Some Analysts See an End to Market Rally

aus der heutigen NYT:

It’s been a blockbuster summer for the bulls on Wall Street. Shares are up more than 15 percent since mid-July, investors are feeling optimistic, and once-idle money is pouring back into equities.

But as Wall Street heads into September, historically its worst-performing month, the party may be winding down.

Time for a Paradigm Shift to Include Credit: Do We Need a Higher Inflation Target? A Price Level Target?

• In a July 16, 2009, report, Morgan Stanley asserted that the pre-crisis period showed that „stabilizing consumer price inflation does not automatically stabilize asset prices.“ Moreover, in a June 24, 2009, report, the OECD noted that several nations have hit the zero bound of nominal interest rates, which highlights the shortcomings of the low-inflation-targeting framework. Among the possible options to reduce the downside risks of deflation are increasing inflation targets and „target[ing] a price level path instead of an inflation rate because a credible price-level targeting regime can practically eliminate the risk that policy rates may be constrained by the zero floor.“

An Uncomfortable Choice

aus John Mauldin’s heutigem Newsletter, sehr persönlich, absolut scharf und lesenswert:

As our family grew, we limited the choices our seven kids could make; but as they grew into teenagers, they were given more leeway. Not all of their choices were good. How many times did Dad say, „What were you thinking?“ and get a mute reply or a mumbled „I don’t know.“

Yet how else do you teach them that bad choices have bad consequences? You can lecture, you can be a role model; but in the end you have to let them make their own choices. And a lot of them make a lot of bad choices. After having raised six, with one more teenage son at home, I have come to the conclusion that you just breathe a sigh of relief if they grow up and have avoided fatal, life-altering choices. I am lucky. So far. Knock on a lot of wood.

I have watched good kids from good families make bad choices, and kids with no seeming chance make good choices. But one thing I have observed. Very few teenagers make the hard choice without some outside encouragement or help in understanding the known consequences, from some source. They nearly always opt for the choice that involves the most fun and/or the least immediate pain, and then learn later that they now have to make yet another choice as a consequence of the original one. And thus they grow up. So quickly.

The Most Powerful Banker You’ve Never Heard of

aus der kommenden Business Week:

Lewis Kaden is the ultimate behind-the-scenes power player. Lobbying the White House for Citi may be his biggest role yet

By Mara Der Hovanesian

Lewis B. Kaden doesn’t stand out among the high-powered executives on Citigroup’s (C) organizational chart. He’s one of three people who carry the title of vice-chairman, and he doesn’t run a big revenue-generating business such as investment or retail banking. Kaden’s official duties are largely administrative—human resources, government affairs, and philanthropy among them.

Behind the scenes, however, the 67-year-old Kaden has emerged as the most influential adviser to Citi CEO Vikram Pandit and a key conduit to the Obama Administration.

Are Banks Playing It Too Safe?

Aus der kommenden Business Week:

Critics say capital cushions at firms like Goldman are a drag on profits, and healthy banks need more leverage

By David Henry

Barely a year after Lehman Brothers toppled under the weight of its own debt, Wall Street is calling for some players to load up again. Analysts say Goldman Sachs (GS), Morgan Stanley (MS), JPMorgan Chase (JPM), and other relatively healthy firms are holding too much capital—an overly cautious stance that’s costing shareholders billions of dollars in profits.

It’s a tricky balancing act. Banks, which set money aside to protect against losses, have more capital than regulators require. They would love to use some of that extra cushion to boost dividends, buy back shares, or borrow more money to invest. But the economy and credit markets remain fragile. And the Obama Administration wants to raise the capital requirements. „You’ve got two opposing forces: the regulator turning the screws, and investors saying you need more leverage,“ says a financial lobbyist.

The burden of debt

Aus P. Krugman’s blog in der NYT:

August 28, 2009, 10:59 am

<!– — Updated: 10:59 am –>I respect Jim Hamilton a lot, so I take his criticism seriously — and he raises questions that others raise too about my relatively sanguine assessment of the debt situation. Yet I think that he and others are quite wrong, on several counts.

First off: the assertion that the post-World War II debt was sui generis, that it offers no guidance on what we can afford. It’s true that right after the war it was possible to get a drastic reduction in spending easily, since we didn’t have to fight the Axis any more. But let’s take a slightly later start date: in 1950, federal debt in the hands of the public was 80 percent of GDP, which is in the ballpark of what we’re looking at for 2019. By 1960 it was down to 46 percent — and I haven’t heard that anyone considered America a debt-crippled nation when JFK took office.

Wo ist nun eigentlich die Krise? Neues zur deren Ursache und Bewältigung

-Wohlstand durch deregulierte Bilanzierung-

Achtung! Dieser Beitrag ist nicht ganz frei von Sarkasmus!

Beitrag von Günther Robol zur Beliebigkeit der Bilanzierungsregeln:Robol Wo ist nun eigentlich die Krise

A.I.G. Rises, and Many Ask Why

August 28, 2009, NYT

By MARY WILLIAMS WALSH

It may have been written off as a hopeless case less than a year ago, but the stock of the American International Group shot up to $50 on Thursday, capping a fourfold gain in the last two months.

For all the optimism taking hold in the markets these days, it is hard to find a tangible explanation.

“Who would want to buy a stock that’s still 80 percent owned by the government?” wondered William T. Fitzpatrick, an equity analyst at Optique Capital. Shares ended the day at $47.84, a gain of 27 percent from the previous close of $37.69.

Eurozone Money Supply Growth: Money Multiplier Shrinking

• Money and credit growth in the eurozone has been slowing. Broad money supply growth has slowed faster than narrow money though, suggesting that lending institutions are still unable or reluctant to provide credit. Loans to the private sector slowed from 1.5% y/y in June 2009 to 0.6% y/y July, the lowest level since 1992. Loans to non-financial corporations dropped to 1.6% y/y in July from 2.8% y/y in June. Loans to households turned around its 0.2% y/y growth in June to 0.0% y/y in July.

UK’s Lord Turner Proposes Tobin Tax on Financial Transactions

• Following intense debate over UK banking bonuses, the head of the FSA, Lord Adair Turner has suggested a tax on financial transactions be introduced. Such an idea was first put forward by the economist James Tobin and is known as a ‘Tobin Tax’. Whether this proposal bears fruit remains to be seen as Alastair Darling dismisses suggestions that the idea is being discussed in the Treasury.