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Multiple quick fixes tried for US financial crisisWASHINGTON -- Urgently moving on multiple fronts to stem the worst financial crisis in decades, the government today said it would safeguard assets in money market mutual funds and temporarily banned short-selling of financial company stocks. The Treasury Department has asked Congress to give it sweeping power to buy up toxic debt that has unhinged Wall Street.Source: L.A. Times - Business | 19 Sep 2008 | 1:43 pm Banking shares rise more than 30%Leading UK shares rise in early Friday trading as investors welcome the City regulator's ban on short-selling.Source: BBC News | Business | World Edition | 19 Sep 2008 | 1:41 pm Treasury pulls out stops to support money marketsWASHINGTON (Reuters) - U.S. officials rushed to shore up ailing money markets on Friday after signs that this long-safe corner of financial markets, home to some $3.5 trillion of deposits, was at risk of falling victim to the year-old credit crunch and bring the crisis to Main Street.Source: Reuters: Business News | 19 Sep 2008 | 1:38 pm Russian trading halted after reboundRead full story for latest details.Source: Business and financial news - CNNMoney.com | 19 Sep 2008 | 1:34 pm Treasury pulls out stops to support money markets (Reuters)
Source: Yahoo! News: Business | 19 Sep 2008 | 1:28 pm Metals Stocks: Gold tumbles most in 25 years after rescue planGold futures stumble as traders exit positions following the precious metal’s sharp rally over the prior two sessions, pulling back in reaction to word of a U.S. rescue plan to help revive crippled financial institutions.Source: MarketWatch.com - Top Stories | 19 Sep 2008 | 1:25 pm HSBC scraps £3bn Korea deal amid global turmoilHSBC has walked away from its $6 billion ($£3.3 billion) deal to buy 51 per cent of Korea Exchange Bank, citing plummeting global asset values, the bank said today.Source: Latest Business News from Times Online | 19 Sep 2008 | 1:24 pm Online Brokers Catch A Bid (SCHW, AMTD, ETFC, IBKR)This is the new official 48-hour period to be known in the future as GOVERNMENT BACKSTOP DAYS. While financial stocks are a big beneficiary of this, the moves being seen in online trading firms are just as large or even larger than some of the troubled banks or brokerage firms this morning. Here are some of the pre-market moves and we also included a change from the intraday lows of yesterday morning so you can really see the exaggerated moves.
Jon C. Ogg Source: 24/7 Wall St. | 19 Sep 2008 | 1:24 pm Emerging Markets Report: Russian markets rally, causing another trading haltRussian stocks rally after three days of trading halts, helped by the rally in equity markets around the world as well as the country's plan to pump billions into the banking system and cut bank reserve requirements.Source: MarketWatch.com - Top Stories | 19 Sep 2008 | 1:20 pm Futures Movers: Crude-oil futures rise on hopes for U.S. rescue measuresCrude-oil futures make early gains, getting a boost toward $100 a barrel from hopes that U.S. government officials will hammer out a broad-ranging plan to fix the financial crisis.Source: MarketWatch.com - Top Stories | 19 Sep 2008 | 1:20 pm Indications: Wall Street looks to opening surge on bank bailout planU.S. stock futures rallied Friday as the government considered a plan to buy the bad assets from banks, the Securities and Exchange Commission introduced a temporary ban on financial stock short-selling and the Treasury Department introduced an insurance program for money market funds.Source: MarketWatch.com - Top Stories | 19 Sep 2008 | 1:20 pm Bond Report: Treasurys plunge on Washington's resolution planNEW YORK (MarketWatch) -- Treasurys plunged Friday, sending yields on benchmark notes up by the most in at least two decades, amid investor relief that the U.S. government is planning a broader solution to the financial crisis.Source: MarketWatch.com - Top Stories | 19 Sep 2008 | 1:18 pm Toxic-debt plan and short-selling curbs lift marketsNEW YORK/LONDON (Reuters) - The U.S. government laid out $50 billion to guarantee money-market mutual funds, curbed short-selling and crafted a sweeping plan to mop up toxic mortgage debt, sending global markets higher on Friday.Source: Reuters: Business News | 19 Sep 2008 | 1:17 pm Oil back above $102Oil prices zoomed back above $100 a barrel Friday as some hope was restored on Wall Street that a government bailout could help ease the credit crisis that has put a stranglehold on the U.S. economy.Source: Business and financial news - CNNMoney.com | 19 Sep 2008 | 1:17 pm UK banks jump on short-selling banLondon's banks led a strong rebound after regulators prevented traders from seeking to profit from falling share prices in the financial sector. Sentiment improved across the globe as investors welcomed the prospect of a giant US government-sponsored vehicle to take on toxic assets.Source: FT.com - US homepage | 19 Sep 2008 | 1:17 pm The Reserve closes its fundsMoney-market fund company The Reserve, shaken by seeing its flagship fund “break the buck” and suffering from record redemptions, has closed all its funds.Source: MarketWatch.com - Top Stories | 19 Sep 2008 | 1:16 pm Citigroup reportedly considering bid for WaMuCitigroup may be mulling a bid for Washington Mutual, according to a Wall Street Journal report.Source: MarketWatch.com - Top Stories | 19 Sep 2008 | 1:15 pm Fed says to make loans to aid money market fundsWASHINGTON (Reuters) - The U.S. Federal Reserve on Friday announced more steps to aid battered markets, including opening its discount window to financial institutions to enable them to purchase certain assets from money market funds.Source: Reuters: Business News | 19 Sep 2008 | 1:14 pm Wall Street to surge at open on stability plans (Reuters)
Source: Yahoo! News: Business | 19 Sep 2008 | 1:13 pm Wall Street to surge at open on stability plansNEW YORK (Reuters) - Stocks headed for a surge at the open on Friday as investors cheered a series of sweeping steps by governments worldwide to contain the spiraling credit crisis.Source: Reuters: Business News | 19 Sep 2008 | 1:13 pm Halifax to raise mortgage ratesHalifax is expected to announce later today that it is pulling its most competitive mortgage rates.Source: Telegraph Business | 19 Sep 2008 | 1:12 pm Toxic-debt plan and short-selling curbs lift markets (Reuters)
Source: Yahoo! News: Business | 19 Sep 2008 | 1:10 pm Treasury, Fed move to bolster money market funds (AP)
Source: Yahoo! News: Business | 19 Sep 2008 | 1:08 pm Toshiba warns it will make a lossToshiba says it will swing into the red in the first half of the year - the first time it has made a loss for five years.Source: BBC News | Business | World Edition | 19 Sep 2008 | 1:08 pm Day Trader Alert: Yahoo! (YHOO)
It is hard to pin this on any single event. The company is testing a new homepage design layout and is proceeding with its new Google search arrangement. The fresh data out of comScore showed that Yahoo!'s search share fell by 0.9% to 19.6% in August with Google having 63% of the search market share. S&P has an equity note out but some of that data is actually more of a positive tone. For whatever reason traders are selling Yahoo! shares even on a strong day where almost everything else is up. It is very possible that this is just wholesale profit taking since shares literally rose $2.00 during yesterday's rally. This may go up and it may not. It is even possible that it is just overlooked compared to the rest of the stocks out there this morning. But traders are generally nervous about companies which trade lower on major rally days. Google shares are up nearly 5% pre-market. Yahoo! stock is down over 0.5% at $20.68 on last look with over 70,000 shares pre-market.
