Here is a rather excellent article written by Todd Harrison of Minyanville.com regarding the "privatize profits and socialize losses" policy of the current Fed.
Chasing liberty
Commentary: Facing a critical juncture in financial engineering
http://www.marketwatch.com/news/sto...x?guid={22E814E7-51D9-430C-A955-89A3287BD009}
It's an excellent article in that it not only dovetails neatly with the views of the more sober bears on this site, but also it contains rare balance for an article written by an American.
Worth following this chap. IMO
Trading Diary-
Don't Blame The Free Market
By Colin Twiggs
March 27, 2008 2:00 a.m. ET (6:00 p.m. AET)
http://www.incrediblecharts.com/free/trading_diary/trading_diary.htm
These extracts from my trading diary are for educational purposes and should not be interpreted as investment advice. Full terms and conditions can be found at Terms of Use.
Free Market
The Financial Times features an article pronouncing the end of a three decade move towards market-driven financial systems and quotes Joseph Ackermann as saying: "I no longer believe in the market's self-healing power". The Deutsche Bank CEO appears to have forgotten that financial markets are the exact opposite of a free market. Instead of allowing the market to establish its own equilibrium rate of interest, matching supply of credit with demand, the Fed and other central banks impose artificial rates for political ends.
The current financial crisis was wrought by the Fed imposing just such an artificially low rate. The resulting mis-match between supply of credit and demand encouraged poor lending practices and fuelled a housing bubble of epic proportions. Financial markets require greater policing, but precisely because they are not free — and there is no market mechanism to prevent the resulting excesses.
Along the same lines, this article from Jeff Randall of the UK Telegraph takes a more cynical, though no less accurate look at the bankers obnoxious duplicity.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/26/ccjeff126.xml
2331 GMT [Dow Jones] S&P/ASX 200 feels like its seen its bottom, so institutions will soon come back in buying, with many holding "obscene" amounts of cash, says Goldman Sachs JBWere afternoon report. Says if markets can withstand more subprime losses (How much more?), tight credit markets (How much tighter?), downgrading of U.S. EPS estimates (How much more downgraded?, plus U.S. recession signs (How many more signs can their be?), that will confirm bottom, says broker. ""When all the instos feel a bit more comfortable (How much is "A bit more comfortable"?, the mother of all rallies will hit and we'll see the upper end of the trading band reached fairly quickly." Tips trading band range of 5000 to 5500-5800. Index last 5301.7. (DWR)
Well duhhhhhhhhh
TOM UTLEY: Even an economic dunce like me foresaw the credit crunch
SNIP:
Indeed, as far as I remember, only once before have I dared venture an opinion about economics in these pages - and that was 16 months ago, when I said it was utter madness for banks and building societies to go on lending housebuyers as much as seven times their annual salaries.
With personal debt in Britain then estimated at £1.3 trillion, I mused: "Can we really go on living like this, without risking the most catastrophic fall when the economy turns downwards, the creditors start calling in their money - and the never-never becomes the now-now?"
If even an economic ignoramus like me could grasp such an obvious truth, then why did it escape the board of Northern Rock, the Financial Services Authority and the chief economists of just about every big financial institution involved in the American housing market?
What worries me is that if we economic illiterates predicted the credit crunch, long before we'd even heard the term, might we not be right, too, to be deeply concerned about the flight of manufacturing jobs abroad?
FULL ARTICLE
A bloody interesting article in the UK Daily Mail that applies equally to all Anglo economies. In it, he asks the hard questions that some of us economic numpties, trading at home in our pyjamas have been asking:
J.C. Penney cuts first-quarter outlook
J.C. Penney Co. (JCP) on Friday warned that its first-quarter profit will come in at about 50 cents a share, compared to previous guidance of 75 to 80 cents a share. Citing weaker-than-expected sales through the Easter holiday, the retailer also forecast a low-double-digit decline in same-store sales for March and a high-single-digit decline for the first quarter. Its prior expectation was for low-single-digit declines for both periods. J.C. Penney's Chairman and Chief Executive Myron Ullman said, "Consumer confidence is at a multi-year low." Analysts surveyed by FactSet Research expected J.C. Penney to report first-quarter earnings of 75 cents a share. Shares of J.C. Penney fell more than 13% in premarket trading to $34.90.
also... KB Homes also reported a loss, missing expectations.Signs that the US consumer is feeling a little tapped out.
also... KB Homes also reported a loss, missing expectations.
also... discussions earlier this morning on CNBC from ex-Treasury Snow and Ex-Fed Lindsey over concerns for credit for the automotive market and fears of a broader downturn in car sales.
also... news from Fremont General this morning that it has received a directive for its bank subsidiary, from the FDIC and California Dept of Financial Institutions, to recapitalize in 60 days or accept an offer to be acquired with Fremont General to divest themselves of the bank.
Ho Hum... just another day in paradise...
Cheers
..........Kauri
ooops,,, sorry bout that... is that a link to the 2nd item in the blue box??
German Banks Could Hemorrhage 70 Billion Euros
Spiegel ^ | March 28, 2008
Posted on 03/29/2008 7:22:29 AM PDT by DeaconBenjamin
The fallout in Germany from exposure to America's subprime crisis may be far bigger than previously feared. One major newspaper puts estimated losses at a whopping 70 billion euros, while a prominent politician warns that the US recession has already arrived in Germany. On Friday, Bavarian governor Günther Beckstein said the state's BayernLB bank would announce losses related to the credit crisis of up to €4 billion -- double the €1.9 billion figure the bank had previously disclosed
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