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Monthly Archives: March 2010

US Bank System Reform

The US banking and financial system is in need of updating and improving. Ever since our banking system almost brought Armageddon in 2007-2009, we’ve known the system needs a serious overhaul. Reforming the banking system is always a slow and uphill effort because banks are skilled (OK, their army of lobbyists are skilled) at convincing our perpetually myopically-inclined legislative branch to see things their way.  […] Read the rest of this entry »

Greece Update

Here we go…. March 16 was a deadline for Greece to update the EU finance ministers on their progress to bring down their deficit this year. March 17th:  the most important person in Europe right now -Angela Merkel  (the German Chancellor – the leader of the German federal government) gave a statement indicating the Eurozone must change its own rules to permit the block […] Read the rest of this entry »

Greece Update

Despite the fact that Greece is in Europe (not here in the US) and has a very small economy, it matters a great deal what happens there in the coming days, weeks, and months (March, April, May). This is because there will likely be a common / repeated theme in how Europe manages Greece with how they manage the rest of the PIIGS.  Taken […] Read the rest of this entry »

February Unemployment Report

The Bureau of Labor Statistics (BLS) released data on February US unemployment. The report showed initial claims remained at 9.7% (seasonally adjusted). This is known as the seasonally adjusted U3 rate. The BLS makes adjustments to the data every month to compensate for known annual pattern distortions in the population employment data. They do this to account for such predictable annual things as when […] Read the rest of this entry »

US Economy Update

Here is a brief snapshot: 4q 2009 US GDP was revised up from +5.7% to +5.9%. That’s a welcome change from continual lowering of GDP data (though there is one more revision to come in another month). Unfortunately most of the gain -almost 4%- came from a tepid inventory rebuild. Because of how GDP is calculated, if inventories are being drawn down radically in […] Read the rest of this entry »

3000 small banks enter the pressure cooker

The Congressional Oversight Panel for the TARP program released information on its findings on the health of small banks. Almost 3000 small banks (there are about 8100 banks in the USA) will have to dramatically reduce the business they do with commercial real estate and build up their balance sheet. Small banks are facing a “tidal wave” of losses from commercial real estate loans […] Read the rest of this entry »

Portfolio Insurance

No, you are not imagining it — stock and bond market volatility has steadily increased over the past 2 decades as innovative financial products have been developed and implemented. This is contrary to the objectives of many new-fangled financial products, and it is certainly contrary to what banking system regulators believed was the case (is still the case). Most of the time (and over […] Read the rest of this entry »

Exit the Fed……slowly

The Fed is due to end purchases of mortgage backed securities by the end of March. That will leave it with $1.25T worth of mortgage backed bonds. This extraordinary measure was taken to ensure mortgage rates remain low in order to make home purchasing easier (so we could reduce a mountain of housing inventory). We’ll see where mortgage rates go once the Fed stops […] Read the rest of this entry »