Jon C. Ogg Source: 24/7 Wall St. | 19 Sep 2008 | 1:07 pm Gap to enter Mexico, Egypt, Jordan via franchiseesSeeking to boost sales outside of the U.S. as it tries to turn around its U.S. sales, Gap Inc. is expanding into Mexico, Egypt and Jordan through franchised partnerships.Source: MarketWatch.com - Top Stories | 19 Sep 2008 | 1:06 pm Oracle provides bright spot amid faltering economyOracle Corp. shrugs off concerns that the sluggish economy has been hurting its business, by reporting a fiscal first-quarter profit and an outlook that both exceed Wall Street estimates.Source: MarketWatch.com - Top Stories | 19 Sep 2008 | 1:03 pm NewsWatch: U.S. stock futures leap after financial short-sale banU.S. stock futures rallied Friday as the government considered a plan to buy the bad assets from banks, the Securities and Exchange Commission introduced a temporary ban on financial stock short-selling and the Treasury Department introduced an insurance program for money market funds.Source: MarketWatch.com - Top Stories | 19 Sep 2008 | 1:00 pm CMS Awards Medicaid Integrity Program Contract to HMSNEW YORK, Sept. 19 /PRNewswire-FirstCall/ -- HMS (Nasdaq: HMSY) today announced that it has been awarded a Medicaid Integrity Program (MIP) Task Order by the Centers for MedicareSource: Infocious RSS raw feed - channel BNewsBusiness | 19 Sep 2008 | 12:52 pm The Candidates and Tech (Today From Barron's)What a McCain or Obama presidency might mean for the tech and telecom industries.Source: SmartMoney.com | 19 Sep 2008 | 12:51 pm Rescue hopes lift mood on Wall StreetWall Street stocks were set for another surge on the prospect of a vast government intervention in an attempt to stave off the worsening financial crisisSource: FT.com - US homepage | 19 Sep 2008 | 12:48 pm Horizon Lines Making Voluntary $12.5 Million Debt PaymentCHARLOTTE, N.C., Sept. 19 /PRNewswire-FirstCall/ -- Horizon Lines, Inc. (NYSE: HRZ), today is making a voluntary payment of $12.5 million on its revolving credit...Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Sep 2008 | 12:45 pm US reveals $50bn pledge ahead of historic rescue$Video: Henry Paulson | Comment: Gerard Baker | Comment: Leading article | Comment: Camilla Cavendish | The speculators who made millionsSource: Latest Business News from Times Online | 19 Sep 2008 | 12:43 pm Home Depot's total rehabThe Home Depot's Francis S. (Frank) Blake has one of the biggest jobs in corporate America but one of its least famous faces. Which is what the CEO is counting on one weekday morning when he goes on an undercover mission in Riverside, N.J.: a secret walkthrough at one of his company's 1,970 U.S. stores. He's been taking the walks an average of four times a week, all around the U.S., since January 2007, when he took over as CEO after Bob Nardelli's abrupt and painful departure. Blake wants to see for himself the way regular folks are treated when they shop at the big orange box. And he's not sure what to expect. "This is going to be like a Cracker Jack box," he says, a bit nervously. "You don't know what you'll get."Source: Business and financial news - CNNMoney.com | 19 Sep 2008 | 12:42 pm Treasury, Fed move to bolster money market fundsThe Treasury Department says it will tap into a Depression-era fund to provide guarantees for the nation's money market mutual funds while the Federal Reserve says it will expand its...Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Sep 2008 | 12:41 pm Fed says to make loans to aid money market fundsWASHINGTON (Reuters) - The U.S. Federal Reserve on Friday announced more steps to aid battered markets, including opening its discount window to financial institutions to enable them to...Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Sep 2008 | 12:40 pm Otter Tail Secondary Comes To Roost (OTTR)
You might literally be shocked at the size of the underwriting group for an offering of this size. Merrill Lynch is the sole book-runner. Joint lead managers are R.W. Baird and JPMorgan. Co-managers are listed as Banc of America, Wells Fargo, and KeyBanc Capital. The last 5 days have been rough on the company. Last Friday this was a $40.00 stock. But an earnings warning and an announcement it was going to raise cash took care of the old bullish hopes here. That is part of the reason for the discount to the close. This was a former cult stock which was given positive mention by Jim Cramer on CNBC during the wind power demand craze. This is also a personal holding of Bill Gates. So far shares are down almost 5% at $31.30 in early pre-market trading. Jon C. Ogg Source: 24/7 Wall St. | 19 Sep 2008 | 12:40 pm Toshiba to go in red for first halfJapan's Toshiba Corp. said Friday it expected to go in to the red for the first half of the financial year as its computer chip business is hit by lower prices and weak demand.Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Sep 2008 | 12:37 pm US Treasury moves to aid money market fundsThe US Treasury Department said it would set up a temporary insurance program for the US money market mutual fund industry as part of its efforts to address the financial crisis which has shown signs of spilling over into the money market arena this week.Source: FT.com - US homepage | 19 Sep 2008 | 12:34 pm Legg Mason Provides Money Market Fund UpdateBALTIMORE, Sept. 19 /PRNewswire-FirstCall/ -- Legg Mason, Inc. (NYSE: LM) announced that the Company has entered into additional support measures with three money market...Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Sep 2008 | 12:31 pm AmeriServ Names Nedret Vidinli to its Board of DirectorsJOHNSTOWN, Pa., Sept. 19 /PRNewswire-FirstCall/ -- AmeriServ Financial, Inc. (Nasdaq: ASRV) today announced the unanimous election of Nedret Vidinli, managing director...Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Sep 2008 | 12:30 pm Alexandria Real Estate Equities, Inc. Declares Quarterly Cash DividendPASADENA, Calif., Sept. 19 /PRNewswire/ -- Alexandria Real Estate Equities, Inc. (NYSE: ARE) announced today that its Board of Directors declared a quarterly cash dividend of 80...Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Sep 2008 | 12:30 pm Trade Capital Company Enhances Deposit Loan Program, Builds Credit for International Business, InvestorsTen-year-old Niche Financial Product Attracts Investors to US; Establishes US Businesses Abroad LAS VEGAS, Sept. 19 /PRNewswire/ -- As property and stock markets tumbleSource: Infocious RSS raw feed - channel BNewsBusiness | 19 Sep 2008 | 12:25 pm HSBC scraps agreement to buy South Korean bankBritish bank HSBC Holdings PLC said Friday it has canceled an agreement to purchase a controlling stake in a South Korean bank from U.S. private equity group Lone Star Funds amid world...Source: Infocious RSS raw feed - channel BNewsBusiness | 19 Sep 2008 | 12:19 pm Morgan Stanley leads Wall Street in pre-tradingWall Street’s banking stocks are set to open sharply higher today on hopes that the US Government will put together a historic rescue package to bail out stricken banks by taking on their toxic assets.Source: Latest Business News from Times Online | 19 Sep 2008 | 12:16 pm Alitalia airline cancels flightsAlitalia cancels a number of flights from Rome's Fiumicino airport, increasing fears that it may soon go into liquidation.Source: BBC News | Business | World Edition | 19 Sep 2008 | 12:09 pm Shares surge on US bail-out planEuropean and Asian shares surged after US government proposals to free US banks from billions of dollars of bad debt.Source: BBC News | Business | World Edition | 19 Sep 2008 | 12:07 pm SEC unveils temporary shorting banUS securities regulators joined other authorities and introduced a ban on short selling as part of a co-ordinated effort to combat the global financial crisisSource: FT.com - US homepage | 19 Sep 2008 | 12:07 pm Price war forces petrol prices downPetrol prices fell across the UK today as a price war brought a hint of relief to motorists struggling to fill their cars.Source: Latest Business News from Times Online | 19 Sep 2008 | 12:03 pm SEC