Latest Posts

Case Shiller points to a grim U.S. housing market

Case Shiller points to a grim U.S. housing market

This comes from S&P’s website (pdf): Data through December 2008, released today by Standard & Poor’s for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, show that the prices of existing single family homes across the United States continue to set record declines, a trend that prevailed throughout all of 2007 and 2008. The associated graph […]

Links: 2009-02-24

Tangible Common Equity… – Option ARMageddon Argentina’s Industrial Output Fell Most Since 2001 – Lonmin to cut 5 500 jobs – Fin24 South Africa Hairy Lips Sink Ships – Bill Gross, PIMCO Now What for the Big Banks?: Interview with Nouriel Roubini – Chris Whalen Why Doesn’t the Government Own Citigroup Outright? – Dean Baker The Big Five Trends […]

Quote of the day: Wells and BofA are choking on acquisitions

Chris Whalen, a well-regarded bank analyst, ran an interview piece with Nouriel Roubini on Barry Ritholtz’s site. The conversation was very illuminating and I highly recommend reading the whole post linked below. However, I wanted to point out a quote from Chris in the piece that I find significant in light of the recent dividend cut by JPMorgan Chase. The […]

Denmark: Fionia Bank collapses

Denmark’s 11th largest bank, Fionia Bank, has collapsed after massive writedowns of 1.2 billion Danish kroner. However, the company will not face liquidation. According to Politiken, Instead of bankruptcy, Fionia’s assets will be transferred to a newly incorporated banking company.

In advertising campaigns, Fionia had dubbed itself the “bank of your future.” Despite the obvious, the bank’s chairman insists the future is still bright and all is well.

Michael Panzner: Financial Armageddon?

Fellow econblogger Michael Panzner of Financial Armageddon was on Bloomberg TV and radio today telling folks what all of this credit crisis, bear market, nationalization stuff really means for globalization, the U.S. and stocks.  He recently wrote a book on this very topic called “When Giants Fall.” He is not at all upbeat about the prospects for the U.S..  Don’t […]

Amex: paying cardholders to close accounts

From the National Post: American Express Co., the largest U.S. credit-card company by purchases, is paying some cardholders US$300 each to close accounts so the lender can reduce the risk of defaults as the recession deepens. People who got the offer to “simplify” their finances must pay off their entire credit-card balance by April 30, according to New York-based American […]

JPMorgan cuts its dividend fom 38 to 5 cents

From MarketWatch: J.P. Morgan Chase said late Monday that its board cut the company’s quarterly dividend to 5 cents from 38 cents, effective for the dividend payable April 30. “The board anticipates maintaining this level for the time being. This action will enable the company to retain an additional $5 billion in common equity per year,” the financial firm said […]

‘Slumdog’ cleans up at the Oscars

Right now I am trying to forget that we are back to 1997 levels on the market. So, I am posting this WSJ clip about the Oscars. Overall, I guessed 4 out of 7 of the big categories right. It was the best show in years with “Slumdog Millionaire,” a brilliant film, winning Best Picture.

America needs a pre-privatization plan

America needs a pre-privatization plan

UPDATE: This is another re-post given the huge bailout just administered to AIG.

I am coming out in favor of nationalization in the United States. The efforts to fix the banking system to date have failed. As a result, America is still threatened by the menace of systemic risk. In my view, this risk can only be diminished significantly by ‘pre-privatizing’ large, bankrupt institutions. I am talking about temporary nationalization of a few institutions rather than a wholesale longer-term government ownership of the banking sector. I will often use the word ‘pre-privatization’ because the word nationalization conjures up a Hugo Chavez-style asset confiscation which I believe is not accurate and clouds the picture.

Through the pre-privatization of large institutions which are effectively insolvent, trust will be restored, asset prices will find a natural equilibrium level and prudent lending can commence once again. By resisting pre-privatization in any and all forms, the Obama Administration is setting itself up for failure. In that scenario, President Obama might end up looking a lot more like Herbert Hoover than Franklin Roosevelt in American history books.

Links: 2009-02-23

Americans Would Be Lucky to Mimic 1990s Japan: William Pesek – Will Germany deliver on the Faustian bargain that created monetary union? – Telegraph U.S. economy seen starting recovery in second half of ’09: poll | Reuters Video: Gold May Reach $3,500 – Christopher Wood, U.S. Bubble Collapse to Be Worse Than Japan’s, CLSA’s Wood Says – […]

Nationalization talk everywhere

Nationalization talk everywhere

Everybody is talking about nationalization. The latest trigger is the Citi discussions with the U.S. government to convert taxpayers’ preferred shares into common equity.

Below are a few Bloomberg video clips from just this morning where experts including Marc Faber, Peter Hahn and Bloomberg’s Tom Keene talk about nationalization. It is a very controversial issue. Hopefully, these clips will give you different viewpoints on the subject.