Promod Radhakrishnan

PPIP Killed the 2008 Bear

The PPIP does involve some risk for tax payer money, but its probably one of the only few options to revive the MBS/ABS/CMO markets and have liquidity flowing again. The question is not whether big banks will gain from this...but whether there are enough controls to safe guard public moeny. Considering the situation, Tim Geithner and team have done a decent job. If there's nothing on the table from the government, tha market's going to stay off such assets for a long period. Fresh Fed lending alone doesn't help - banks just park it back as deposits with the Fed itself! So, i would say the PPIP is one of teh few good options to get the credit markets functionaing near normalcy again!

PPIP Watch: Banks as Bidders and Sellers...Hmm, Remember Enron?

Nice post - i do agree there's enough and more skin-in-the-game from the government/treasury and the plan does have a risk factor of collusion and flawed pricve discovery. But putting this in context -a) institutions badly mauled by the crisis
b) increased share holder vigil
c) a new set of regulations forcing higher capital cushion, stronger liquidity norms etc
do we really think either the government or the banks will let this happen in the near term? More over, the relaxation of mark-to-market accounting norms reduce the incentive associate with such devious tactics.

Also, the bigger question - other than letting the liquidity crisis play out slowly (which would have severe unemployment consequences), what are the alternate options to unfreeze liquidity?

A Sensible and Refreshing Move from the Fed

Reinko, pardon my exuberance associated with a good day at the market. I just though a massive up-day after long gloomy weeks deserved some cheer.

As for macro economics, i cannot agree more with you on the fact that deficit budgets, over reliance on consumer spending and over dependence on foreign investment in treasuries and US assets won't keep the economy stable and growing for long. There are obvisouly fundamental changes required - hopefully some of that to start coming with the next government in power. However, we are not really in a time where we could/should cry over macr economic ills and the fact that a crash is bound to happen. All said, i don't hold a view that a 200 bn kitty is enough to avoid slow down or recession completely. However, we need the establishment to think forward, think positive and take steps that would smoothen the slow down and make it bearable for the economy and all of us. If we keep a prudish you-did-wrong appraoch with the money center banks, how would you expect them to lend for homes and education...and in that case, how would you expect the economy to stay resilient.

Just to recap - this single Fed move won't make for a turn of the tide. However, we need multiple steps like these to bring some sanity to the credit/fixed income markets.

Tony, likd your story :-)

A Volatile January for Financials, Healthcare

sun rising: Sorry, didn't see your question. Now that the event's over, i hope you did exit. Oil this year might not have a good run.

My 2008 Investment Prognosis

KO, PG, JNJ, MO are all long-term bets over a 6-12 month period of sustained slowdown...its an old theory, where non-cyclicals do well in periods of down turns. GG might see intermittent spikes, but depending on your view on commodities over the next 2-3 quarters (I am bearish to neutral), it would correct. Eitherway, its going to be a very volatile ride for folks holding Newmont, Goldcorp etc.