Archive for February, 2009
Saturday, February 28th, 2009
This is why publicly-funded deposit insurance should be banned. GMAC's ad for high-yield bank CD...
FDIC insurance creates terribly perverse incentives. GMAC is insolvent. It continues to exist only because taxpayers pumped $6 billion into the company at the end of December. In order to survive, GMAC is offering CD rates ...
Posted in banking | 12 Comments »
Saturday, February 28th, 2009
(Send links, videos, pics to optionarmageddon at gmail with subject “link” ... Thanks to Dan C.---$25---for the tip!)
Berkshire Hathaway Reports Worst Year Ever (WSJ)
Warren Buffett's Annual Letter to Shareholders (Berkshire Hathaway) "...the economy will be in shambles throughout 2009 - and, for that matter, probably well beyond." Contrast with his ...
Posted in links | No Comments »
Friday, February 27th, 2009
Breaking news on WSJ.com:
"General Electric to cut dividend to 10 cents a share from 31 cents a share."
The cut will save the company $9 billion annually according to CNBC. This should come as no surprise. As we've noted here on OA, GE is starving for capital to shore up its ...
Posted in stocks | 2 Comments »
Friday, February 27th, 2009
(Send links, videos, pics to optionarmageddon at gmail with subject “link”)
Rocky Mountain News shuts down (Rocky Mountain News) CEO of parent company Scripps told the staff of the decision himself: "I could say stupid things like 'I know how you feel.' I don't. We are just deeply sorry. I hope ...
Posted in links | No Comments »
Friday, February 27th, 2009
Treasury and Citi announced their deal this morning by which the government and other preferred stockholders will convert their shares to common equity. No more money is being spent by the government, but shareholders are having their stakes cut to 26% and the government now gets a 36% ownership stake ...
Posted in bailout, banking, leverage, Wall Street | 6 Comments »
Friday, February 27th, 2009
The economy is contracting much faster than economists thought. (AP)
The economy contracted at a staggering 6.2 percent pace at the end of 2008, the worst showing in a quarter-century, as consumers and businesses ratcheted back spending, plunging the country deeper into recession.
The Commerce Department report released Friday showed the ...
Posted in debt, Economy, inflation, leverage | 1 Comment »
Thursday, February 26th, 2009
Anyone taking bets on which company will be the single largest money sink for taxpayer cash between now and 2012? Fannie, Freddie, AIG, Citi, BofA, GE, others? WSJ:
Fannie Mae said its fourth-quarter net loss widened to $25.2 billion amid massive fair-value losses and credit-related expenses, bringing its net loss for ...
Posted in bailout, GSE, housing | 1 Comment »
Thursday, February 26th, 2009
(Send links, videos, pics to optionarmageddon at gmail with subject “link” ... Thanks to Anonymous---$7---and Vijay C.---$15---for the tips!)
Recipe for Disaster (Wired) Felix Salmon on "the formula that killed Wall Street"
GM burns $6.2 billion of cash in Q4 (AP) The automaker's GAAP accounting loss was $30.9 billion for 2008.
Dangerous Loans ...
Posted in links | 1 Comment »
Thursday, February 26th, 2009
So much for the CBO's estimate of $1.3 trillion for this year's estimate. Including the stimulus bill and Obama's new budget, the deficit is not projected to be much higher (Reuters)
President Barack Obama will forecast the biggest U.S. deficit since World War Two in a budget on Thursday that urges ...
Posted in accounting, debt, Economy, taxpayer issues | 2 Comments »
Thursday, February 26th, 2009
This move was greeted very positively by the market as bank stocks were up on the open. It is long overdue. (Marketwatch)
JPMorgan said it expected to save $5 billion in common equity every year after cutting its quarterly dividend Monday to 5 cents a share from 38 cents. JPMorgan made ...
Posted in banking, leverage, stocks, taxpayer issues | 4 Comments »
Wednesday, February 25th, 2009
Truth-telling in Congress (hat tip Ronbot)
Posted in Dollar, Economy, inflation | 1 Comment »
Wednesday, February 25th, 2009
hat tip Nick Gogerty (via Financial Rounds)
Posted in funny | No Comments »
Wednesday, February 25th, 2009
(Send links, videos, pics to optionarmageddon at gmail with subject “link” ... Thanks to Wendie N.---$20---for the tip!)
Man Living in Cave Hit by Recession (ABC)
Bailout Bank Blows Millions Partying in L.A. (TMZ)
Troubled San Francisco Paper in Danger of Closing (AP) The newspaper shakeout continues.
Conde Nast also in deep trouble (NY ...
