Scary Banks

By | 2014-09-04T14:26:13+00:00 October 31st, 2008|Global Market Update|

Halloween is supposed to be the time or make-believe ghouls and goblins. But there are some real-life zombies out there that are really scary. I'm referring to zombie banks. These are banks that, if you marked their balance sheets to market, have no equity. But because the FDIC guarantees their deposits they can sell CDs and keep operating. GMAC bank, AIG bank, and IndyMac Federal all offer 1-year CDs online that pay over 4%. Notice anything similar? Yeah, they're all bankrupt, or almost. In [...]

Oh, Grow Up

By | 2014-09-15T14:44:17+00:00 October 30th, 2008|Global Market Update|

Do the presidential candidates live in a fantasy world? Or do they assume that we just can’t handle the truth? In the real world people need to pay their bills. So why do the candidates assume that they can hand out goodies to all and sundry and no one has to pony up? Barack Obama says he’ll reduce taxes for 95% of working families. John McCain plans to cut corporate taxes. Neither specifies where he will make up for the lost income. But if [...]

Oil Slick

By | 2014-09-04T14:23:08+00:00 October 29th, 2008|Global Market Update|

Everyone is worried about deflation and recession now. But I’m looking across the valley. When oil prices were over $140 a barrel and everyone was screaming “inflation,” why didn’t I worry? Because I was confident that the higher prices would bring on supply and that in a year or so we would be facing an oil glut. That’s what we saw in the ‘80s. But now that oil is back under $70, I’m worried. Why? Because the combination of drastically lower prices and a [...]

Fed Up

By | 2014-09-04T14:21:52+00:00 October 28th, 2008|Global Market Update|

This is Doug Tengdin from Charter Trust with the Global Market Update for Tuesday, October 28th, 2008. Remember the Fed? We used to stop everything and watch. Not lately It seems rather quaint to be talking about the Federal Reserve and interest rates. Kind of like soldiers coming back from a war zone being warned about various health risks. When you've looked at the end of the world, other issues pale in comparison. But even if the credit crisis has been taking center stage, [...]

No Pain, No Gain

By | 2014-09-04T14:11:43+00:00 October 27th, 2008|Global Market Update|

Are we there yet? After the volatility of the past two months, everyone wants to know if we’ve seen the worst that the market can dish out. The answer is, it all depends. Now that the Federal Government has shown itself a willing partner in the banking system, it seems like the worst of the financial panic is behind us. Even if a further decline in the housing market burns thought the capital infusion that the banks have received, the Feds have shown that [...]

The Maestro in Concert

By | 2017-07-17T12:35:24+00:00 October 24th, 2008|Global Market Update|

"The only thing people like more than a hero is to see a hero fall." As I listened to Alan Greenspan testify before Congress, I heard Representatives insult him, question his judgment, and repeatedly interrupt him. Say what? This is "The Maestro." In years gone by, a politician's main economic qualification might be his friendship with Alan the Mighty. How have the mighty fallen! In the go-go years of the internet bubble no one could criticize the Chairman Now that cracks are appearing in [...]

On Ice

By | 2014-09-04T14:08:45+00:00 October 23rd, 2008|Global Market Update|

Here we go again. Iceland was home to a hot banking sector. Focusing on trade finance, the Icelandic banks attracted deposits from abroad and had assets four times larger than their entire economy. But their undercapitalized banks made some bad loans, and now there isn’t enough cash in the country to bail out the banks. So the banks are getting loans from the IMF, the English government, and even the Russians. But there’s a hitch. Leveraged financial institutions bought leveraged financial instruments and the [...]

Personnel Responsibility

By | 2014-09-04T14:07:52+00:00 October 21st, 2008|Global Market Update|

Where were they? Everyone wants to know where the risk managers were. Where were the regulators? Where were the rating agencies? Where were the internal controls when all this sub-prime debt was inflating a real-estate bubble? One of the answers is that they were right there, but nobody was listening--in part because of a culture where successful traders and loan originators get paid seven to fifteen times what a risk manager gets paid. And for the most part it seemed like they were worth [...]

Of Plans and Power

By | 2017-07-17T12:35:24+00:00 October 20th, 2008|Global Market Update|

So what do you thing about the rescue plan? That’s a question I must hear a dozen times a day. And I tell people: I don’t see a credible alternative, but I’m deeply troubled by the new power of the U.S. Treasury. Think about it. One man has the authority to invest money greater than most countries’ economies. He can also tell the banks he supports whether they can pay dividends to their investors, whether their CEOs are entitled to a bonus, and whether [...]

Looking Backward

By | 2017-07-17T12:35:24+00:00 October 17th, 2008|Global Market Update|

120 years ago Edward Bellamy wrote a novel about a socialist utopia. In the '30s, John Dewey listed it as the most influential novel of the previous 50 years. While his book seems to predict innovations like debit cards and radio stations, the bulk of his text compares his utopia to what came before. Looking Backward is the title of his work, and today many people make their financial plans with their gaze fixed firmly on the rear-view mirror. When times are good, they [...]