Search results for credit crisis
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Posted
Oct 23 2009, 02:11 PM
by
Ken Kam
Rating:
Money Blog: Top Stocks Blog - MSN Money
Banks are reporting great earnings. But this is to be expected because making banks profitable is the most politically palatable way for the government to recapitalize the banking system. The government accomplished this by holding interest rates that banks have to pay on their deposits to almost zero and relaxing the accounting rules so they don’t have to be diligent about writing off their bad loans. It looks to me like the plan is working. If this continues, the banks will make enough money to earn their way out of the bad loans that are still on their books. Some banks are putting their executives’ interests ahead of their shareholders’, by using the lion’s share of the profits to pay record bonuses. Other banks are using the profits to do things more in line with their shareholders’ interests — paying back TARP, making acquisitions, and rebuilding their capital without diluting shareholders.
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Posted
Sep 25 2009, 03:43 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
The federal government’s Shared National Credit (SNC) review for this year found $53 billion in losses on large loans held by U.S. bank organizations, foreign bank organizations, and nonbanks such as securitization pools, hedge funds, insurance companies, and pension funds. The definition of a large loan is one exceeding $20 million.
The SNC said the $53 billion ”exceeded the combined loss of the previous eight SNC reviews and nearly tripled the previous high in 2002.” The study was first done in 1977.
Total credit commitments across the institutions reviewed was $2.9 trillion. The study looked at 8,955 credits extended to about 5,900 borrowers.
The results of the study are certainly an indication that many financial firms will have to raise more capital and that certain hedge funds and LBO operations may be in much deeper troubled that had previously been thought.
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Posted
Sep 08 2009, 04:09 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
 The World Economic Forum says that the United States is no longer the world’s most competitive economy. Switzerland has taken that role. The culprits behind the U.S. position are its weakened financial markets and what the organization calls worsening macroeconomic stability. As part of the project, more than 13,000 business leaders were polled in 133 economies.
Rounding out the top 10 nations in global competitiveness in the report were Singapore, Sweden, Denmark, Finland, Germany, Japan, Canada, and the Netherlands.
The analysis has a number of weaknesses. The report defines competitiveness as the "institutions, policies, and factors that determine the level of productivity of a country.” That, in turn, is based on twelve factors: 1) the effectiveness of institutions, 2) infrastructure, 3) macroeconomic stability, 4) health and primary education, 5) higher education and training, 6) goods market efficiency, 7) labor market efficiency, financial market sophistication, 9) technical readiness, 10) market size, 11) business sophistication, and 12) innovation.
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Posted
Aug 25 2009, 03:48 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
The number of reasons for President Obama to reappoint Ben Bernanke as Fed chairman greatly outnumber the reasons for letting him go and putting someone like Larry Summers in his place.
Bernanke is viewed as the hero of the great recession, the only man who bridged the two administrations in a time when the credit and financial markets were failing. Secretaries Paulson and Geithner may get high grades for their work in saving the banks and making money available to the capital markets, but at best they can only split any accolades
Bernanke was on deck for the entire storm. But, it is easy to forget that he took his job on February 1, 2006 which means that he was serving as Fed chief as the clouds were forming. He did little or nothing during 2006 and early 2007 to anticipate or hold off the disaster.
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Posted
Aug 10 2009, 03:48 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
 There are so few profit centers that banks can count on anymore.
Many of the largest financial firms are still losing money on derivatives. Consumer credit default rates are rising. Commercial real estate may be Armageddon for some banks. The only recent bright spot for financial firms last quarter was investment banking. That may be short-lived if the stock and bond markets stop advancing.
One thing the banks can count on is the fact that many consumers will overdraw their accounts. This is probably a more frequent occurrence during a recession when money is tight. Data from Moebs Services which recently appeared in the Financial Times shows that U.S. banks will collect roughly $38 billion in overdraft penalties this year.
That should make up for a lot of their losses from other sources. The Moebs data show that people with the lowest credit scores are those who pay the lion’s share of the fees. This cost of banking undoubtedly adds to their financial stress.