Posted in links | No Comments »
Wednesday, February 25th, 2009
Two weeks ago I wrote "With Allstate You're Not in Good Hands." The company had convinced regulators to change capital adequacy requirements to allow, among other things, the inclusion of deferred tax assets as regulatory capital. I did some digging and, sure enough, Allstate's story is not unusual. Lincoln National ...
Posted in accounting, Fed, leverage, shorts | 11 Comments »
Tuesday, February 24th, 2009
(Send links, videos, pics to optionarmageddon at gmail with subject “link” ... Thanks to Doug D.---$37---for the tip!)
The Case Against the Mortgage Interest Deduction (NYT Economix) "Subsidizing interest payments encourages people to leverage themselves to the hilt to bet on housing markets." Interesting that in 2007 a French court struck ...
Posted in links | 2 Comments »
Tuesday, February 24th, 2009
Now that unemployment has kicked into a higher gear, more folks will be defaulting on mortgages, meaning house prices are likely to continue their slide in coming months. As they do, household and bank balance sheets will continue to deteriorate. Said another way, their leverage ratios will continue to increase ...
Posted in Economy, housing | 1 Comment »
Monday, February 23rd, 2009
Northern Trust Economist Paul Kasriel is always worth reading. His perspective is always fresh and his prose is always articulate and well-reasoned. In his latest missive he debunks the "paradox of thrift," which is the Keynesian principle most often cited to support fiscal stimulus. (hat tip Rick)
Mainstream economists and the ...
Posted in Economy | 18 Comments »
Monday, February 23rd, 2009
Here's a news flash from Politico:
Former Time Warner and future Citigroup Chair Richard Parsons was just moments ago at the NW Gate to the WH.
“Parsons,” he said when asked by Secret Service to identify himself.
Asked again, he repeated that the last name was “Parsons” and explained that he had a ...
Posted in bailout, banking, politics, Wall Street | No Comments »
Monday, February 23rd, 2009
Here's a link to my interview with NPR's Planet Money this morning.
Press the play arrow on the progress bar below the photo of the fish. My segment starts about 2 minutes into the clip. The better stuff starts at the 5 minute mark.
Unfortunately they didn't use everything I said in ...
Posted in Uncategorized | 1 Comment »
Monday, February 23rd, 2009
(Send links, videos, pics to optionarmageddon at gmail with subject “link” ... Thanks to Siddhartha G.---$50---for the tip!)
READER NOTE: Sorry for the delay in posting today's links, was doing an interview with NPR regarding the Fed's new favorite capital measure: tangible common equity.
Washington State sends $1 Food Stamp Checks to ...
Posted in links | No Comments »
Monday, February 23rd, 2009
------------------
Tangible Common Equity Ratio = Tangible Common Equity / Tangible Assets
Tangible Assets = Total Assets - Intangible Assets - Goodwill
Tangible Common Equity = Shareholder's Equity - Preferred - Intangible Assets - Goodwill
An explanation of the TCE ratio is here. The latest data for banks' tangible common equity (3/31/09) is here. ...
Posted in banking, bankruptcy, debt, leverage | 9 Comments »
Sunday, February 22nd, 2009
February 22, 2009
TO: Thomas K. Brown c/o BankStocks.com
RE: Your blog post criticizing 60 Minutes for its piece on Herb and Marion Sandler and their option ARM loans.
Dear Tom,
In the column referenced above, you express great admiration for the Sandlers and you criticize 60 Minutes for its report on their bank, ...
Posted in banking, debt | 10 Comments »
Sunday, February 22nd, 2009
Another newspaper company goes under... (WSJ)
Journal Register Co., the debt-strapped owner of the New Haven Register and 19 other daily papers, filed for Chapter 11 bankruptcy protection Saturday, at least the third newspaper publisher to tip into bankruptcy court in recent months.
Journal Register has been plagued for more than a ...
Posted in bankruptcy | No Comments »
Saturday, February 21st, 2009
Three weeks ago, the positively schizophrenic Op-Ed page for the WSJ published yet another piece by a big financial brain proposing a "solution" to the financial crisis. While the editorial page itself is so rigidly ideological as to be useless, the op-ed page publishes stuff all over the map. The ...
Posted in accounting, credit crunch, debt, deflation, Economy | 17 Comments »
Saturday, February 21st, 2009
(Send links, videos, pics to optionarmageddon at gmail with subject “link” ... Thanks to Robin G.---$5---and George F.---$30---for the tips!)
Volcker's Vision of a Return to Narrow-Banking (Jesse) Includes a good video of Volcker discussing "the mother of all financial crises." (hat tip Aaron Krowne)
Bank Failure #14 (FDIC) Another small bank. ...
Posted in links | 1 Comment »
