GregT

In Defense of Meredith Whitney

Just to address one of Whitney's points that Shulman tout's without clarity. He said "Consumer credit continues to contract - credit lines are down $1.5 trillion."

We need to remember that these are credit "card" lines. Most credit card users come nowhere near their credit limits. The card companies have reduced credit limits as the economy has gone into recession. This is normal. Shulman tries to make it seem like 1.5 trillion has actually been removed from the economy.

Most of the time, analysts like Whitney who make one correct call like to parlay their fame into bigger and better things. She is now predicting the whole economy rather than just analyzing banks. We'll have to see if she continue to get things right or turns into a perma bear. Another person who predicted the downturn and made billions doing it (Paulson) is very bullish right now. We'll see who is right.

GDP Manipulation? You Should Consider Shorting the Market

It is certainly true that the US government plays a huge part in manipulating the economy and many aspects of consumer investing/purchasing. This has been the case for decades going back to before the Great Depression. It is also true that the amount of manipulation has increased over the years.

But the big question is not whether or not this manipulation exists, but when it might come home to roost. While US debt has increased dramatically in the last couple years and will continue to do so, it is unclear that the heavy debt will cause a major problem for the US economy or the markets in the near term - the next couple years. It is certainly unhealthy, but the markets care less about government balance sheets than they do about corporate profits. All indications are that corporate profits will be recovering - perhaps strongly. At least in the near term, it is likely that markets will remain positive. Short term technical pullbacks are certainly a possibility, but the market is likely to be higher in 1 to 2 years.

Is Wells Fargo Regretting Its Wachovia Acquisition?

A lot of claims are made in this article without any substantive points to back them up.

Before people like you call for the break up of the large banks by the government, you should consider that the government cannot and should not create rules and procedures for it's own convenience. The government wanted WFC to buy Wachovia so it would not have to absorb the costs of the cleanup. It forced BAC to buy MER to avoid a systemic collapse of our financial system. For the government to now turn around and require a breakup of the very mergers it supported/required would be completely wrongheaded and contradictory.

It becomes quite scary indeed when the government and supporters of heavy handed govnerment regulation like the author base public policy on what is most convenient at the time for the government rather than on fairness and common sense.

Roubini Is Right: Recovery Will Be Slow

Let's not start worshipping at Roubini's alter. He correctly predicted the financial crisis. BUT he was dead wrong in predicted a continued decline and all sorts of doomsday scenarios. So now he has shifted his focus to predicted the type of recovery we will have rather than preaching continued doom.

In my book he got only the initial call right. It is very rare for economists or market analysts to continue to be correct in their prognostications. They tend to stay in whatever "camp" got them the fame and they miss the turn. It happens to both bulls and bears. Remember perenial bull Abby Joseph Cohen.

At this point Roubini is capitalizing on his recent fame, but his predictions at the beginning of this year completely failed to predict where we are right now and chances are that his current predictions will be wrong too.

Big Banks: Still in Charge

The irony in this article suggesting that certain large banks like BofA should be split up to avoid the devastation their failure could cause is that it was the government "made" BofA complete it's takeover of Merrill Lynch in order to prevent a financial meltdown and would now be making BofA split itself up to avoid the potential for financial devastation.

We can't have it both ways. We can't use the healthy banks to buy the troubled banks when it is convenient and then turn around and say that the now combined bank is too large and must be split up.

The BofA / Merrill Mess - A Misguided Mob Goes After the Wrong Guy

Worthless rambling without any real insight.

Bad Bank and Draft Bill Spook CDS Traders and Wall Street

In the very big picture, the purpose of banking and Wall Street is to provide financial instruments and funding to the parts of the economy that need it and deserve it. In providing this funding, our financial industry should make a profit.

What has happened however, is that our financial industry is making profits without actually helping the economy. In fact, many of the financial instruments recently created have hurt the economy. It is one thing for a corporation to use credit default swaps to insure their own risks. It is quite another thing for investment houses to use credit default swaps when they are not insuring any underlying risk. The second use is pure speculation and provides no benefit to the American economy. Furthermore, since this "insurance" is unregulated, there are no requirements that the companies selling CDS's have adequate reserves to pay for defaults as they happen (e.g. AIG).

The net result is that taxpayers have had to fund these losses which never even provided a benefit to the economy to begin with.

Where's the Bottom? Still Anybody's Guess

Great article. It is very easy to see that the US has lots of things out of wack. In fact, many people have been seeing our demise for over a decade. It is easy to agree on the imbalances, yet it is nearly impossible to predict when these will come home to roost.

Where's the Bottom? Still Anybody's Guess

Great article. It is very easy to see that the US has lots of things out of wack. In fact, many people have been seeing our demise for over a decade. It is easy to agree on the imbalances, yet it is nearly impossible to predict when these will come home to roost.