issues temporary ban on short salesWASHINGTON/NEW YORK (Reuters) - The U.S. Securities and Exchange Commission issued an emergency order on Friday temporarily halting the short selling of 799 financial stocks in an effort to protect investors and markets.Source: Reuters: Business News | 19 Sep 2008 | 12:02 pm The Insure ThingBefore it teetered, American International Group used to be routinely called the biggest insurer in the world. That title belongs now to Hank Paulson.In the latest step to shore up a teetering financial system, the Treasury said today that it would use $50 billion to insure money-market mutual funds whose asset values fall below $1. Fears that nearly paralyzed the lending and flow of money this week had been stoked by the announcement by a large money-market fund—considered to be among the safest of investments—that investors might lose money because of a write-down of Lehman Brothers securities held by the fund. Two days later, Putnam Investments said it was closing a $12.3 billion fund. In the last week, investors have pulled record amounts of cash out of money-market funds, a sign that the financial panic was spreading. "Concerns about the net asset value of money-market funds falling below $1 have exacerbated global financial-market turmoil and caused severe liquidity strains in world markets," the Treasury said in a statement. "In turn, these pressures have caused a spike in some short-term interest and funding rates and significantly heightened volatility in exchange markets. Absent the provision of such financing, there is a substantial risk of further heightened global instability." The insurance will be for a year, and the Treasury is using a fund established in 1934 to manage the price of gold when it still backed the value of the dollar. Money-market funds make up a $3.4 trillion industry whose attraction is that investors are assured of at least getting their principal back. This week, that faith was shaken by the fund that started the industry, the Reserve Primary Fund, when its net asset value fell below $1 a share. (The money-market fund was co-invented by the late Henry B.R. Brown, whose hobby, as Franz Lidz described on Portfolio.com, was catapulting pumpkins. Strange, yes, but not as strange as the events of this week.) The money-market insurance comes as Paulson and Congressional leaders move toward creating a federal agency to bail out troubled financial institutions. The agency would likely be something akin to the Resolution Trust Corporation that liquidated hundreds of savings and loans after that banking fallout. In this case, such an agency would take the bad debt off the balance sheets of troubled financial institutions so that they can return to a more normal course of business. Think of it as a government-sponsored structure-investment vehicle. Stock markets around the world have surged on word of a possible toxic-debt Superfund and the money-market insurance plan should provide additional confidence to investors. Related Links Money-Market Datapoint of the Day No Security in Securities Hit the Panic Button Source: Portfolio.com: Top 5 | 19 Sep 2008 | 12:00 pm Financial Stock Set To Rocket (AIG)(WM)(GS)(MS)
Washington Mutual's (WM) stock is up over 40% and AIG's (AIG) over 30%. Douglas A. McIntyre Source: 24/7 Wall St. | 19 Sep 2008 | 11:59 am John Lewis trade rises 7.5% on clothing salesThe John Lewis Partnership today provided a further sign that it may not be all doom and gloom on the high street by reporting “excellent” trading since the start of the month.Source: Latest Business News from Times Online | 19 Sep 2008 | 11:52 am Stocks soar on rescue hopesGlobal stocks rallied after the creation of a giant US government-sponsored vehicle to take on toxic assets looked possible. Treasury secretary Hank Paulson, Fed chief Ben Bernanke and top lawmakers convened a dramatic meeting to discuss the financial crisis.Source: FT.com - US homepage | 19 Sep 2008 | 11:51 am SEC issues temporary ban on short sales (Reuters)
Source: Yahoo! News: Business | 19 Sep 2008 | 11:50 am Treasury To Insure Money Market Funds
Douglas A.McIntyre Source: 24/7 Wall St. | 19 Sep 2008 | 11:44 am Top Pre-Market Analyst Upgrades (AEP, CREE, DRI, GPS, KEY, MFE, ORCL, SONC, YUM)These are some of the upgrades and positive calls from analysts we have seen affecting shares this Friday morning:
Jon C. Ogg Source: 24/7 Wall St. | 19 Sep 2008 | 11:43 am Top Pre-Market Analyst Downgrades (ACN, ARO, ASCA, CTSH, ROCK, INFY, ISLE, MSCC, STN, TRIN)These are some of the downgrades and negative analyst calls we have seen affecting shares this Friday morning:
Jon C. Ogg Source: 24/7 Wall St. | 19 Sep 2008 | 11:41 am Central banks keep cash flowing to markets despite rallyFRANKFURT/TOKYO (Reuters) - The world's central banks jumped to grease money market wheels again on Friday, pouring in more money even as stocks and the dollar rallied in response to an emergency U.S. plan to mop up toxic debt.Source: Reuters: Business News | 19 Sep 2008 | 11:41 am Risking prisonSpreading false rumours is illegal, yet it is often doneSource: BBC News | Business | World Edition | 19 Sep 2008 | 11:41 am Russian shares surge despite hour interruptionRussia's stock exchanges soared today before they were forced to close again for an hour by regulators.Source: Latest Business News from Times Online | 19 Sep 2008 | 11:40 am Russian stock exchanges suspendedTrading on Russia's two leading stock exchanges is suspended for a second time in a day after share prices rise too sharply.Source: BBC News | Business | World Edition | 19 Sep 2008 | 11:37 am Thomson Reuters Markets' revenue to take hit: analysts(Reuters) - Thomson Reuters Plc's Markets division revenue will likely take a hit from the current turmoil in the financial markets, at least two analysts said Friday.Source: Reuters: Business News | 19 Sep 2008 | 11:36 am HSBC ends deal to buy South Korea bankSource: Business and financial news - CNNMoney.com | 19 Sep 2008 | 11:29 am Alitalia limps on as liquidation loomsROME (Reuters) - Alitalia SpA was still flying on Friday but the Italian flag carrier faced liquidation in a matter of days after a rescue plan collapsed.Source: Reuters: Business News | 19 Sep 2008 | 11:28 am European equities surge on rescue hopesEfforts to quell the crisis in global financial markets hit the mark in Europe on Friday with stocks soaring after four sessions of dramatic losses.At midday, the FTSE Eurofirst 300 jumped 6.2 per cent...Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Sep 2008 | 11:28 am Arsenal announce jump in profitsArsenal's big US shareholder Stan Kroenke, with a 12% stake, has become a non-executive director of the North London club.Source: BBC News | Business | World Edition | 19 Sep 2008 | 11:06 am UK banks jump on short-selling banLondon equities surged on Friday, with banking stocks making big double-digit gains after new rules on short selling came into force. Sentiment improved across the globe, as investors welcomed the prospect...Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Sep 2008 | 11:03 am Dollar leaps on hopes for US rescue plan (AFP)
Source: Yahoo! News: Business | 19 Sep 2008 | 10:52 am Gas prices sink 5 cents in 2 daysGas prices fell for the second-straight day Friday, after rising for eight consecutive days following the refinery-battering Hurricanes Gustav and Ike, according to a nationwide survey of credit card swipes at gasoline stations.Source: Business and financial news - CNNMoney.com | 19 Sep 2008 | 10:47 am Oracle (ORCL): Tech Prospers (NT)(MSFT)(GOOG)(JAVA)