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Posted
Jul 31 2009, 04:01 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
The Wall Street Journal reports that a number of retailers are running “Christmas In July” sales. They may help store chains that are low on money, but they probably just displace sales that would normally have taken place in October. That may be good for retail balance sheets, but only for a brief period.
Consumers are so badly shaken by unemployment, flat wages, and credit problems that they are not likely to spend a lot of money in malls now and then come back and spend a great deal more money in the fall.
The most important effect of summer sales is that they will almost certainly hurt the bump in fourth-quarter employment that the economy normally gets as retailers take on additional temporary workers. Stores are not full now, so current staff levels are probably adequate to handle special sales, even successful ones. Retailers usually need extra people for the holiday rush. They won’t need those people if a lot of their revenues have been pulled forward in the year due to summer bargains.
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Posted
Jul 28 2009, 03:54 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
The idea of Fed chairman Ben Bernanke at a town hall meeting being covered by PBS made some Washington observers shudder. Others just assumed that Bernanke wanted to take a victory lap to celebrate the end of a recession many economists believe he was critical in halting.
One or two members of the press had the effrontery to say that Bernanke was trying to draw attention to himself and the fine job he has done because the president will make a decision about who will run the Fed starting in January. These people are assuming that Bernanke is “campaigning” for the job, as if he needed to after his remarkable actions of the last year.
No one could have imagined when the news came out that Bernanke was barnstorming on public television that an influential Gallup poll would show that Americans trust the Fed less than any other agency among nine that were part of questions put to 1,018 people from July 10-12. Only 30% of those asked said the Fed was doing an “excellent or good” job. The figure was 53% when Alan Greenspan was chief in 2003. His star has fallen considerably since then which makes the results of the survey about the Fed’s role today even more shocking.
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Posted
Jul 14 2009, 12:11 PM
by
Ken Kam
Rating:
Money Blog: Top Stocks Blog - MSN Money
With today's news of Goldman Sach's (GS) strong second-quarter results, it is becoming clear that the financial industry's survivors are going to be big winners. To find out which companies are worth evaluating, I asked one of Marketocracy's mFOLIO Masters, Eugene Groysman, for his best idea. mFOLIO Masters are the creme of the crop at Marketocracy.com, I've tracked Groysman for the past 6 years, and over that time he averaged 21.8% a year. That's why we started making his portfolio available for clients in our managed account program.
He surprised me by picking US Bancorp (USB) over better-known rivals Goldman Sachs, Bank of America (BAC), Citibank (C), Morgan Stanley (MS) and JP Morgan (JPM). I'm going to let him explain in his words why US Bancorp is his pick.
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Posted
Jul 10 2009, 03:48 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
The SEC says that companies holding California IOUs can trade them like stocks or bonds by handing them over to a broker. According to the agency, “California’s recently issued IOUs are ’securities’ under federal securities law.” That means they will be traded the same way as most municipal debt.
California is not the only state likely to issue IOUs. Budget problems in states including Michigan and New York are bad enough that they may have to adopt a California-like plan.
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Posted
Jul 06 2009, 10:23 AM
by
Catherine Holahan
Rating:
Money Blog: Top Stocks Blog - MSN Money
Is $12.8 trillion not enough? In an effort to pull the country from the brink of depression, the U.S. government has already spent, lent or pledged that amount on stimulus packages, bank and insurer bailouts, auto rescues and U.S. Treasury purchases.
But some are still calling on Congress and other rich nations to do more. On July 8, world leaders meeting in Italy for the G-8 summit expressed support for additional stimulus spending, should the need arise.
The call follows comments made early this week by Vice President Joe Biden indicating that the U.S. could seek a second stimulus package in the future. In an interview with ABC on Sunday, Biden said that the government misjudged the depth of the recession. He also said that, though President Barack Obama's administration is not seeking a second stimulus package now, it could do so in the future.
The reason for the seemingly incredible call for more public funds is the unprecedented pullback in consumer spending. The U.S. economy runs on personal consumption. In recent years, consumer spending has accounted for about 70% of U.S. gross domestic product. In the past two years, however, the consumer spending engine has stalled due to high unemployment, stagnant wages, tight credit and more than 14 trillion in paper losses due to steep declines in property values and market investments.
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