Föhrenbergkreis Finanzwirtschaft

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Archive for 28. August 2009

A.I.G. Rises, and Many Ask Why

Posted by hkarner - 28. August 2009

August 28, 2009, NYT

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. Den Rest des Beitrags lesen »


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Eurozone Money Supply Growth: Money Multiplier Shrinking

Posted by hkarner - 28. August 2009

  • 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.

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UK’s Lord Turner Proposes Tobin Tax on Financial Transactions

Posted by hkarner - 28. August 2009

  • 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.

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FDIC Q2 Quarterly Banking Profile: Industry Reports Net Loss, Number of Problem Banks Increases

Posted by hkarner - 28. August 2009

  • „FDIC insured institutions reported an aggregate net loss of US$3.7 billion in Q2 2009 after net income of US$7.6 billion in Q1. Although the economy is improving, the banking industry performance is — as always — a lagging indicator. Provisions for loan losses totaled $66.9 billion in the quarter, an increase of $16.5 billion (32.8%) year-over-year. Extraordinary losses stemming from writedowns of asset-backed commercial paper totaled $3.6 billion. Noninterest expenses were $1.7 billion (1.7%) higher year-over-year, primarily due to increased FDIC deposit insurance premiums. Indicators of asset quality continued to worsen during Q2.“ (FDIC Q2 Quarterly Banking Profile)

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Berlusconi: Private Leisure and Public Costs of the “Sultan of Swing”

Posted by hkarner - 28. August 2009

Paolo Manasse | Aug 25, 2009

The recent controversies about the private conduct of Prime Minister Berlusconi did not highlight one crucial issue at stake: the economic costs of the scandals.

The Premier’s personal affairs are likely to result in considerable public outlays. First, there are the direct costs of the “entertainments”, by now public knowledge:  fees for escort “services”, air-transportation costs of party guests, and so on. To these, one must add the presumed sums awarded to the health-care entrepreneurs involved in the escort-for-favours exchange in Puglia, now under police investigation.

But the reputation costs are likely to be much more important. When the private behaviour of the Premier openly contradicts publicly professed values (god, marriage, etc.), the prestige of the institutions is lessened (as the Clinton – Lewinsky affair demonstrates).  At times of crisis, such disrepute may have a very negative impact on national cohesion (why should I accept sacrifices, when the Premier has a lot of fun?). Moreover, it may undermine the country standing in the international arena, thus inhibiting the capability of supporting national economic, strategic and military interests. The economic consequences of this disrepute may be substantial, but they are difficult to quantify. Den Rest des Beitrags lesen »

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The Credibility of Farmers, Priests and Prostitutes – and Bankers?

Posted by hkarner - 28. August 2009

als Prostituierte wäre ich da aber beleidigt!

Michael Pettis | Aug 27, 2009

Three weeks ago China Daily published a pretty funny article about a recent survey on credibility that had taken place in China. According to the article,

At a time when shamelessness is pervasive, we are often at loss as to who can be trusted. The five most trustworthy groups, according to a survey by the Research Center of the Xiaokang Magazine, are farmers, religious workers, sex workers, soldiers and students. 

A list like this is at the same time surprising and embarrassing. The sex business is illegal and thus underground in this country. The sex workers’ unexpected prominence on this list of honor, based on an online poll of more than 3,000 people, is indeed unusual.  Den Rest des Beitrags lesen »

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China Cutting Overcapacity

Posted by hkarner - 28. August 2009

Edward Harrison | Aug 27, 2009

The Chinese are getting serious about addressing overcapacity that has developed in industry, according to statements released by the state press. This should be seen as a positive development given concerns about a bubble in property and shares and stories of malinvestment related to China’s attempts to reach lofty growth targets.

China’s State Council said yesterdayt.gif that in emerging sectors like wind power,  „overcapacity and redundant projects remain prominent because of slow progress in industrial restructuring in some of these sectors.“  As a result, regulators were cracking down both on lending to the sector and in direct oversight. Den Rest des Beitrags lesen »

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Roubini On U Shaped Recovery: More Statesmanlike or Less Certain?

Posted by hkarner - 28. August 2009

Yves Smith | Aug 24, 2009

Nouriel Roubini verged on apocalyptic during the course of the crisis, and was proven largely right. Now that he has softened his stance, some have accused him of moderating his tone as a result of his much higher profile.

While that’s possible, a couple of factors seem more likely. First and foremost, much of Roubini is now being filtered through the MSM, which as many readers have commented, has been too often trying to find the happy face in any bit of economic news. A glaring instance in July was when Roubini put out a press release disputing a Bloomberg news report claiming Dr. Doom had said the recession would be over this year. So we are not getting the raw, unedited, long form Roubini of RGE Monitor, which tends to pointed language, but the MSM soundbite. Some of the forcefulness of Roubini’s views comes from his relentless and usually multi-point exposition, and not just colorful turn of phrase. Den Rest des Beitrags lesen »

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Ratings Reform, Redux

Posted by hkarner - 28. August 2009

Joseph Mason | Aug 26, 2009

Policymakers are coming back to ratings reform, but the discussion remains skewed toward conflict of interest and liability. In doing so, however, policymakers are missing the opportunity to steer the debate in a different direction. Ratings predictability and stability comes from widespread applications that are used to rate well-understood financial securities. But recent discussions about ratings agency reform have attempted to avoid judging models in efforts to avoid commoditizing ratings. Dogmatically avoiding such commoditization, however, sets up a Type-I/Type-II error bias that is not, in fact, incentive compatible with the goal of producing high-quality NRSRO ratings. Den Rest des Beitrags lesen »

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