The Economy, stupid

[Balta1701]

It seems Elizabeth Warren may well be willing to stand up and be face of the the anti-Geithner plan forces.

Elizabeth Warren, chief watchdog of America's $700bn (£472bn) bank bailout plan, will this week call for the removal of top executives from Citigroup, AIG and other institutions that have received government funds in a damning report that will question the administration's approach to saving the financial system from collapse.

 

Warren, a Harvard law professor and chair of the congressional oversight committee monitoring the government's Troubled Asset Relief Program (Tarp), is also set to call for shareholders in those institutions to be "wiped out". "It is crucial for these things to happen," she said. "Japan tried to avoid them and just offered subsidy with little or no consequences for management or equity investors, and this is why Japan suffered a lost decade." She declined to give more detail but confirmed that she would refer to insurance group AIG, which has received $173bn in bailout money, and banking giant Citigroup, which has had $45bn in funds and more than $316bn of loan guarantees.

 

Warren also believes there are "dangers inherent" in the approach taken by treasury secretary Tim Geithner, who she says has offered "open-ended subsidies" to some of the world's biggest financial institutions without adequately weighing potential pitfalls. "We want to ensure that the treasury gives the public an alternative approach," she said, adding that she was worried that banks would not recover while they were being fed subsidies. "When are they going to say, enough?" she said.

 

She said she did not want to be too hard on Geithner but that he must address the issues in the report. "The very notion that anyone would infuse money into a financially troubled entity without demanding changes in management is preposterous."

 

The report will also look at how earlier crises were overcome - the Swedish and Japanese problems of the 1990s, the US savings and loan crisis of the 1980s and the 30s Depression. "Three things had to happen," Warren said. "Firstly, the banks must have confidence that the valuation of the troubled assets in question is accurate; then the management of the institutions receiving subsidies from the government must be replaced; and thirdly, the equity investors are always wiped out."

[southsider2k5]

It seems Elizabeth Warren may well be willing to stand up and be face of the the anti-Geithner plan forces.

 

Is it worth pointing out, again, here exactly how much money Barack Obama got from the banks who are taking these trillions of dollars in various forms?

[kapkomet]

IAM (shipps) going to do my mark to market accounting post today, just because I'm in that mood. I have a doctor's appointment that I'm leaving for now, and when I come back after watching the kiddos for a while, I will banquish myself to upstairs and write it out. Here's hoping for no distractions.

 

[lostfan]

IAM (shipps) going to do my mark to market accounting post today, just because I'm in that mood. I have a doctor's appointment that I'm leaving for now, and when I come back after watching the kiddos for a while, I will banquish myself to upstairs and write it out. Here's hoping for no distractions.

If not then I will put you on the spot and make a thread called "kapkomet's M2M thread"

[kapkomet]

It might be the loniest thread in the history of soxtalk.

 

[southsider2k5]

It might be the loniest thread in the history of soxtalk.

 

I'll at least stop by and make some "Can't Pass Again" jokes... That's what friends do.

[Cknolls]

Is it worth pointing out, again, here exactly how much money Barack Obama got from the banks who are taking these trillions of dollars in various forms?

 

 

Not only money. How about positive press coverage from NBC and his buddy Jeff Immelt. The gov't has guaranteed over $130 billion in their paper. If Citi AIG and others go... so too should Immelt.

[Balta1701]

Chart(s) of the day...how this dropoff compares to the 30's. Normalized to 100 at the start of the recession.

Figure 1. World Industrial Output, Now vs Then

Figure 2. World Stock Markets, Now vs Then

Figure 3. The Volume of World Trade, Now vs Then

 

If you want to understand why it's important to take stimulative measures now, there's your answer. The good news is that at least a handful of people seem to have a better understanding of monetary and fiscal policy than was available in 1930-1931 when things were really contracting and when the response of the government was to allow the money supply to contract so that things could spiral even farther downwards.

Figure 5. Money Supplies, 19 Countries, Now vs Then

 

All of the x axes are time in months/years after the peak.

[StrangeSox]

None of those charts have their axis labeled. What am I looking at there?

[Balta1701]

None of those charts have their axis labeled. What am I looking at there?

1 second, i'll try to fix it.

 

Done.

[kapkomet]

f***, I got sidetracked all to hell today... dammit.

 

[Cknolls]

Credit spreads are at their widest level since crisis began.

[Cknolls]

Don't forget the looming pension crisis on the horizon. I believe this is the next area of concern.

[Balta1701]

Don't forget the looming pension crisis on the horizon. I believe this is the next area of concern.

