phil from Edmond

Wall Street Breakfast: Must-Know News

Further to the proposed sale of tax credits. Why would Treasury approve the sale? Effectively, they would approve Fannie Mae to accept $0.80 (or whatever) for $1 dollar of tax credits. Since Treasury is funding Fannie Mae, through the conservatorship, where is the advantage to the Treasury in this transaction. Treasury reduces its contribution to Fannie Mae by $0.80 and loses $1 dollar from tax receipts.

Buffett's BNI Purchase: Bearish Bet on the Economy?

Aren't billions to be spent by government on high-speed rail, didn't Buffet just buy the best rail network in the country? Just a hunch.

Whistling Past the Depression

What the government and the Fed have accomplished compared to the great depression is minimizing some discomfort to the individual. For example, we aren't standing in line to remove our deposits from insolvent banks. Safety nets for the unemployed and the foreclosed are still limiting the visibility of the damage.

The Fed has tried some novel steps. The FDIC and the GSE's have bankrupted themselves. But like you imply, we aren't really addressing the problems. I'm not even sure we agree on what the underlying problems are that need to be solved. Meanwhile the Treasury borrows unimaginable amounts of money. The bogeyman is real.

Why We Must Act Now on Our Economic Structural Problems

The first problem to fix is the trade deficit. But, 3(b)-(c), might worsen it by the "beggar thy neighbor" implications. Home grown energy to reduce the need for imported oil is most important. Unfortunately, that means shale gas, off-shore oil, coal and nuclear as well as the environmentally correct wind and solar.

Serious campaign reform, 5(a), and regulated lobbying, 5(b), might occur as a result of taxpayer revolt, town meetings and active interest in legislation

First-Time Home Buyer Tax Credit Fraud Called 'Disturbing?'

Did anyone check to see if credits went to names like Geitner, Dodd or Frank? Just a question.

Bond Expert: Thursday Outlook

Don't apologize.

The Underlying Size of U.S. Economy

You're focusing on the symptom not the problem. The problem is the less than benign foreign trade deficit during this period. The dollars going overseas were recycled through financial products back into the US economy.

To address the problem reduce the trade deficit. The "Pickens plan" and "drill baby drill" should be the focus. Instead the administration wants to kneecap the oil and gas industry.

U.S Now Land of Two Economies - U.S Bank Titans and the Rest of US

Anyone wishing a good read might find FDR's first inaugural address interesting. I like "Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men."

"True they have tried (to restore business activity), but their efforts have been cast in the pattern of an out-worn tradition. Faced by a failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully to restore confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish."

The Bank Credit Crunch Spawns Bonds

Companies like GE are issuing bonds to substitute for the securitized loans no longer available to them that are being unwound. GE, I believe, is still deleveraging its balance sheet and addressing liquidity concerns.

Financial Crisis: Remembering What Got Us There Is Critical

This article is excellent. Your point on European banks is important. Another fact to consider is that the AIG credit default swaps supported the European banks leveraged position. Another point I would suggest is how truly benign was the US trade deficit?

The Fed was of the opinion that the US was satisfactorily repatriating these dollars. But in actuality the returning dollars were stimulating the irrational housing market.

In Europe, the banks were lending heavily to Eastern European economies.

The Fed and the G20 thought they had a workable system and were successfully transitioning China, India and Eastern Europe into the capitalist system. They were wrong.

Bond Expert: Tuesday Outlook

John, you mistyped the 10 year yield.

Sub-Debt = Senior Debt?

Does "too big to fail" explain why US bank sub-debt trades like senior debt? I would be interested if there isn't a differential between regional bank sub-debt and large national banks. With the regional bank sub-debt requiring a higher spread.

Interesting point you make though. Thanks

U.K. Recovery Just a Mirage

Now compare this to what Britain did after WW1. The US was the lender then, now it is presumably China. The US was the emerging manufacturing power then, now it is China. This is a replay of the run up to 1929. Hopefully the "best and the brightest" have this figured out and the exit strategy.

Keynes said "in the long run we are all dead". At least he is.

Commercial Real Estate - Make Up Your Own Mind

Thanks. The article really helps those unfamiliar with the commercial real estate market.

First Read of House Health Care Reform Act (H.R. 3200)

Is there a stated lifetime maximum benefit?

The maximum 2 to 1 premium difference between young and old is a significant cost increase to the young with individual coverage or no coverage.