Larry Ellison, the third richest man in America, gave Bill Gates and the founders of Google a reason to rejoice. The company he founded, Oracle (ORCL), did much better than expected last quarter and hinted that the trend would continue for the portion of the future it can see. Oracle's fiscal first quarter earnings were up 29% to nearly $1.1 billion. Revenue rose 18% to $5.3 billion. It should have been expected that sales from software upgrades would be good, and they were. Many large companies cannot afford going without the improved and more efficient products. What was surprising is that Oracle said new software sales were still relatively strong. IT spending at larger enterprises is not moribund as some on Wall St. expected. Oracle made one more encouraging remark which was that it was not being murdered by a drop in spending in the financial services sector. Due to its tremendous size and operations around the world, Oracle is a near-perfect prism for looking at the picture of big tech. IT spending is fine which means that many of the stocks in the sector are oversold. Douglas A. McIntyre Source: 24/7 Wall St. | 19 Sep 2008 | 10:41 am Oil holds $100 while gold slipsOil prices moved towards the $100 a barrel level on Friday but gold gave back some of this week's sharp gains as equity markets rallied after US lawmakers proposed radical plans to deal with toxic financial...Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Sep 2008 | 10:36 am Russian stocks surge as confidence returnsRussian shares soared as much as 25 percent on the Micex stock exchange on Friday, recovering steep losses earlier from in the week as trading resumed with confidence restored by a government anti-crisis planSource: FT.com - US homepage | 19 Sep 2008 | 10:26 am The Socialists Killed The Short Sellers
Short-selling was based on one of the foundations of capitalism. Making money betting on disaster is just as much a part of the economy as taking the optimist's side. Banning short-selling in financial stocks, which both the US and UK have done, will halt the activities of the so-called naked shorters. These firms short shares without borrowing them from other firms. They are required to do that borrowing because it is the basis of their risk. If the stock they borrowed goes up, they have to pay the difference of what the original owner would have made. Killing short-selling buries naked shorting. It also demolishes the entire market for legitimate gambles that a stock will go down. It subverts one of the most important checks and balances of equities trading. The regulators feel that poisoning part of the system is the only way to save the whole market. No one will ever know if that is true. Free marketers such as George Soros felt that the whole bloody mess should be sorted out on its own and that the government should simply stand by and watch the world burn. Soros and his ilk were voted down and banned from the property. Short-selling was always a dirty business, and now the government has decided that it is no business at all. Financial stocks will rise on the news that the system for betting against them has been crushed. In the process of the shares going higher. there will be very little left to tether them to the earth. Exuberance will have its day, but it may be that when the next set of banking and brokerage quarterly losses are announced there will be another round of crashing share prices. The shorts will not have been permitted to do their jobs. Douglas A. McIntyre Source: 24/7 Wall St. | 19 Sep 2008 | 10:16 am Consortium withdraws Alitalia bidThe investors proposing to rescue Italian airline Alitalia withdraw their offer, raising fears the carrier may go into liquidation.Source: BBC News | Business | World Edition | 19 Sep 2008 | 10:14 am World markets soar on new U.S. rescue planSource: Business and financial news - CNNMoney.com | 19 Sep 2008 | 10:12 am Rescue plan boosts dollarThe dollar rallied on Friday on news that the US government was planning to launch a vehicle to take on toxic assets that have wreaked havoc across financial markets. Hopes that a deal could be in sight...Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Sep 2008 | 10:00 am Uncle Sam Wants To Own Your Bank, And Your House
This cesspool would come with a checking account to send money back to the banks for their troubled paper.Eventually, these assets would be sold back into the market. This is the stuff of which vulture funds are made, so there will be a ready market. But, the assets will have to be sold at a significant discount to their original values. While the financial branches of the government have turned sharply toward socialism, it is in the name of preventing a new version of The Great Depression. Even taxpayers who will have to pay for this gamble would rather face higher payroll deductions than having to live in Hoovervilles on the edge of town. While the government is sending out cash to financial companies and getting something no more valuable than wallpaper in return, one proposal from Congress for balancing this transaction is that the Fed would end up owning some equity in each bank that the system helped. It seems only reasonable for the government to receive compensation for the tremendous service being rendered. The Fed would end up with a portfolio of bank stocks. As bad paper is moved off the balance sheets of these banks, their market values will increase and the government could make back its money. People with large checking account balances may walk into their local branches and find Paulson or Bernanke at the teller window filling in for someone who has gone on vacation. By owning toxic paper, the government would have a number of shaky mortgages, some of which have gone into default. That would make the Treasury or a related federal entity the largest homeowner in the country. In terms of its new equity interest in the banks it will have saved, the government will own a percentage of the mortgages held by those institutions as well. Homeowners should not be startled if they return from work one day and find an assistant undersecretary of The Treasury mowing the lawn. They will have equity in the place so keeping up its value will be extremely important. Douglas A. McIntyre Source: 24/7 Wall St. | 19 Sep 2008 | 9:55 am New bailout plannedThe federal government, in what may be its most comprehensive attempt yet to contain the financial crisis, is poised to establish a program to let banks get rid of mortgage-related assets that have been hard to value and harder to trade.Source: Business and financial news - CNNMoney.com | 19 Sep 2008 | 9:41 am U.S. bailout plan lifts world marketsHONG KONG — Global stock markets soared today after a punishing week as news of a possible U.S. government plan to rescue banks from toxic mortgage debt brought hope of a letup in the world's worst financial crisis in decades.Source: L.A. Times - Business | 19 Sep 2008 | 9:40 am U.S. bailout plan lifts world marketsHONG KONG — Global stock markets soared today after a punishing week as news of a possible U.S. government plan to rescue banks from toxic mortgage debt brought hope of a letup in the world's worst...Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Sep 2008 | 9:40 am Asian shares soar on bail-out movesChinese stocks led a region-wide rally on Friday after the government announced steps to shore up the market, which had lost almost 70 per cent of its value from its October 2007 peak.The rest of Asia-Pacific...Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Sep 2008 | 9:29 am Asian shares soar on bail-out movesChinese stocks led a region-wide rally after the government announced steps to shore up the market, which had lost almost 70% of its value from its October 2007 peakSource: FT.com - US homepage | 19 Sep 2008 | 9:29 am Short-selling ban is a 'mind-blowingly stupid' knee jerk reactionWhat a joke. If the authorities were so sure about the strength of the financial institutions then why is the Bank of England not happy to take virtually unlimited bank debt obligations in exchange for funding?Source: Telegraph Business | 19 Sep 2008 | 9:24 am Short-selling ban is a 'mind-blowingly stupid' knee jerk reactionWhat a joke. If the authorities were so sure about the strength of the financial institutions then why is the Bank of England not happy to take virtually unlimited bank debt obligations in exchange for...Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Sep 2008 | 9:24 am US government's 1980s solution to credit crisisWhat a joke. If the authorities were so sure about the strength of the financial institutions then why is the Bank of England not happy to take virtually unlimited bank debt obligations in exchange for funding?Source: Telegraph Business | 19 Sep 2008 | 9:24 am US government's 1980s solution to credit crisisWhat a joke. If the authorities were so sure about the strength of the financial institutions then why is the Bank of England not happy to take virtually unlimited bank debt obligations in exchange for...Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Sep 2008 | 9:24 am Halifax expect to pull mortgage deals after HBOS takeover by Lloyds TSBHalifax is expected to announce that it is pulling its most competitive mortgage rates.Source: Telegraph Business | 19 Sep 2008 | 9:20 am FTSE 100 surges most in history as banking shares race higherBanking shares across the world led a dramatic rally in stock markets today, as the US government's plan to rid lenders of their bad debts and a ban on short-selling in the UK bolstered investors' confidence.Source: Telegraph Business | 19 Sep 2008 | 9:20 am FTSE 100 surges most in history as banking shares race higherBanking shares across the world led a dramatic rally in stock markets today, as the US government's plan to rid lenders of their bad debts and a ban on short-selling in the UK bolstered investors' confidence.Source: Telegraph Business | 19 Sep 2008 | 9:20 am FTSE 100 surges most in history as banking shares race higherBanking shares across the world led a dramatic rally in stock markets today, as the US government's plan to rid lenders of their bad debts and a ban on short-selling in the UK bolstered investors' confidence...Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Sep 2008 | 9:20 am FTSE 100 surges as banking shares race higher across EuropeBanking shares across the world led a dramatic rally in stock markets today, as the US government's plan to rid lenders of their bad debts and a ban on short-selling in the UK bolstered investors' confidence...Source: Infocious RSS raw feed - channel BNPaperBusiness | 19 Sep 2008 | 9:20 am FTSE 100 surges as banking shares race higher across EuropeBanking shares across the world led a dramatic rally in stock markets today, as the US government's plan to rid lenders of their bad debts and a ban on short-selling in the UK bolstered investors' confidence.Source: Telegraph Business | 19 Sep 2008 | 9:20 am When your company's stock goes badQuestion: My husband's 401(k) from a prior job - about 10% of our savings - is all in his old company's stock. It just dropped 50%. Do we leave it and hope it recovers? Or do we sell it and invest elsewhere? - Elaine Ricca, Forsyth, Ga.Source: Business and financial news - CNNMoney.com | 19 Sep 2008 | 8:48 am Robert PestonThe big risks of US government's bank bail-out planSource: BBC News | Business | World Edition | 19 Sep 2008 | 8:41 am Capitalism queriesThe implications of market turmoil for capitalismSource: BBC News | Business | World Edition | 19 Sep 2008 | 8:13 am Medvedev pledges $20bn liquidity boostPresident Dmitry Medvedev of Russia pledged $20bn (€14bn, £11bn) to shore up the nation's stock markets after the worst declines since the August 1998 crashSource: FT.com - US homepage | 19 Sep 2008 | 7:17 am Middle-Class Power Play (Today From Barron's)Wall Street trailblazer Elizabeth Bramwell doesn't expect a quick U-turn in housing and financials.Source: SmartMoney.com | 19 Sep 2008 | 7:06 am Would a Resolution Trust Corp.-type solution work?The agency created in the late 1980s to end the S & L crisis had a different kind of mess to clean up.Bankers, politicians and economists grasping for ways to address the financial crisis are rallying behind a solution with its roots in the savings and loan debacle of the 1980s -- the creation of a single government agency to buy up billions in bad bank debt and other assets. Source: L.A. Times - Business | 19 Sep 2008 | 7:00 am U.S. proposes sweeping bailoutThe government would buy up firms' bad assets to boost lendingIn what could be the biggest bailout since the Great Depression, top government officials and congressional leaders agreed late Thursday to quickly develop a comprehensive plan aimed at defusing the nation's roiling financial crisis. Source: L.A. Times - Business | 19 Sep 2008 | 7:00 am Plan to convert an empty airplane hangar into a film studio is taking offInvestors are in escrow to buy the Long Beach site from Boeing and have secured financing for the $500-million project.Plans for a massive indoor movie studio are underway in Long Beach, where the buyers of a former aerospace plant say they will build a $500-million soundstage facility that would rival the largest established Hollywood studios in scope. Source: L.A. Times - Business | 19 Sep 2008 | 7:00 am Rate increase OKd for land-line phone service in CaliforniaThe Public Utilities Commission approves hikes of as much as $3.25 a month in 2009 and 2010.The cost of basic local telephone service may increase as much as 30% next year and an additional 23% in 2010 for land-line service, under new rates approved Thursday by California regulators. Source: L.A. Times - Business | 19 Sep 2008 | 7:00 am Rate increase OKd for land-line phone service in CaliforniaThe Public Utilities Commission approves hikes of as much as $3.25 a month in 2009 and 2010.Basic local telephone service may increase as much as 30% next year and an additional 23% in 2010 for land-line service, under new rates approved Thursday by California regulators. Source: L.A. Times - Business | 19 Sep 2008 | 7:00 am Dow soars more than 400 points after Wednesday's market routStocks rally late in the day after regulators pledge increased oversight of short sellers and a key lawmaker says the federal government is working on a permanent solution to the financial crisis.For a few hours Thursday on Wall Street, greed finally got the upper hand on fear. Source: L.A. Times - Business | 19 Sep 2008 | 7:00 am Studio says no to Steven Spielberg, Peter JacksonSqueezed by rising costs and leveling revenues, Universal Pictures declines to finance 'Tintin.'Steven Spielberg and Peter Jackson don't hear "no" very often. Source: L.A. Times - Business | 19 Sep 2008 | 7:00 am Analysis: How serious is the financial crisis for Asia?Once derided for their high proportion of bad loans, it seems Chinese banks are the ones still standing as Wall Street succumbs to the credit crunch.Source: Telegraph Business | 19 Sep 2008 | 6:20 am HSBC pulls out of Korea Exchange Bank dealAnglo-Asian bank HSBC has pulled out of its long-standing deal to purchase a controlling stake in Korea Exchange Bank, citing the ongoing turmoil in world markets.Source: Telegraph Business | 19 Sep 2008 | 6:08 am Citigroup considering bid for WaMu: report (Reuters)