Thankfully the Pension Benefit Guarantee corp. still exists and is in perfect health, thanks to George Bush's refusal to touch it.

 

Oh.

[Balta1701]

Credit spreads are at their widest level since crisis began.

This one doesn't mean anything to me but I'd like a translation if anyone can provide it.

[Balta1701]

"Right on everything" Roubini rips Cramer.

Just weeks after "The Daily Show" host Jon Stewart took Cramer to task for trying to turn finance reporting into a "game," famous bear economist Nouriel Roubini criticized Cramer on Tuesday for predicting bull markets.

 

"Cramer is a buffoon," said Roubini, a New York University economics professor often called Dr. Doom. "He was one of those who called six times in a row for this bear market rally to be a bull market rally and he got it wrong. And after all this mess and Jon Stewart he should just shut up because he has no shame."

 

Cramer recently wrote in a blog that Roubini is "intoxicated" with his own "prescience and vision" and said Roubini should realize that things are better since the stock market bottom in March.

 

Roubini said in 2006 that the worst recession in four decades was on its way. He has attracted attention for his gloomy — and accurate — predictions of the U.S. financial market meltdown.

 

Roubini said the latest surge is just another bear market rally following the pattern of other rallies after the government intervened. He expects the market will test the previous low because of worse than expected macroeconomic news, disappointing earnings and because banks will fail after the stress tests come out.

 

"Once people get the reality check than it's going to get ugly again," Roubini said.

 

Roubini said Cramer should keep quiet.

 

"He's not a credible analyst. Every time it was a bear market rally he said it was the beginning of a bull and he got it wrong," Roubini said in an interview with The Associated Press.

[kapkomet]

IMO, Roubini's right on this one. I'm cashing out tomorrow... after my 20% pickup since the beginning of March. When the banks report earnings, things are going to plummet again.

 

[Balta1701]

IMO, Roubini's right on this one. I'm cashing out tomorrow... after my 20% pickup since the beginning of March. When the banks report earnings, things are going to plummet again.

If I had anything more than a pittance in the markets that's exactly what I'd have done when it crossed 8000 again as well. It'll drop again until the next round of bailouts come through.

[kapkomet]

If I had anything more than a pittance in the markets that's exactly what I'd have done when it crossed 8000 again as well. It'll drop again until the next round of bailouts come through.

Meh, it's a pittance. But 20% of nothing is something, you know?

 

[Balta1701]

Meh, it's a pittance. But 20% of nothing is something, you know?

Honestly, Huh? Totally lost me there.

[kapkomet]

Honestly, Huh? Totally lost me there.

Oh, I was saying that my 401K is a mere pittance and 20% of nothing is something (play on words).

 

[kapkomet]

I just saw that Wells Fargo had "record breaking profits" this quarter. I haven't read the details, but the market is up 2.5% on this.

 

I'll have to snoop around to see if I can find out why, because honestly that doesn't make sense, unless this is the m2m adjustment.

[lostfan]

Which you still have yet to lecture us on

[Cknolls]

Thankfully the Pension Benefit Guarantee corp. still exists and is in perfect health, thanks to George Bush's refusal to touch it.

 

Oh.

 

 

Actuall, I was referring to the State and Municipal pensions. They were woefully underfunded and the beneficiaries are promised returns that will never in a million years be met.

[Y2HH]

IMO, Roubini's right on this one. I'm cashing out tomorrow... after my 20% pickup since the beginning of March. When the banks report earnings, things are going to plummet again.

 

Or you can leave it there for 10 years and you'll be happy you did. Although this is a traders market -- 20% isn't enough for a trader. For a long term investor (1yr+), 20% + dividend payouts would be huge, but for a trader, 20% is just too low considering the tax rate is 30%+ on short term cap, not to mention the broker cost for the purchase and the sale also cut into the profit. The profit needs to be enough that you notice it after trading fees and taxes when it comes to short term trades. There is a huge ETF market for people who like to do that called pro-shares, etc...it's nothing I'm into, but it exists and it's tailored for people who like to actively trade.

 

I do nothing but buy and hold.

 

I bought into BAC at 4, it's up well over 100% since I bought it, I believe it closed over 9 yesterday. Sell it?! No way. If this guy is right and it goes down to 4 again, I'll just take the opportunity to buy even more -- I don't care about short term gains, I care about 10 years from now. I mostly look for dividend paying stocks, and right now there are still plenty of them at bargain prices. I wish I had more money to sink into the market right now.

Edited April 10, 2009 by Y2HH