logicalthought

Banks Are Not Lending? So What

>>This has created widespread frustrations which became apparent in an interview with real estate mogul Donald Trump... Trump argued that the economy cannot heal until we have a fully functioning credit market and even suggested that perhaps the government should force banks to lend more.<<

Okay, but if you're a bank that wants to get its money back, you might not want to lend any to HIM!

Time for the U.S. Economy to Reindustrialize

On Nov 15 08:19 AM Michael Clark wrote:

>>We need more than the 'bottom line' philosophy. Enhancing shareholder value is NOT the only viable creed for business. Japan has a 'employee for life' philosophy.<<

And Japan has economically stagnated (or worse) for the last 20 or so years. No system is perfect, but "bottom line/enhancing shareholder value" capitalism (accompanied by reasonable safety and environmental regulation and, for the financials, leverage regulation) is the "continually reinvigorating" best of them.

Five Reasons the Market Could Crash This Fall

>>I am officially going on record now and stating that IF the S&P 500 hits 1,000, we will see a full-blown Crash like last year.<<

LOL... Fortunately, when you wrote this, you followed Rule #1 of economic predicting: If you give them the price, don't give them the timing!

Credit Card Crunch: Creating a New Generation of Subprime

Credit card borrowers can't pay? Hey, no problem-- the U.S. government can guarantee THOSE receivables, too... I mean, it's only money!

Explaining the Citi Arithmetic

I still find this reasoning a bit puzzling, because from an "enterprise value" standpoint, the above-market conversion price is accretive to the common stockholders. And in a potential liquidation, whether or not the common holders thought the preferred had been worth "par", it still would've been one more piece above them in the cap structure which (theoretically, at least) would've had to have been paid off in full before the common holders got anything.

I think the stock got slammed because the common holders were considering their stock to be sort-of a cheap, "highly-levered call option" (in case the equity value of Citi could one day get back to near what it used to be), but due to this massive dilution, even if that happens, the stock price will be worth a heck of a lot less.

Slow Down Mr. Roubini

"the White House has publicly announced it will not nationalize banks and has taken action to prop up Citigroup."

Uh, excuse me, but owning somewhere between 25% and 40% of the common equity in something (which is the latest rumor about what the government is doing with Citi) isn't at least PARTIAL "nationalization"??? It looks to me as if you're wrong and Roubini's right, and we didn't have to wait until August to find this out.