Source: Yahoo! News: Business | 19 Sep 2008 | 5:49 am Citigroup considering bid for WaMu: report(Reuters) - Citigroup Inc is considering making a bid for Washington Mutual Inc, the Wall Street Journal said on Friday, citing people familiar with the situation.Source: Reuters: Business News | 19 Sep 2008 | 5:49 am Freddie Mac says Lehman owed it over $1.2 billionNEW YORK (Reuters) - Freddie Mac said on Thursday it has yet to receive payments of more than $1.2 billion due from Lehman Brothers Holdings , which went bankrupt after the U.S. government refused to bail out the investment bank.Source: Reuters: Business News | 19 Sep 2008 | 5:33 am Currency: US dollar data interrupts NZ dollar's rallyThe New Zealand dollar's test of higher levels was today interrupted by a resurgent US dollar and a reminder of how indebted New Zealand is in current account data. From around US67.60c shortly before news of a record annual current...Source: New Zealand Herald - Business | 19 Sep 2008 | 5:26 am Cadillac CTS-V is full of sound, fury -- and graceThe 556-horsepower sedan is a speedster that provides superb cornering and control in a refined and seductive package.With 556 horsepower under its tented hood and a cross-wire grille that looks inspired by the maximum-security wing at Chino, the 2009 Cadillac CTS-V seems, well, sort of aggressive. Remember when Cadillacs were soft and pillowy and ambled around town in a kind of Vicodin haze? Remember when you felt like you needed to slip into supportive undergarments to drive one? Doesn't that seem a long time ago? Source: Portfolio.com: Top 5 | 19 Sep 2008 | 4:00 am NY AG launches Wall Street rumor probeNew York Attorney General Andrew Cuomo announced Thursday he is looking into whether traders spread false information in an effort to drive down certain stock prices amid the recent turmoil on Wall Street.Source: Business and financial news - CNNMoney.com | 19 Sep 2008 | 2:26 am Latest updates: Financial Turmoil16.53-SYDNEY: National Australia Bank Ltd (NAB), the owner of the BNZ, says increased volatility in global credit markets means it cannot commit to pass on any further official rate cuts by the central bank. ``In this time of unprecedented...Source: New Zealand Herald - Business | 19 Sep 2008 | 2:00 am SEC weighs ban on short sellingUS securities regulators were on Thursday night considering a ban on short selling as part of a group of new initiatives to restore calm to the stricken financial markets, people familiar with the situation saidSource: FT.com - US homepage | 19 Sep 2008 | 1:36 am Banking system 'still sound' says RBNZ after interventionThe Reserve Bank has joined with central banks in other countries and intervened in a bid to increase liquidity in the crisis-hit banking system. After saying that the bank had confidence in the system, a press release just published...Source: New Zealand Herald - Business | 19 Sep 2008 | 1:30 am Lehman owes Freddie Mac at least $1.2bnUS mortgage financier Freddie Mac said Lehman Brothers owed it at least $1.2bn in unsecured loansSource: FT.com - US homepage | 19 Sep 2008 | 1:09 am US financial rescue plan due 'in hours'WASHINGTON - Treasury Secretary Henry Paulson says the government is crafting a plan to rescue banks from bad debts that are at the heart of Wall Street's worst financial crisis in decades. Paulson said late Thursday the plan will...Source: New Zealand Herald - Business | 19 Sep 2008 | 1:00 am Trends & Innovations - ThursdayMany sleep with smart phonesSource: Investor's Business Daily: BUSINESS | 19 Sep 2008 | 12:45 am Business Briefs - ThursdayGoogle extends market-share lead. The Web's top search site added to its market share in Aug., drawing 63% of U.S. searches vs. 61.9% in July and...Source: Investor's Business Daily: BUSINESS | 19 Sep 2008 | 12:45 am After The Close - ThursdayNVIDIA, a maker of graphics chips, will cut 360 jobs, or 6.5% of its global work force, due to weak sales. Shares rose 2%.Source: Investor's Business Daily: BUSINESS | 19 Sep 2008 | 12:45 am In Brief - ThursdayKellogg (K), the cereal and snack maker, bought Specialty Cereals, an Australian private maker of natural ready-to-eat cereals, for an undisclosed...Source: Investor's Business Daily: BUSINESS | 19 Sep 2008 | 12:45 am Web Sites Clear Out Overstocked Homes, Lend Housing AdviceIn the gloomy aftermath of the housing crash, real estate financier Jon Maddux and lawyer Chad Ruyle sensed a business opportunity.Source: Investor's Business Daily: BUSINESS | 19 Sep 2008 | 12:45 am Medical Supplier Hopes To Hit Ball Out Of Park With Test PlatformBio-Rad Laboratories never had a beef with mad cows. But it knows how to spot them.Source: Investor's Business Daily: BUSINESS | 19 Sep 2008 | 12:45 am Recovery in NZ current account deficit shudders to a haltThe recovery in New Zealand's current account balance shuddered to a halt with the annual deficit hitting a record $14.97 billion in the June quarter. Main factors swelling the deficit were a rise in goods imports, mainly petroleum...Source: New Zealand Herald - Business | 19 Sep 2008 | 12:30 am Russian stocks rocket after government injects billionsRussian shares soared following an injection of billions of dollars by the government aimed at staving off a massive financial crisis.Source: Telegraph Business | 19 Sep 2008 | 12:01 am Migration loss to Aussie highest in nearly 20 yearsThe annual loss of people from this country to Australia hit a 19-1/2-year high in August, new figures from Statistics New Zealand show. The net outflow to Australia on a permanent or long term (PLT) basis was 33,000 in the August...Source: New Zealand Herald - Business | 19 Sep 2008 | 12:00 am The decline and fall of Britain's high streetIt has been a valiant struggle, but the odds are stacking up against the survival of the British high street as we know it.Source: Latest Business News from Times Online | 18 Sep 2008 | 11:00 pm US regulator to hunt down the market manipulatorsAndrew Cuomo, the New York attorney-general, has launched a major investigation into short-selling on Wall Street to expose and bring charges against traders who have sought to damage other companies by spreading false rumours.Source: Latest Business News from Times Online | 18 Sep 2008 | 11:00 pm Lloyds shares summarise political situationLabour MPs who are hoping to trigger a leadership election might be advised to find a way of shorting Lloyds TSB shares, as it appears that shareholders in the Black Horse bank have more power over Gordon Brown at the moment than his parliamentary party.Source: Latest Business News from Times Online | 18 Sep 2008 | 11:00 pm Need to know: Woolworths criticised ... Ryanair levels out ... Gold risesEconomicsSource: Latest Business News from Times Online | 18 Sep 2008 | 11:00 pm Trading floors feel the pulse of crisisTrading floors all over New York -- at private companies that trade commodities or bonds or pretty much anything else -- have been crazy this week. Kai Ryssdal talks with Tom Digaloma, who runs a government-bond trading desk, about what it's been like.Source: Marketplace | 18 Sep 2008 | 10:09 pm What they're saying: World reaction to the financial crisisNeed a Job? $17,000 an Hour. No Success Required. Are you capable of taking a perfectly good 158-year-old company and turning it into dust? If so, then you may not be earning up to your full potential. You should be raking it...Source: New Zealand Herald - Business | 18 Sep 2008 | 10:00 pm Governments put limits on short sellingThe SEC has toughened rules on short selling, the British government has banned shorting of financial firms, and New York's attorney general has launched an investigation into the shorting of financial stocks. Bob Moon reports on why these actions were deemed necessary.Source: Marketplace | 18 Sep 2008 | 9:47 pm House passes anti-speculation billRead full story for latest details.Source: Business and financial news - CNNMoney.com | 18 Sep 2008 | 9:33 pm Shorts on FireThe finger-pointing has begun, and guess who is wearing the target? Short-sellers, of course.If your response is, "Haven't we been down this road already?" the answer is yes. But it's a road regulators never seem to tire of traveling. On Thursday, New York attorney general Andrew Cuomo launched an investigation into whether or not some short-sellers of financial stocks have been illegally spreading false rumors about the companies to precipitate their stock declines. The two biggest California pension funds also announced today they would stop lending out their shares in certain financial stocks to institutions for shorting. This news comes just a day after Morgan Stanley chief executive John Mack phoned regulators to complain that short-sellers were destroying Morgan's shares. In the U.K., regulators took a more drastic step. The Financial Services Authority banned short-selling of financial stocks for the rest of the year. Here in the U.S., the Securities and Exchange Commission is also investigating rumors and contemplating whether or not to require hedge funds to disclose their short positions. All this is a lot of piling on to a group that likely lost a bundle in the markets today. The Dow surged late in the trading session to close with a 410-point