Mase

Returning to the Real World

To Jasper M
This is not a case of which is the better buy in an investment sense...to me this raises the question about nations buying the assets of other nations. It is an ownershipthing...a power thing.

In the Commercial Banking Sector, No Green Shoots Yet

Also, by-the-way glendokid...
where did you get the 749B in the article? I referred to $743.9 billion in the article, but that was for excess reserves in the banking system and not cash assets, which totaled $958.7 billion July 15 2009. And, where did you get the 340 billion in cash assets since the figure in the post is $320 billion. The $320 billion was the average for June 2008. The average for May 2008 was $309.1 billion and the numbers for other months around then were very similar.
Bottom line...I have no idea where you are getting your numbers from. I am getting mine from the Federal Reserve release H.8.

In the Commercial Banking Sector, No Green Shoots Yet

glendokid:
How can the total loans of these banks exceed 19 Trillion dollars when the total assets of these banks total 12 Trillion dollars. And all these numbers are on the same page!

Should Bernanke Be Reappointed?

Mr. Thoma writes: "Here's the question I ask myself. If I were to suddenly come down with the same disease, would I want the current group with its current leadership in charge of bringing me back to health, or would I want a different group led by someone new who thinks they know what to do, but has never actually been through it? I'd want this group, the one with experience."

I remember listening to many thrift managements taking their institutions public in the 1980s telling potential investors..."Give me tens of millions of dollars to run my thrift institution. Sure, I was the one that got it into the mess it is in, but I have learned from my experience!"

What did Barnum say?

CIT's Debt Issues Show Why the Economy Won't Be Picking Up Any Time Soon

To me, this would come under the third option, "renouncing the debt". Nassim Nicholas Taleb and Mark Spitznagel suggest this in their Financial Times article this morning (www.ft.com/cms/s/0/4e0...). The existing shareholders have already given up their rights by not paying attention and letting the company go "down the tubes" so diluting the current equity holders is not the issue. The question then is what does providing the equity exchange do? Taleb and Spitznagel argue that the world has changed and is more volatile, therefore, debt is riskier than it was before. Because of this more equity should be involved in any financing decision.
Who disagrees with this? But, what is getting equity for your bonds? It is basically renouncing the debt of the company on a gamble that the company will get its act together. This can also be done through bankruptcy.


On Jul 14 02:16 PM DannyBoy29 wrote:

> What about a fourth alternative, converting debt to equity? Granted
> it would be dilutive to current equity holders and may not be an
> option in all cases, I doubt CIT’s bond holders want a potentially
> worthless stock, but in many cases it is a viable alternative.

Structural Shift in the U.S. Economy Is Really in Supply

Just noted in this morning's Wall Street Journal..."Cuts Are Here To Stay, Companies Say." (online.wsj.com/article...) Companies are contending that at least 20% of the layoffs and firings now taking place will not exist as positions once recovery begins.

The Fed's Quantitative Easing Goes Forward

I appologize for not providing my sources. The figures on excess reserves are from the Federal Reserve release H.3, Aggregate Reserves of Depository Institutions and the Monetary Base. The numbers for the Federal Reserve's balance sheet are from release H.4.1, Factors Affecting Reserve Balances of Depository Institutions and condition Statement of Federal Reserve Banks.

The Fed and the Banking System

To put things into perspective...it took the Fed about 94 years to increase Federal Reserve Bank Credit to $900 billion. It took the Fed another seven (7) weeks to double this total!

Why the Financial Markets Haven't Responded

wpdragon
Thanks for the quote. Exactly what I am trying to express.

davesilb
But, the quarterback has supposedly learned the game from others, has coaches that continually supply him with information, has learned what plays to call in different situations, and is supposed to inspire confidence in his play calling. That is supposedly why he is the quarterback.
If the quarterback cannot call the plays and cannot inspire confidence...the whole team suffers and the resulting execution of the team can be pretty dismal.

Why the Financial Markets Haven't Responded

In response to duude and others...in a corporation, a CEO may not and probably does not have the expertise needed to deal with specific situations that are not from their speciality. Still it is the responsibility of the CEO...the person leading the organization...to draw together the expertise needed to examine the situation and come up with a workable vision and plan to execute under the circumstances. This CEO...this leader...sets the tone of the culture, exhibits this culture in everything that he or she does, brings dissidents into line so that the culture prevails within the organization.
This is true for any form of organization, business, government, not-for-profit, sports team, religious, or academic.
Can you imagine a quarterback putting up with team mates that question the plays that are being called?
This leadership is not present in the current financial and economic situation! As a consequence, no one really knows what is being aimed for and how it will be achieved.
If the running back or the guard has to take charge of calling the plays because the quarterback is missing, how are the other players on the field to really know where they are to go?

Caught in a Liquidity Trap

Keynes was also the person who said..."When the facts change, I change my mind. What do you do?"
The father cannot always be held responsible for those that do not change their minds when the facts change and the irresponsible use of his work.

Caught in a Liquidity Trap

Smarty_Pants
I agree with you entirely...that is the point...
Keynes just defined the situation.
Mase

The Mortgage Market and Incentives

For more on covered bonds see

seekingalpha.com/artic....

Interpreting the Economy and Its Direction

The second quarter real GDP figures were released this morning with revisions of past data. The year-over-year rate of increase in real GDP for the second quarter of 2008 is 1.8%. The rate of increase for the first quarter of 2008 remains at 2.5%. Using the criteria presented in the post, the United States was not in a recession through the second quarter of 2008 but is on the edge of a recession.

It's All a Matter of Incentives

Please go to my blog site...I have two more posts there including one to the questions raised by fedhed.
Thanks!