Market Commentary


Three Quick Points About the Fed

Author: David Kotok, Post Date: March 17, 2009

First:   As the Federal Reserve starts its two day meeting today, Chris Whalen just released his notes regarding an unpublished Fed research work.  The summary is below.   The link to his letter is: . “The following article on fair value accounting ("FVA") was authored in May 2007 by a researcher who at the time […]

Systemic Risk

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

“Systemic risk is the risk imposed by inter-linkages and interdependencies in a system or market, which could potentially bankrupt or bring down the entire system or market if one player is eliminated, or a cluster of failures occurs at once. Systemic financial risk occurs when contingency plans that are developed individually to address selected risks […]

Fixing the Banking System

Author: David Kotok, Post Date: March 9, 2009

Kotok introductory note:  During the weekend, we participated in a colloquy with Bill Dunkelberg and Chris Whalen.  Our purpose was to examine the banking crisis, the risk in banking liabilities (deposits and debt), and systemic cures.  The full text of the interview follows. What is the Plan? A Discussion With Bill Dunkelberg and David Kotok […]

Investor Eyes Are on the Dragon Economy

Author: Bill Witherell, Post Date: March 8, 2009

On Wednesday, March 4, global stock markets rallied strongly on the expectation that China’s leaders would announce the next day at the opening of the National People’s Congress a massive additional fiscal stimulus program. Thursday, after the rumored announcement failed to materialize, global markets tumbled. These events illustrate the pivotal positive role the Chinese economy […]

A Forecast of the Economic Outcome from Obama’s plan

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

Kotok introductory note: There are many forecasts of the outcome of President Obama’s stimulus package. Most of them focus only on the domestic US economy, for understandable political reasons. One economist with global skills in the applied arena has modeled the outcome globally and given us permission to share it with our readers. He is […]

AIG: What It Means?

Author: David Kotok, Post Date: March 2, 2009

The news on AIG of additional federal funds and a change in the structure of the preferred stock and its implications have rattled the securities markets.  We are scheduled to discuss this tonight on National Public Radio (NPR), “All Things Considered” and on CNBC in the 8:10 p.m. segment and, subsequently, in the 8:45 p.m. […]

Citigroup: Who Has the Pea?

Author: Bob Eisenbeis, Post Date:

Last Thursday the US Treasury agreed to convert $25 billion of TARP Series H Preferred Stock into common equity at an exchange price of $3.25 per share.  The stated goal of this exchange was to increase the bank’s Tangible Common Equity and thus ensure more investor confidence in the institution’s long-term prospects.  This transaction is […]

Stress Tests: What They Mean and Don’t Mean

Author: Bob Eisenbeis, Post Date: February 26, 2009

Much attention was given this week to the upcoming stress tests that the Treasury and the banking agencies are sponsoring for the nation’s 19 largest banking institutions.  How much faith should we have in the results?  The answer is “it depends.”  It depends upon how well the required models are constructed and how well they […]

Housing Affordability Plan

Author: Bob Eisenbeis, Post Date: February 24, 2009

The Obama Administration has announced its Homeowner Affordability and Stability Plan (HASP).  What problems are these efforts attempting to address?  And how significant are they likely to be in addressing the current problems in the housing market? HASP is a very limited plan with a large price tag. It is directed primarily towards helping two […]

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