gain. So far, there hasn't been any solid evidence that short-sellers are even to blame for this massive unwinding of these over-leveraged institutions. As Jesse Eisinger points out, short-sellers were not involved in the series of disastrous steps that A.I.G. took that ultimately led to its demise. The shorts may have benefited from those steps, sure, but they didn't have any part in encouraging A.I.G. to hop aboard the high-flying credit-default swaps ride. Eisinger offers a potential solution for much of the problems in volatile markets like today's. In his column in the October issue of Condé Nast Portfolio, Eisinger proposes a transaction tax on all trades. Such a burden would discourage "short-termism"—traders that go in and out of positions in rapid fire to turn a quick profit who have a disproportionate and often irrational control over stocks and commodities. Of course, a transaction tax is probably the last thing on any regulator's mind at this point. Today, they're squarely focused on the wild goose chase instead. Related Links The Long Crisis Illiquidity and Insolvency in the Commercial Real Estate Market Bringing Back Regulation's Good Name Source: Portfolio.com: Top 5 | 18 Sep 2008 | 9:30 pm Central banks release billions to tackle crisisNEW YORK - Wall Street's biggest crisis since the Great Depression forced the US Federal Reserve and central banks around the globe to pump billions of dollars into the world banking system overnight in an urgent bid to stop further...Source: New Zealand Herald - Business | 18 Sep 2008 | 9:00 pm AG Edwards's McRedmond Discusses New Commodities ETFsSource: Bloomberg - All Podcasts | 18 Sep 2008 | 8:50 pm VIX Index of U.S. Stock Option Prices Retreats 8.6% to 33.10Source: Bloomberg - All Podcasts | 18 Sep 2008 | 8:41 pm How to Best Cope With Being Laid Off (Deal of the Day)Financial sector woes will impact other industries. Here's how to cope with a layoff.Source: SmartMoney.com | 18 Sep 2008 | 8:29 pm ETFs Rally on Talk of RTC-Type Bailout (Daily ETF Wrap-Up)Reports that Treasury is considering RTC-type entity rallies ETFs and broad market.Source: SmartMoney.com | 18 Sep 2008 | 8:24 pm Berry Says New Rules Needed for Industry Bonuses: CommentarySource: Bloomberg - All Podcasts | 18 Sep 2008 | 8:11 pm US Stocks surge on Federal interventionNEW YORK - Wall Street surged higher today with the Dow Jones industrials up more than 400 points after a report that the federal government is considering creation of a repository for banks' bad debt. CNBC said Treasury Secretary...Source: New Zealand Herald - Business | 18 Sep 2008 | 8:07 pm Hip, Hip, Hooray!Wall Street is hoping that Washington will come to its rescue.Stocks surged late in the trading day on Thursday after CNBC reported that Treasury Secretary Henry Paulson is planning to create a federal agency to bail out troubled financial institutions. The agency would likely be something akin to the Resolution Trust Corporation that liquidated hundreds of savings and loans after that banking fallout. In this case, such an agency would take the bad debt off of the balance sheets of troubled financial institutions so that they can return to a more normal course of business. Details of the plan, including the cost to taxpayers, were not known. The news is certainly great for the markets, but does New York know that Washington is about to close down? Congress is hoping to adjourn this session next Friday to campaign on their home turf until election day. The lawmakers may not come back for votes until after the end of the year, when a new Congress and administration will be in place. Of course, extenuating circumstances such as this major financial crisis could keep legislators at work in D.C. until early November if need be. Paulson is said to be shopping the plan to lawmakers on the Hill currently, and in recent days the idea of it seems to have attracted bipartisan approval. President Bush, who will be in office until January, could try to go out on a positive note by putting this plan into action swiftly. Today's market was wildly volatile and despite the last minute surge, it's still too early to call a bottom. Indeed, the fallout from Lehman Brothers and A.I.G. is only starting to be felt among already struggling financial institutions around the globe. And the problems facing Goldman Sachs and Morgan Stanley will likely continue for the coming days and weeks. Shares of Morgan rebounded to close up slightly today, while Goldman ended the session down nearly 4 percent. The broader financial sector soared. The Dow swung from a 148-point loss to a gain of as much as 465 points before settling down to close the session up 410 points, or 3.9 percent. Also on Portfolio.com:
A Supercop for Finance Mark-to-Model on Wall Street: The Numbers Shock to the System Source: Portfolio.com: Top 5 | 18 Sep 2008 | 8:00 pm On the Ball: Yankee Stadium Final Game, Davis Cup TennisSource: Bloomberg - All Podcasts | 18 Sep 2008 | 7:58 pm Professor Meltzer Sees Fed Setting `Terrible Precedents'Source: Bloomberg - All Podcasts | 18 Sep 2008 | 7:55 pm Beaten-Down Tech Stocks Have Further to Fall (Ticked Off)Prices are way down, but battered technology stocks have even further to fall.Source: SmartMoney.com | 18 Sep 2008 | 7:34 pm Dow soars 400 points in final hour of tradingNEW YORK - Wall Street surged higher today, with the Dow Jones industrials up more than 400 points after a report that the federal government is considering creation of a repository for banks' bad debt. CNBC said Treasury Secretary...Source: New Zealand Herald - Business | 18 Sep 2008 | 7:33 pm Loomis's Fuss Sees `Classic Buying Opportunity' in BondsSource: Bloomberg - All Podcasts | 18 Sep 2008 | 7:00 pm The Remains of the 401(k) (SmartMoney Magazine)After having nearly a million in my 401(k) three years ago, I am down to $45,000. Where should I invest it? Also, should I accelerate my mortgage and reduce my 401(k) contributions?Source: SmartMoney.com | 18 Sep 2008 | 6:48 pm My home's value has increased ... right?In a recent study, 62% of homeowners believed their home had gone up or stayed the same in value in the past year. Commentator and behavioral economist Dan Ariely says in a falling market your house is almost always worth more to you than anyone else.Source: Marketplace | 18 Sep 2008 | 6:27 pm The Dow's the favorite, but unreliableThe Dow Jones Industrial Average is removing insurance giant AIG from its index and replacing it with Kraft Foods Inc. Given that Kraft's revenues have been about one-third of AIG's, how much weight should we be giving the Dow? Jeremy Hobson reports.Source: Marketplace | 18 Sep 2008 | 6:27 pm Central banks pump billions into systemSix central banks -- including those of the U.S., Japan and Switzerland -- have added another $180 billion worth of credit into the global banking system. They're all trying to get banks lending money again. John Dimsdale reports.Source: Marketplace | 18 Sep 2008 | 6:27 pm Is Your Money-Market Fund Safe? (Consumer Action)News that a money-market fund lost value has investors worrying about their cash.Source: SmartMoney.com | 18 Sep 2008 | 6:12 pm Vintage WhineThe markets are inundated with zombie myths. No matter how many times you stab them through the heart, you just can't kill them.What's taking down these grand financial icons such as Lehman and A.I.G.? It couldn't possibly be that the companies themselves made stupid and shortsighted decisions. So it must be a conspiracy of the short-sellers. It must be some wrong-headed accounting rules and bad regulation. In the wake of the demise of A.I.G., we are hearing them again. If only the insurer didn't have to mark its positions to market, this foolishness would have been avoided and we'd all be celebrating how wonderful the economy is. The S.E.C. has rushed to put up restrictions against short-selling again. And in the Wall Street Journal today, Zachary Karabell writes that the "root cause" of the current meltdown is "bad regulation." His evidence? That A.I.G. had to mark its positions