The Good News Economist

Taxpayers Earn 23% Return on Goldman TARP Investment

@SivBum,

I like your idea... however when looking at equity valuation over the term of the loan the returns aren't that hefty. If you pick your starting point anytime in 2008, your S&P measure doesn't hold. Further, based on warrant auction estimates it's likely that what Goldman paid was right in line with what other market bids were likely to be.

GNE

Treasury Accepts Lowball Price for TARP Warrants

Linus,
Thanks for your papers and these articles raising the awareness. Most of US taxpayers have no idea how valuable these warrants ultimately can be... or even that negotiating is happening on their behalf... thus the lowered payback price. If we can raise the political awareness of these paybacks, the stories may change.
GNE

Why This Rally Is Unsustainable

>So where is the breaking point? A look into the
>why instead of how of this rally can offer some
>insight. This whole rally is essentially a scam to
>pass off asset depreciation in struggling financials
>to the taxpayer.

Do we really believe this conspiracy theory? The reality is that the market has figured out long before us that in fact recovery is here. Like every recovery before it, depressed equities turn up and do not look back. We are now approaching a 35% uptick. That in and of itself represents the fact that indeed this rally IS SUSTAINED. With history as our guide, if we keep saying the rally is not sustainable long, indeed we will get it right... but not this week...
seekingalpha.com/artic...
and probably not this year...
seekingalpha.com/artic...

GNE

Thoughts on a 'Recovery' Following Surprisingly Good Earnings Reports

Perhaps. But then again perhaps not. If you read the theories and works of Malcolm Galdwell (The Tipping Point, Blink, and Outliers), you will note that answering the question "How could things have gone from so bad to so good in a heartbeat?" becomes elementary.

Also check the past big bull runs that follow a prolonged bear, volume obviously takes time...and as volume and confidence builds, the rise simply becomes steeper.

6 weeks from now your miss can easily be 60%+ from the low 6 weeks ago.

For Gladwell if we reached "The Tipping Point" last month, the rally will be in full swing before we can "Blink."

Good Luck

Global Markets in Review: Does the Rally Have More Steam Left?

Prieur,

Again an another enjoyable article. As I examine the last table in your article, I note that we are only off thirty-some percent year over year in several of the indexes.

If the bull move continues at the same rate as the last 5 weeks, we will be solidly in positive territory year/year.

No doubt this bull could continue to be swift and steep leaving many in the dust...

mast-economy.blogspot....

Thanks again for your balanced analysis. Enjoy the Cape!

GNE
goodnewseconomist.com

Turning Toxic Assets into Gold

@Gravity,

Thanks for the catch on BAC.

GNE

JPMorgan Beats: For Banks, This Is as Good as It Gets

Edward,

Great article on what we may be able to expect from some of these larger banks who are getting their portfolios back in order.

Very interesting "accounting" with WaMu.

Not sure that I agree that this is "as good as it gets." For that I think we need to look at strong banks downmarket... mast-economy.blogspot.... It is in many of the second tier banks where there is true strength moving forward. In reviewing the 10Qs of these banks in the 1B-10B revenue range, there is much less junk exposure in those banks that are one step smaller.

I agree though that this is indeed a very strong report. Particularly your observations in Commercial Banking, Treasury and Security Services, Asset Management, and Private Equity businesses...

GNE

Bleak Outlook for U.S. Banks Through 2009

This is a very misleading article. Twenty or so very large banks have failed. Why? Because they made stupid non-conventional bets to get larger returns on their deposits. Does it follow that all the mid-tier and smaller banks made those same lame bets? I think not.

My favorite example is First Bank of Lakewood Colorado. Have a look at
www.efirstbank.com/adv...

Where they highlight their stability, strength, and service. Not to mention growth.

The fed own data is just not there to support the claim that these mid-tier banks are in trouble or not lending. To the contrary lending is UP at these banks by the Fed's own numbers:
mast-economy.blogspot....

One banker I recently heard said this, "I don't lend to people I don't know and I don't buy paper instruments that I don't understand. Call me conservative, but it has always worked for me. And it's still working well for us now."

And for those 20 that have failed. Lookie there at the S&P chart, how much bad paper did they pass around? Looks like about $375B by that chart. And we've already got that and more on the Fed's balance sheet now.

Don't believe me or the numbers? If you've got a local bank, (not a big bank branch), call the president there. I'm sure he's doing just fine and the deposits there are doing just fine as well.

The bailout is behind us.

GNE