Market Commentary

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Is Contingent Capital the Answer to the Bank Capital Problem?

Author: Bob Eisenbeis, Post Date: November 23, 2009

Lloyds Bank has announced the successful exchange of some outstanding subordinated debt for a new debt instrument that would be converted to common equity if its capital ratio declined below a critical value.  Specifically, in the Lloyds proposal, the security would convert when its Tier 1 capital ratio fell below 5%.  The instrument is called […]

In Fed We Trust by Robert A. Eisenbeis and Ellis Tallman

Author: Bob Eisenbeis, Post Date: November 17, 2009

Ellis Tallman is the Danforth-Lewis Professor of Economics, Oberlin College, and was formerly Vice President, Federal Reserve Bank of Atlanta. David Wessel’s book, In Fed We Trust: Ben Bernanke’s War on the Great Panic, is the definitive chronicle of the 2007-2009 financial crisis, but it is much more.  The book gives us an inside view […]

Good Morning, Vietnam!

Author: David Kotok, Post Date: November 16, 2009

Robin Williams’ movie scenes are nothing like modern-day Vietnam. At 6 AM the streets are already teeming with people, scooters, buses and cars. Many Hanoi city folks gather to exercise in the early morning. Badminton games are everywhere and exercise groups of all types are ubiquitous, almost as ubiquitous as the cell phones. By 8 […]

Is Restricting Pay the Silver Bullet?

Author: Bob Eisenbeis, Post Date: November 9, 2009

Financial institution regulators around the world have coalesced around the idea that the way to control excessive risk taking is to restrict bankers’ pay. In part they are responding to taxpayer ire at their having put billions of dollars of rescue funds into financial institutions, only to see those institutions pay what are viewed as […]

The Fed and the Unemployment Rate cont’d

Author: David Kotok, Post Date: November 4, 2009

In response to the recent piece we wrote about the Fed and the unemployment rate, Bloomberg anchor Kathleen Hays emailed the following: [Richmond Fed president] “Jeff Lacker told me he could see the Fed tightening before unemployment comes down when I interviewed him last month on The Hays Advantage.” Kathleen also sent a recent NY […]

More BRICs Falling

Author: Bill Witherell, Post Date: November 2, 2009

Last week (October 26-30) was a roller-coaster ride for global equity markets. In the US, the S&P 500 finished the week down 4.1% from the Friday, October 23, close; and the international advanced-economy (ex-North America) benchmark, the MSCI EAFE Index, dropped 5.1%.  The emerging-market benchmark MSCI EEM Index lost 7.8%. A break in the run-up […]

The Coming Week: Fed, Employment Report, Asia

Author: David Kotok, Post Date: October 31, 2009

This is going to be a big week.  And it comes on the heels of another weekend bank-failure announcement, and as we absorb the Geithner testimony and the discussion draft hearing in front of Barney Franks’ House Financial Services Committee.   Ours views of this Geithner-designed proposal are harsh and already known to readers. It has […]

End of the Carnival in Brazil?

Author: Bill Witherell, Post Date: October 29, 2009

The Brazilian stock market has sizzled this year.  The 116% gain in the MSCI Index for Brazil is second only to that for Russia, which recovered from a very severe fall. Foreign investors have been flocking to the BM&FBOVESPA, Brazil’s multi-asset exchange in Sao Paulo, and to the Brazilian currency, the real, which has advanced […]

Fed Independence: R.I.P.?

Author: David Kotok, Post Date:

It’s now official.  The proposed legislation to reform America’s financial service supervision includes granting the Secretary of the Treasury a veto over Section 13(3) emergency action by the Federal Reserve Board of Governors.  If this becomes law, it will be a sad day for the independence of America’s central bank. The Secretary of the Treasury, […]

$80 Oil…..

Author: David Kotok, Post Date: October 23, 2009

The $80 oil price is starting to worry me a little.  Translate it into gasoline and you get somewhere around $2.50 per gallon or a little higher, depending on where in the US you fill up your tank.  Add to that a little cold weather and expanding crack spreads in refineries, and the price will […]

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