Fed Food

By | 2014-09-04T18:42:37+00:00 June 30th, 2009|Global Market Update|

Was the grilling of the Fed chair a summer sizzler? When Bernanke testified before Congress last week, a lot of people were surprised by the rancor. But this is a sensible approach to a newly political institution. In the fabled days of yore, the Fed used "System RPs" and "Bill Passes" to manage the money supply and regulate the use of the discount window. On a good day, they could oversee a bank holding company exam. But once the Fed gets involved in saving [...]

Emerging Shoots

By | 2014-09-04T18:41:47+00:00 June 22nd, 2009|Global Market Update|

June is bustin' out all over. Especially in emerging markets. Recent attitudes have been positively giddy. Commodity prices have helped stock indices from Singapore to Turkey to Brazil. An composite of these markets has risen over 70% since March. Clearly, the shock resulting from last year's credit crunch is fading. In May, Singapore's exports rebounded 5%; Hong Kong's unemployment rate was unchanged; and IMF support has reduced the risk of a cash crisis in Eastern Europe But some clouds are on the horizon. All [...]

Bootleggers and Baptist

By | 2014-09-04T18:40:17+00:00 June 19th, 2009|Global Market Update|

Sometimes moralists align with monopolists to protect their markets. A few years ago, Mississippi was a "dry" state. Every so often someone would propose that they go "wet" and allow people to buy liquor at the store. At that time, preachers would rail against the evils of alcoholism, aided and abetted by moonshiners and bootleggers. Those folks had a vested interest in keeping whiskey out of the stores and in their `stills. Monopolists always want higher barriers to entry. We can see the same [...]

Endangered Species

By | 2014-09-04T18:38:08+00:00 June 12th, 2009|Global Market Update|

Pity the poor Fed Watcher. There's hardly anything left to do. In days gone by, Fed watching was a contact sport. There were cryptic actions by the New York Fed that went by names like "System RP" and "Bill Pass." These seemed more like football plays than policy actions. Back then, a Fed watcher had to translate the arcane actions into meaningful intentions. It took training in economics, finance, and communications. In 1994 the Fed initiated a new policy of announcing Fed decisions. But [...]

Compensating Interests

By | 2014-09-04T18:36:38+00:00 June 10th, 2009|Global Market Update|

Everyone's looking at controlling compensation. One of the stories that people like to tell about the credit crunch has to do with compensation. Because a bunch of kids were paid too much too fast, the story goes, they were effectively incented to gamble with house money. When they lost big-time, the Treasury had to pick up the tab. Never mind if this is true-but it makes a nice story. So now the government is looking to limit pay, not just for TARP recipients, but [...]

Moderate Medicine

By | 2014-09-04T18:34:41+00:00 June 9th, 2009|Global Market Update|

"Moderation in all things" seems a sensible rule of thumb. But for some economists, when it comes to government spending, you can't get too much. For months, Nobel-laureate Paul Krugman has been berating the Obama administration for its stinginess in only approving a $700 billion stimulus package. After all, global real estate probably declined by about $5 trillion. If half of that occurred in the U.S., then the government is making up only a fraction of the loss. It's understandable that many people want [...]

Dodgeball

By | 2014-09-04T18:33:34+00:00 June 8th, 2009|Global Market Update|

This is Doug Tengdin from Charter Trust with the Global Market Update for Monday, June 8th, 2009. Everybody's worried about GM and Chrysler. But what about the other guy? Yes, we're talking about Ford. For years, Ford was the also-ran in the auto market. Their rental agency, Avis, was perpetually second to GM's brand, Hertz. The number-two moniker seemed permanently tattooed on the company's chest. Well ever since Alan Mulally mortgaged the company to the banks, Ford has been dodging what's been thrown at [...]

Physics Envy

By | 2014-09-04T18:31:57+00:00 June 5th, 2009|Global Market Update|

Is everybody trying to be a physicist? Physics seems to be the science of uniform laws of motion and force. Hit a billiard ball with X force and see Y result. One can see the appeal. In health care, evidence-based medicine could lead to alternate treatments and healthier people. In economics, laws of money supply and output can help us tame inflation and stimulate the economy. Only life is rarely so neat and clean. You can't do controlled experiments on municipal finance like you [...]

What Went Wrong?

By | 2014-09-04T18:30:23+00:00 June 3rd, 2009|Global Market Update|

What brought a company low that at one time embodied the cool of Apple, the financial heft of Microsoft, and the marketing savvy of Toyota? At one point, every other car sold in America was made by GM. In a word, protection. When Alfred Sloan organized Billy Durant's hodgepodge of brands, he created a car for every purpose. The entry-car was a Chevy. As customers went upscale, they could ascend through Olds and Buick to eventually land a Caddy, and never leave the GM [...]

They All Laughed

By | 2014-09-04T18:28:50+00:00 June 2nd, 2009|Global Market Update|

The old commercial stated that when E.F. Hutton talks, people listen, But apparently when the U.S. Treasury Secretary speaks in China, it's okay to laugh. When Secretary Geithner asserted that Chinese investments in US Treasury and Agency bonds were very safe, his answer drew loud laughter from his student audience, reflecting skepticism in China about the wisdom of a developing country accumulating a vast war-chest of foreign reserves. Vice Premier Wang Qishang later "clarified" that economic dialogue was wise, but the message was clear: [...]