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Posted
Oct 10 2008, 07:46 AM
by
Todd Harrison
Rating:
Money Blog: Top Stocks Blog - MSN Money
Shhh. Can you hear it?
Remove your ear from the ground. It's no longer a murmur. The shifting social mood has bubbled to the surface: Americans are starting to fight back.
Our 401(k)s are evaporating before our eyes. Elected officials trumpet power grabs that moonlight as rescue packages. Talking heads mention in passing that General Motors may not be around next year.
And while some are content to sit, mouth agape, staring at a screen, watching flickering symbols drop in value and bank accounts dwindle, others have had enough and are doing something about it
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Posted
Oct 08 2008, 10:32 AM
by
Todd Harrison
Rating:
Money Blog: Top Stocks Blog - MSN Money
Shorts will be returning to the game for the financials, which could have played a role in the massive sell-off in that sector. In the meantime, shorts are chomping at the bit.
The Financial ETF closed in unchartered territory on huge volume. Even with the 500-point decline on the Dow, old-school market watchers will tell you it wasn’t capitulation; volume was under 2 billion, when it should have been over 3 billion. Volume was massive in the financials yesterday, because there was no clear-cut reason for the move. Sure, Bank of America is going to raise money and cut its dividend, but why was Morgan Stanley beaten to a pulp?
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Posted
Oct 07 2008, 11:09 AM
by
Todd Harrison
Rating:
Money Blog: Top Stocks Blog - MSN Money
Last week, by its own account, Wachovia was a breath away from failing. Today, two of the four biggest banks in the country are literally suing each other for the right to buy the troubled Charlotte-based lender.
As I write this morning, Wachovia's fate is unknown. Whether that will be the case by lunchtime is anyone's guess.
By all accounts, Wells Fargo's bid makes more sense, it being the far stronger firm and eschewing the FDIC's involvement in the transaction. Citigroup, however, has yet to capitalize on the bank firesale its competitors are taking advantage of, and it doesn't want to miss the party.
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Posted
Oct 06 2008, 10:18 AM
by
Todd Harrison
Rating:
Money Blog: Top Stocks Blog - MSN Money
The Rescue Plan was necessary but not sufficient to fix the crisis. There’s going to have to be more heavy lifting. Let me offer a few ideas about what possible actions might be taken in the future. I’m not advocating these actions, I’m simply telling you what might happen.
If you’re a large investor or sovereign wealth fund that put money into banks last year, you’re down anywhere from 35-50% (unless you invested in Washington Mutual, and then you are down 100%). You’re unlikely to invest more in any financial institution without some very real understanding of what is on the balance sheet of the bank that is asking for your money.
What the Paulson plan potentially does is remove the questionable debt. The bank may have to write down assets in order to sell the debt to the government, but they end up with a transparent balance sheet with hopefully known risks. Then they can go to the market and try to raise capital. Shareholders will get diluted.
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Posted
Oct 03 2008, 10:24 AM
by
Todd Harrison
Rating:
Money Blog: Top Stocks Blog - MSN Money
As the specter of bailouts upon bailouts looms, it's become clear that the U.S. government may be pushing us -- wittingly or unwittingly -- toward hyperinflation. I'm writing today, with no small degree of concern, to suggest that there will be non-economic consequences to hyperinflation which no one is yet considering - and these consequences are far more dire.
In a true hyperinflationary situation, food is very quickly going to become a high-demand asset. Indeed, if hyperinflation hits the U.S., the primary concern won't be food inflation but rather food availability.
To understand why, it's important to grasp that the American system of food production and distribution is unlike any other in human history. Starting in the 1950s (and accelerating rapidly in the '70s and '80s), food production in the U.S. left behind the model used by every human civilization since people first settled together in Babylon: Namely, grow the food where the people live.
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Posted
Oct 02 2008, 10:33 AM
by
Todd Harrison
Rating:
Money Blog: Top Stocks Blog - MSN Money
Each day that the engine of economic growth -- credit -- is prevented from flowing freely, the crisis worsens - and its effects on the broader economy keep piling up.
Even as Congress rushes to pass the latest iteration of the bailout plan -- or emergency rescue plan, or stimulus plan, or whatever it happens to be called to make it sound politically expedient and palatable to confused and frightened Americans -- the economy is grinding to a halt.
After years of fudging the numbers to make growth look stronger than it actually is, policymakers may have to finally accept the fact that recession is inevitable. Weekly jobless claims rose to a 7-year high, new car sales are tumbling, and the stock market is gyrating wildly on an almost hourly basis.
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Posted
Oct 02 2008, 12:27 PM
by
Todd Harrison
Rating:
Money Blog: Top Stocks Blog - MSN Money
On the wall of the lobby of the Baltimore Sun is a quote, reprinted in large type, from its great columnist H.L. Mencken. It reads:
"As I look back over a misspent life, I find myself more and more convinced that I had more fun doing news reporting than in any other enterprise. It is really the life of kings."
The quote is nostalgic and romantic, and I’m reminded of it every time I read another death notice for newspapers: Indeed, they're in bad shape, knocked flat on the canvas and in danger of staying down for the count.
While Mencken and the reporters of past generations dreamed of being newspapemen, the idea is anathema to younger generations -- they either read the news online, or not at all. The shift has been calamitous: Newspapers have as yet been unable to monetize their online operations.
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Posted
Sep 29 2008, 12:56 PM
by
Todd Harrison
Rating:
Money Blog: Top Stocks Blog - MSN Money
The Dow found a way to rally Friday, achieving an almost 300 point reversal off the bottom. Of course the move was advertised as an assumptive action on the part of investors that a deal would be crafted on Capitol Hill over the weekend.
Interestingly, action in the credit market said the exact opposite. If I had to rely on one to be a canary in a coal mine, it would be the latter for me.
Be that as it may, equities looked pretty good, especially those banks that could be among those still standing when the dust settles. There was a part of me that wondered if the market was up because it took the Washington Mutual news in stride, with just a little initial nervousness and then displaying adult-like calm. Then there was another part of me, albeit a smaller part of my being, that wondered if the market was up on Friday because there was a chance of a deal not happening. I know it's one of those things we’ll never really know, however, because a plan is going to be unveiled.
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Posted
Sep 29 2008, 07:08 AM
by
Todd Harrison
Rating:
Money Blog: Top Stocks Blog - MSN Money
The bailout is done! Time to breathe a sigh of relief. Or is it?
As details emerge about the financial bailout package that was jammed through Congress over 10 days of political theater at its most nauseating, there’s still a striking omission from the plan to right American’s economic ship.
The failure of bureaucrats and regulators to propose a realistic solution for the foreclosure problem is emblematic of their inability to treat the root cause of an issue, focusing instead on simply applying band-aids to the visible symptoms
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Posted
Sep 26 2008, 12:19 PM
by
Todd Harrison
Rating:
Money Blog: Top Stocks Blog - MSN Money
The bailout of the financial system has officially become a typical Washington dog-and-pony show. Partisan politics, it turns out, do in fact trump economic expediency and our elected officials' desire to act in the best interests of their constituency.
Meanwhile, back in reality, the short-term money market -- the oil that greases the gears of the financial system -- is coagulating.
According to the Wall Street Journal, cash is flowing out of the commercial paper market at an alarming rate. In the past two weeks, the market contracted by $113 billion, the largest Minyanville's Why Wall Street Will Never Be the Sameamount since last summer when the Federal Reserve was forced to take unprecedented steps to unfreeze credit markets.
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