markfl

Next Time, Let Goldman Fail

"In any event, Gapper believes that Goldman should not receive the benefits of the federal reserves discount window unless it is a true deposit-taking institution which carries out a central function that carries responsibilities."

The purpose of the discount window is supposed to be a last resort for depositories to access emergency cash in bank runs and to prevent them not being able to meet withdrawls of demand deposits. It is supposed to protect the consumer and hopefully prevent insolvency.

Giving GS access to the window does nothing for the consumer or the taxpayer. GS has 3 times the FDIC's pre-recession reserves. They've got cash bigger than the GDP of some countries. They don't need any government help.

Why the Home Buyer Tax Credit Is a Bad Idea

With an expanded credit, owners effectively have no net out of pocket equity in many home purchases (or very little). Does this mean they are free to file their return and collect the credit only to subsequently default on the mortgage after the fact? Home prices can only stabilize once all the excess supply is worked off and the market can find an equilibrium price that meets real (and not artificially stimulated) demand.

Who Were the Winners on Interest-Rate Swaps?

The State of Tennessee recently put in rules designed to eliminate this kind of corruption, and I hope Alabama will too. Morgan Keegan was the target in TN, but ANY transaction where one "advisor" pretends to represent the fiduciary interest of BOTH sides/parties in a deal is one that is bound to be crooked.

Wall Street Breakfast: Must-Know News

Yes, but GS supposedly gets a $1 billion payout if CIT goes bk, and the US Govt. owns 2.3 in preferreds. I guess they would be the only winners?

On Oct 19 08:21 AM Anthony Alfidi wrote:

> Shut down CIT already.

Wall Street Breakfast: Must-Know News

Suzanne Miller wrote:
"Bary worries the Fed is failing to distinguish between normal accommodative monetary policy and crisis accommodative policy."

The immediate crisis now passed, it's time for a serious discussion about when next year would be a good time for a 25 basis point increase. A reactionary approach to inflation means the risk of further and more catastrophic bubbles.

Inflation and the Hierarchy of Needs

Steinberg wrote:
"The Federal Reserve admits that it has little influence on food and energy, believes that it can control core inflation, and says that it has no control over asset inflation."

If at this late hour the Fed/FOMC truly do not comprehend that an irresponsible Fed Funds rate created the housing bubble (house/asset price inflation), they need their heads examined.

Dow Breaks 10,000 for 26th Time While Gold Shines

Nielson wrote:

"At that time, the U.S. government was using a 'deflator' of 1% to adjust U.S. GDP."

Yes, the GDP deflator has usually been a fraction of CPI, which, in itself, is still a fraction of true inflation. As long as the Fed continues to provide cheap money to their banker friends via a deflating dollar and fiat currency, even an 11,000 Dow doesn't mean much if the equity value of the stocks (in $US) has less and less real puchasing power over time.

Global Markets in Review: Risky Assets Disconnect from Fundamentals

If, as the article states, S&P is pricing 4.8% GDP (got to be kidding!) and job growth is expected to be extraordinarily anemic (probably true, unfortunately), then at some point the rally has to run against the coming reality--if these points are valid--that top line sales cannot be sustained by such a weak US consumer, and there are few earnings gains to be made from firing more people.

How U.S. Financial Sector Could Be Downsized

Harrison wrote:
"The FDIC will be directed to examine the books of the largest 25 insured banks to uncover all CDS contracts held."

Still $600 trillion in the derivatives market, and we don't know which banks may have a potential AIG-breaking $3 trillion in exposure.

Who Is Carlos Slim in Today's Market?

Baseline wrote:

"First, obviously nothing can stop Goldman Sachs (GS) and JP Morgan (JPM). With unfettered access to the Federal Reserve and no effective controls on their ability to take risk, they are in the catbird seat. The weakness of other big banks is further icing on their cake."

Unfortunately, Geithner, Summers, and Rubin are pals, and he and Paulson had ties to GS. I don't think its a stretch to say GS and the US Govt. are "genetically related." The are kin, and incestuous at that. Nevertheless, I'd bet 3 in 4 Americans have no idea who these people are. They have been amongst the most powerful men on Earth, but where there is ignorance their can be no democracy, and too many Americans are painfully unaware.

Two More Indicators of a V-Shaped Recovery

Pundit wrote:

"In the end, this recovery rests on a foundation of renewed confidence and declining fears. The recovery is now in a positive feedback loop where increased confidence leads to increased demand and production, which in turn leads to increased confidence."

Super, only U of M's confidence survey (October) came in lower than expected and lower than September. It would be nice to see some "V" shaped data to go along with the rhetoric.

Nokia Enters the Already Crowded Netbook Market: Pros and Cons

PC World comes down about where I do: Nokia just isn't cost competitive. Note that the netbook in PC World's quote below was introduced at Wal Mart for $299 and now sells for $249, but I've noticed them having trouble keeping the item in stock:

"It runs a Intel Atom 1.6GHz chip -- the same used in the market-leading Acer Aspire Ones -- and includes Wi-Fi, a 120GB hard drive, 1GB of RAM, and a 10.1? display. My Acer has all of that, and was $259 without any subsidy [no subsidy for the Nokia offering even for data plan subscribers]."
www.pcworld.com/articl...

Bond Market Expects Inflation to Be Only 1.75%

Bloomberg reported:
"Fed Vice Chairman Donald Kohn this week said inflation and growth will probably stay below the central bank’s objectives for some time, warranting low interest rates for an 'extended period.' His concerns echoed those of New York Fed President William Dudley."
www.bloomberg.com/apps...

This echoes FOMC sentiments that display concerns over disinflation, so long as consumer demand is weak. Strict monetarists might disagree, but, regardless, low inventories could still spark inflation in case of a sudden and unexpected demand spurt.

Why Stocks Go Up as Jobs Go Away

Rick Newman wrote:

"The question is whether the job market will hitch onto the coattails of the stock market, with companies starting to hire as their fortunes improve. . . ."

According to minutes from a September FOMC meeting quoted by the AP, companies will be "cautious in hiring and investing even as demand for their products . . . [increases]."
www.google.com/hostedn...

eBay: Growth at the Right Bid

The WSJ wrote, "EBay has been working for more than a year to restructure is core marketplace business, which has struggled amid the recession and intensifying competition from Internet retailers such as Amazon.com Inc. (AMZN)."

I think what it comes down to is that in the era of diminished consumer expectations, there's only room for the best of the best online merchants, and AMZN is the more competitive.

online.wsj.com/article...