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Fed continues to stonewall in Freedom of Information Act suit

Back on November 7th, I posted a story on how Bloomberg News was compelled to sue the Federal Reserve under the Freedom of Information Act in order to find out what type of assets the Federal Reserve was accepting as collateral for loans to banks. Bloomberg has provided the latest update in that saga and it is not good. The Fed continues to stonewall and it seems apparent that it will only reveal how U.S. taxpayer money is being spent if forced to do so by law.

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James Montier sees “deep value” in markets – he is bullish

James Montier, a market guru usually known as a permabear has turned bullish of late. In keeping with my bullish sentiments, I have posted his thoughts below according to Bloomberg News.

That said, I should always qualify my ‘bullishness.’ I still believe we are in a bear market and that equities will go lower on an inflation-adjusted basis. Investing only in index funds is a bull market strategy to be avoided like the plague. However, there are many stocks trading for 3 and 4 times earnings like Valero Energy or Chevron that deserve a look – Montier obviously agrees. This is shaping up to be a value investor’s dream.

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Quote of the day: Willem Buiter – Tits on a bull

Willem Buiter has a very useful and provocative blog at the Financial Times website called Mavercon.  The Dutch-born former Bank of England MPC member is not afraid to take policy makers to task or call a spade a spade. In his latest post on why banks are refusing to lend to creditworthy customers, he has some useful insights and a […]

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Case-Shiller Home Price index shows a 17% fall

Case-Shiller Home Price index shows a 17% fall

The S&P/Case-Shiller® Home Price Indices were released yesterday. Unfortunately, I was away all day and could not post. The indices showed a further decline in home prices in the United States through September 2008 (the data most recently available). In the year to September, prices dropped 17.4% for the Composite-10 index and 18.6% for the Composite-20 index versus 17.7% and […]

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Jeremy Grantham: In-depth television interview with Consuelo Mack

Jeremy Grantham: In-depth television interview with Consuelo Mack

The renowned money manager Jeremy Grantham has had his first television interview ever with Consuelo Mack on Mack’s program WealthTrack. Below is the video from that interview. Mack has promised to make a longer video available to those who subscribe to her podcast. Please find the podcast audio link here and the podcast video link here.

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News round-up: 26 Nov 2008 – Politics, Economy and Markets

Politics As the time for Barack Obama to take office moves ever closer, his policy team is coming into view. Obama has appointed a slew of economic advisors including Tim Geithner, Larry Summers and Paul Volcker. In addition, he looks to have filled out the key positions in his White House staff and to have nominated veterans to other key […]

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The Citigroup Bailout: a blogosphere post-mortem

When a bank with $2.2 trillion in assets is saved from potential ruin, it is big news. So, as you can imagine, every one and his brother has a take on what went wrong at Citigroup and whether the solution to ‘fix’ Citi was the right one. Below are a number of the best links to commentaries around the blogosphere regarding Citi’s demise.

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The problem with comprehensive banking crisis solutions

I have come down on the side of sweeping change when it comes to the banking system in the United States. Basically, I fear a further downward spiral due to the fear and panic that the banking crisis has unleashed. In my view, this necessitates a comprehensive solution, one which we have yet to see. However, there is one problem with comprehensive solutions I would like to highlight: asset confiscation.

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The Citigroup Bailout

It looks like we have a solution to Citi’s crisis. The U.S. Government agreed to bailout Citigroup, backing $306 billion of debt in exchange for preferred equity and warrants plus a host of other details I will enumerate below. On the whole this looks to be a better deal for the U.S. Government and American taxpayers than the AIG deal. However, it is yet another ad-hoc band-aid when a comprehensive solution is preferable.

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Citigroup: Panics, Banking Confidence, Bailouts and Fractional Reserves

Citigroup is in serious trouble. The storied institution with $2 trillion in assets has seen its shares collapse and its reputation is in tatters as it goes cap in hand to the U.S. government for a bailout. Indeed, a solution must be found as Citi is a monster of a bank, three times the size of Lehman Brothers, whose collapse caused untold damage two months ago. As I write this, Citigroup is meeting with U.S. Government officials to hammer out an agreement to set the firm on the right path. We can only hope these talks bear fruit.

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Obama White House: Add Larry Summers and Robert Gibbs

Yves Smith at Naked Capitalism is reporting that Larry Summers is to be tapped to head Barack Obama’s National Economic Counsel.  Summers had been considered for the Treasury position, one that looks likely to go to Tim Geithner, the head of the New York Fed.  It is notable that Robert Rubin held Summers position in the Clinton Administration before heading […]

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Citigroup talks with US Government as bankruptcy looms

Reuters is reporting that persons familiar with the matter have indicated that Citigroup began talks with the U.S. Government as contingency planning. With Citigroup’s share price having plunged dramatically in recent days, rumors have been circulating about the firm. Yesterday, the Board of Directors met to discuss strategic options including a sale of all or part of the firm. It is now evident that the government may need to get involved.

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