT&T's (NYSE: T) challenges selling commercial paper underscore the nature of the financial crisis and the need for lawmakers / policy makers in Washington to act, "with all deliberate speed."

"When a cash-rich giant like AT&T, the corporate equivalent of an 850 Tri-merged FICO score, has trouble selling commercial paper longer than overnight, a bell should go off in your head," Wang said, adding that he does not own shares of any telecom company.

Continue reading AT&T says credit market stress crimping operations

AT&T says credit market stress crimping operations originally appeared on BloggingStocks on Wed, 01 Oct 2008 18:40:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>bailout billbond marketcredit marketsfinancial crisisinthenewsrescue billTU.S. CongressWed, 01 Oct 2008 18:40:00 EST<![CDATA[Rescue bill's revision seen as opportunity to recapitalize banks, refinance mortgages]]>http://www.bloggingstocks.com/2008/10/01/rescue-bills-revision-seen-as-opportunity-to-recapitalize-banks/http://www.bloggingstocks.com/2008/10/01/rescue-bills-revision-seen-as-opportunity-to-recapitalize-banks/http://www.bloggingstocks.com/2008/10/01/rescue-bills-revision-seen-as-opportunity-to-recapitalize-banks/#commentsFiled under: , , , ,

With the U.S. Senate expected to debate and vote on a revised bailout/rescue bill in the next day or so (famous last words), two revisions the world's greatest deliberative body should incorporate are bank recapitalization options and funding to refinance mortgages, economists say.

BloggingStocks' Peter Cohan has written extensively on the need to recapitalize banks, and economist Richard Felson concurs. However, Felson argued that the revised rescue bill should give banks and other institutions the option of either offering their distressed/bad debts to the U.S. Treasury in its reverse auction or accepting a mutually agreeable investment by the U.S. Treasury into the institution.

Creating options for stressed banks

"This will give banks more options, and in my view more incentives to participate in the rescue plan. If the plan just contains asset purchase provisions some banks may balk at the prospect of selling some assets at a fire-sale price of 10 cents or 15 cents on the dollar, and that may prevent some distressed assets from being removed from the system, delaying the financial system's recovery," Felson said. "Offering to buy a stake in the bank offers another recapitalization option."

Continue reading Rescue bill's revision seen as opportunity to recapitalize banks, refinance mortgages

Rescue bill's revision seen as opportunity to recapitalize banks, refinance mortgages originally appeared on BloggingStocks on Wed, 01 Oct 2008 16:01:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bailout billbanking sectorbond marketcredit marketsDemocratsFederal Housing AdministrationFHAforeclosuresgdpmortgage backed securitiesmortgagesRepublicansrescue billU.S. CongressU.S. economyWed, 01 Oct 2008 16:01:00 EST<![CDATA[Dollar mixed as recession fears meet flight to safety]]>http://www.bloggingstocks.com/2008/10/01/dollar-mixed-as-recession-fears-meet-flight-to-safety/http://www.bloggingstocks.com/2008/10/01/dollar-mixed-as-recession-fears-meet-flight-to-safety/http://www.bloggingstocks.com/2008/10/01/dollar-mixed-as-recession-fears-meet-flight-to-safety/#commentsFiled under: , , ,

The dollar was mixed early Wednesday as talk that a revised bailout bill is heading toward the U.S. Senate for a vote met with concerns that the U.S. economy will enter a recession regardless.

The dollar rose about one-half cent to $1.4036 versus the euro and three-quarters of a cent to $1.7730 versus the British pound, but fell about three-tenths yen to 106.10 versus Japan's yen.

Raising dollars vs. economic fundamentals

Currency Trader Andrew Resnick said the currency market is in a tug-of-war between raising dollars and U.S. economic fundamentals. "If the U.S. economic fundamentals were the gauge, the dollar would be falling because the U.S. is in poor shape," Resnick said. "But banks are hoarding cash and there's a global trend toward raising dollars, which is bullish for the dollar."

