Market Commentary


AIG-LEH-Federal Reserve and Asymmetric Information. Special thanks to John Silvia, Dennis Gartman, George Akerlof and (we hope) Janet Yellen

Author: David Kotok, Post Date: September 16, 2008

September 16, 2008-a critical FOMC meeting day “How did we get into this big of a mess?” asked the journalist.   “Asymmetric information” we quickly answered.   Huh?  What’s that? My friend, John Silvia, is not only my fishing partner.  He also is one smart economist and an encyclopedia of research references.   “Look at George Akerlof’s “Lemons” […]

September 11th Reflection

Author: David Kotok, Post Date: September 11, 2008

There are two images that have not muted with time.   They are exactly 84 months old.  After seven years, these closed eyes still see the jumpers as vividly as I did that morning.  I counted five in the few minutes between the time I first turned around to look at the smoldering North Tower […]

Wishful Thinking

Author: Bob Eisenbeis, Post Date: September 10, 2008

Markets breathed a sigh of relief on Monday following the government bailout of the debt holders of Freddie Mac and Fannie Mae. But one wonders if that sigh is like that of the murderer who received life in prison rather than the death penalty. Once the immediate threat was removed then the reality of the […]

Trouble in the Eurozone

Author: Bill Witherell, Post Date: September 9, 2008

The 10th anniversary of the January 1, 1999 launching of the euro is approaching.  However, the celebrations are likely to be tempered by the sluggish performance of the 15 European economies that have adopted the euro as their common currency (Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovenia, […]

Hank Punts on First Day of Pro Football Season

Author: Bob Eisenbeis, Post Date: September 8, 2008

Treasury and the Federal Housing Finance Agency (FHFA) placed Freddie and Fannie into conservatorship, replaced existing management, suspended dividend payments on outstanding equity and preferred stock, and promised injections of new capital in the form of senior preferred stock with warrants.  The actions are designed to maintain the flow of funds to housing and to […]

GSE and Moral Hazard

Author: David Kotok, Post Date: September 6, 2008

GSE stands for Government Sponsored Enterprises and is now the common reference for the federal government’s housing mortgage lenders Fannie Mae and Freddie Mac (FF).  Other GSEs like the Federal Farm Credit Banks or the Federal Home Loan Banks are not public shareholder-owned and have not encountered the problems of FF. “Moral hazard” is a […]

One Small Step for a Beaten-Up Insurer and a Battered Muni Market

Author: John Mousseau, Post Date: September 2, 2008

John Mousseau is a portfolio manager and heads the tax-free Muni section of Cumberland.  He is a member of the Management Committee of Cumberland Advisors.  His bio is found at  His email is  This past week, Financial Guaranty Insurance Corporation (FGIC) announced that Municipal Bond Insurance Corporation (MBIA) would reinsure $184 billion of […]

Banks, Cash & Labor Day

Author: David Kotok, Post Date: September 1, 2008

Labor Day weekend started with another bank failure; this time in Georgia.  That is number 10 for the year.  Another few hundred million is lost by the Federal Deposit Insurance Corporation (FDIC) fund as a billion-dollar, five-branch bank disappears.  The weekend also saw a few of us back at Leen’s Lodge in Maine, talking informally […]

Hans Christian Anderson and Vladimir Putin

Author: David Kotok, Post Date: August 19, 2008

Tivoli Gardens’ pleasantries are brightened by the warming sunshine in this western Baltic nation.  It finally stopped raining.  Three flavors of herring and a cold beer will mask geo-political and financial concerns if you allow it to happen.  Five and a half million Danish citizens live on their four hundred island nation, enjoy the fruits […]

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