to the market even though it issued a statement saying that the market was getting it wrong. It issued a statement! Well then! Case closed. Not so fast. It seems we must review the case of A.I.G. What exactly went wrong at the insurance behemoth? For several years, A.I.G. dove headfirst into an insurance-like product called credit default swaps. It wrote hundreds of billions worth of protection mostly on the top slice of mortgage-backed structured financial products. Short-sellers and accounting rules didn't cause A.I.G. to enter the C.D.S. protection business. Supposedly A.I.G. had an expertise in insurance, being the largest of its kind in the world. Insurance is hard to price correctly. When the hurricane hits, were you getting enough money from homeowners all those years? It's a difficult question. But when it was initially writing all that C.D.S. protection, A.I.G. thought it wasn't possible to take a penny of losses because its contracts were backstopping such highly rated, highly protected slices, according to an ex-A.I.G. Financial Products employee I spoke with this week. (That makes perfect sense since this was the same mistake made by the bond insurers M.B.I.A. and Ambac.) Each time the company wrote one of those contracts, a grain of sand should have dropped to the bottom of the hourglass until an A.I.G. risk-management official said: "Enough. You can't write anymore." But that didn't happen. Short-sellers and accounting rules didn't make the company put little-to-no capital against these positions. Back when A.I.G. started writing these contracts, the credit-ratings agencies rated the insurer Triple A. Accounting rules didn't prevent the ratings agencies from re-assessing the rating before the crisis. And while it may be hard to believe, short-sellers did not stick their voodoo dolls with their "Maintain the Triple A Rating Until It's Too Late" pins. A.I.G.'s counterparties didn't require that the insurance company put up any collateral—called initial margin— because its rating was so high. This wasn't an accounting rule. This was a general agreement among the players in the C.D.S. market. Then the underlying mortgage-holders started to default, leading to the value of the super-senior tranches to decline and the spreads on the C.D.S. to widen. Counterparties wanted some collateral to reflect the changes in the market. The credit-ratings agencies downgraded A.I.G., leading to even more demands for collateral. Does anyone seriously think that the counterparties said to A.I.G., "Hey man, we don't want you to put up any cash. We know it's stupid, but our hands are tied by those damn accounting rules!" Hardly. They wanted their cash now. If these positions were marked-to-model rather than marked-to-market, does anyone think that the counterparties wouldn't have written any collateral triggers into the contracts? And here let's pause to dispense with a ridiculous assertion from Karabell, which makes one seriously question the credibility of his argument that the market is somehow overreacting ridiculously. He writes in his WSJ op-ed today that the value of the mortgages only has dropped about 10 percent or 20 percent, so how could the value of the securities been wiped out? "There's something wrong with that picture: Down 20 percent doesn't equal down 100 percent," he says. But of course it can. That's what "leverage" means. When you have a C.D.O. made up of mezzanine tranches of subprime M.B.S., down 20 percent in the underlying can mean exactly that. Now for the sake of argument, let's say that the market overreacted horribly. Let's contemplate that short-sellers were too convincing. They caused needless panic, helping drive the spreads on the C.D.S. protection way too wide, in turn driving the value of A.I.G. equity down to absurdly low levels. This was causing paper losses, but there were also real credit rating agency downgrades. But it wasn't anything substantive—a mere liquidity crisis at the insurer. If that were so, why didn't the insurer find buyers? Why didn't the private-equity firms swoop in? They did examine A.I.G.'s books this past weekend. What they found was that the amount that A.I.G. needed was undeterminable. It was an unfathomable black hole. At first it seemed like the company would only need $20 billion. Then on the weekend, the number doubled to $40 billion. Then on Sunday, the Asian markets opened and suddenly the firm needed $60 billion, according to the WSJ. Was $60 billion the right number? Who knows? The private-equity firms weren't basing their estimates off of silly securities regulations or dumb accounting rules. They were trying to estimate the value of the company. They were allowed to use whatever valuation technique they liked. And they couldn't come up with anything because they couldn't determine the value of the underlying assets. A.I.G. got into something it didn't understand and didn't protect itself properly. The market-based watchdog—the rating agencies—failed to assess its risk properly. In the market panic, A.I.G.'s counterparties acted rationally to demand more cash, their actions having nothing to do with accounting rules. And the buyers balked. And no amount of zombie tales will bring the company back. Related Links Bond Insurer Break-Up Would You Buy a Bridge From Warren Buffett? Buffett Moves Into Bond Insurance Source: Portfolio.com: Top 5 | 18 Sep 2008 | 6:00 pm She designs for ideas, not just styleLook at the objects around you. Who dreams up how they look, work and feel? One such person is Raffaella Mangiarotti, an industrial designer based in Milan, Italy. She's part artist, part inventor, part engineer, and full-time problem solver. Jon Miller reports.Source: Marketplace | 18 Sep 2008 | 5:59 pm Wall Street Firms Involved in Tax Dodge, Probe SaysSource: Bloomberg - All Podcasts | 18 Sep 2008 | 5:33 pm Merck Must Face Shareholder Fraud Suit Over VioxxSource: Bloomberg - All Podcasts | 18 Sep 2008 | 5:31 pm Lehman Lets Some Creditors Take Key Assets FirstSource: Bloomberg - All Podcasts | 18 Sep 2008 | 5:30 pm Lehman Files Biggest Bankruptcy Case as Suitors BalkSource: Bloomberg - All Podcasts | 18 Sep 2008 | 5:28 pm One Desperate DealWhen two lonely single people walk into a bar full of couples, it's pretty obvious what's likely to happen after a few drinks.
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Wall Street's New Realities Bankers Speed Date Investment Bank, R.I.P. Source: Portfolio.com: Top 5 | 18 Sep 2008 | 3:30 pm Borrowing From Your IRA (The Tax Guy)It can be a source for an interest-free short-term loan -- or a bad idea if you do it wrong.Source: SmartMoney.com | 18 Sep 2008 | 3:16 pm Hit the Panic ButtonWith fear paralyzing the global money markets, the world's leading central banks are riding to the rescue, announcing that they will pump in huge amounts of U.S. dollars into the system. More than $180 billion will be made available to banks for short-term financing, under a coordinated effort among the Federal Reserve, the European Central Bank, the Bank of Japan, the Bank of England, the Bank of Canada, and the Swiss National Bank. The fear that another big financial institution will collapse is still very much with us, as is the fear that there is more toxic debt in the system to be discovered—a realization illustrated by the announcement on Tuesday by a "safe" large money-market fund that investors might lose money because of a write-down of Lehman Brothers securities that were held by the fund. Another reason not to be too encouraged by the joint central bank action is that the central banks have shown themselves to be largely impotent in wresting with the 14-month crisis. The Fed Turns Up the Tap The Abstract: Jackson Hole Symposium Papers Even More Power for the Fed? Source: Portfolio.com: Top 5 | 18 Sep 2008 | 12:00 pm
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According to
There was a perverse honor in being a short-seller. It was an honor among thieves, but the group usually made lots of money by taking significant risks.