"It may seem strange to want more dollars from the country with the biggest financial and economic problems, but the dollar is still the world's reserve currency and in times of fear there is a flight to safety, which in the currency market is the dollar," Resnick said. He added that he was presently flat or had no open currency trading positions.

Continue reading Dollar mixed as recession fears meet flight to safety

Dollar mixed as recession fears meet flight to safety originally appeared on BloggingStocks on Wed, 01 Oct 2008 11:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bailout billbanking sectorbond marketBritish poundbudget deficitcredit marketsdollarECBeuroEuropean Central BankFedinterest ratesinthenewsmonetary policymortgage backed securitiesnational debtrescue billU.S. Federal ReserveyenWed, 01 Oct 2008 11:00:00 EST<![CDATA[Pearlstein: Lack of rescue package threatens global financial system]]>http://www.bloggingstocks.com/2008/09/30/pearlstein-lack-of-rescue-package-threatens-global-financial-sy/http://www.bloggingstocks.com/2008/09/30/pearlstein-lack-of-rescue-package-threatens-global-financial-sy/http://www.bloggingstocks.com/2008/09/30/pearlstein-lack-of-rescue-package-threatens-global-financial-sy/#commentsFiled under: , , ,

Washington Post business columnist Steven Pearlstein does not mince words: too many people just don't get it.

Moreover, yours truly is not one to alarm, and typically views 'sweeping and dramatic statements' with a journalist's skepticism and a scholar's critical review.

But when the best economists you talk to, and business executives, and others in financial and investment circles, start reaching the same conclusion, from decidedly different vantage points, the dramatic statement begins to take on more weight, becoming more compelling.

'The reality of the facts on the ground'

Further, as Pearlstein incisively points out, there are reasons why a considerable portion of the American people are not 'getting it' regarding how serious the current situation is. Politicians are more concerned about ideology, partisan posturing, and teaching people a lesson -- if you can believe that they could be so irresponsible (my astonishment added, not Pearlstein's). Financiers have been very slow to admit to greed, arrogance, and incompetence. And foreign government leaders still view the financial crisis as 'an American problem.'

But none of the above changes what Pearlstein, and what my closest economist colleagues (David H. Wang, Richard Felson, Peter Dawson, M. Chandler, and Glen Langan) all argue is "the reality of the facts on the ground," to borrow a phrase from Israel's former Prime Minister and Defense Minister Ariel Sharon. Namely, that a massive, global deleveraging is taking place, and that absent a systemic rescue/intervention by the U.S. Government, in conjunction with interventions by other governments around the world, the world risks the bursting of a credit bubble that threatens to bring down the global financial system.

Continue reading Pearlstein: Lack of rescue package threatens global financial system

Pearlstein: Lack of rescue package threatens global financial system originally appeared on BloggingStocks on Tue, 30 Sep 2008 18:10:00 EST. Please see our terms for use of feeds.

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The U.S. Congress' rejection of the $700 billion rescue bill generated a predictable response from private banks late Monday night. The cost of borrowing rates surged the most on record as banks were increasingly reluctant to lend to one another.

The London Interbank Offered Rate, or LIBOR, rose an astounding 431 basis points to 6.88% Monday night, Bloomberg News reported Tuesday.

Meanwhile, the Euro Interbank Offered Rate rose to a record 5.05%, reflecting cash hoarding, rising fear, and a breakdown in normal trading.

Economist David H. Wang told BloggingStocks he expects overnight interest rates to remain abnormally high until the U.S. Congress passes a rescue bill, or U.S. and international leaders find another mechanism to get bad assets out of the financial system.

"There's plenty of liquidity in the system. The problem is no one is lending to one another, and that's fear, basically. Until we implement policies to reduce and eliminate fear, the fear problem is going to grow and there will be more bank failures and other failures," Wang said. "There is no end in sight for this crisis until the psychology has been changed."

Continue reading Until fear is checked, credit freeze up will not ease

Until fear is checked, credit freeze up will not ease originally appeared on BloggingStocks on Tue, 30 Sep 2008 13:50:00 EST. Please see our terms for use of feeds.

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Wall Street protesters New York Times Chief Financial Correspondent and Columnist Floyd Norris, appearing on the "Charlie Rose" talk show Monday night on PBS, offered an insight that sort of summed up the financial crisis, the need for a rescue bill, and the reason a considerable portion of the American public doesn't like the rescue package.

Floyd Norris said: "At times it does appear that Wall Street is saying 'Bail us out or the U.S. economy is ruined.' And, if you're a citizen of the U.S., it's perfectly normal to be upset and angered by that. The problem is, what Wall Street is saying is true."

No time for perfection

The rescue bill, even the expected, revised rescue bill by Congress, will not be perfect. And yes, it will help some on Wall Street, including (unfairly) those who 'gamed' the system, or whose business mistakes, dubious securitization frameworks, or just plain greed helped create the crisis in the first place. But the nation does not have the luxury of taking six months to compose and pass a 'perfect' bill. The nation needs a rescue package, imperfect though it may be, to stabilize the financial system. And it needs it now.

Should you, the typical investor be upset about that? Sure, it's o.k. and it's a natural response to be upset, but don't let that emotion lead you to believe the nation or the financial system would be better off without a rescue bill; it won't be. And it's not possible to prevent Wall Street institutions from being involved in the solution -- at this time-pressured, critical juncture, they have to be. As The Times' Floyd Norris noted, Wall Street knows it, we know it, everyone knows it. So accept it, and move forward with the necessary work of getting a rescue plan in place.

Continue reading Emotions shouldn't cloud decision on the bailout plan!

Emotions shouldn't cloud decision on the bailout plan! originally appeared on BloggingStocks on Tue, 30 Sep 2008 12:20:00 EST. Please see our terms for use of feeds.

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By almost all accounts, the defeat of the bailout / rescue bill stunned those both inside the beltway, on Wall Street, and across the nation.

Many political analysts projected that the bill would be approved by the U.S. House of Representatives by about a 80-100 vote margin. The reality: bill defeated, 228-205 and the stock market plunged a big seven zero zero and more.

Public policy analysts, professional and otherwise, will spend ample time investigating the reasons why the bill failed, but in a crisis such as this one, congressional leaders, save for reviewing their mistakes, do not have time for the stuff of graduate seminars in public policy: they need to get a rescue bill passed.

Now what?

Well first, don't panic. As George Bailey (Jimmy Stewart) said during the bank run on the the Bailey Building & Loan in the movie, It's A Wonderful Life, "Now just remember that this thing isn't as black as it appears. Now, we can get through this thing all right. But we've, we've got to stick together."

Continue reading U.S. House leadership's new task: Find 13 more votes ...

U.S. House leadership's new task: Find 13 more votes ... originally appeared on BloggingStocks on Tue, 30 Sep 2008 08:59:00 EST. Please see our terms for use of feeds.

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Few economists / analysts would deny that the financial crisis is so complex, with numerous casual factors, that there's more than enough blame to go around: no one party can or should be seen as 'the culprit.' Moreover, what's paramount now is to identify what works, i.e. what helps solve the crisis, and implement it.

The U.S. Congress' bailout / rescue bill (pdf) is one tool: it will help. If it goes reasonably according to plan, the U.S. Treasury, and the companion agencies the rescue creates, will slowly remove distressed / bad assets from the financial system and in the process would both stabilize the credit markets, and equally important, restore confidence in the financial system.

Another tool: mortgage help in the form of refinanced mortgages for homeowners having trouble paying their mortgage / nearing default.

Economist David H. Wang said Congressional Democrats were unsuccessful in their effort to get U.S. bankruptcy laws amended so that judges could adjust the terms of mortgages -- Congressional Republicans were adamantly opposed to it -- but the bailout / rescue package does authorize the U.S. Government to further assist homeowners who face mortgage defaults.

Continue reading Next rescue step - moratorium on home mortgage foreclosures?

Next rescue step - moratorium on home mortgage foreclosures? originally appeared on BloggingStocks on Mon, 29 Sep 2008 11:30:00 EST. Please see our terms for use of feeds.

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