Commentaries

Now raising intellectual capital

new yospace test 1

video id 12523592:

video id 11012273:

video id 11527833

video id 15751313:

video id 17033784:

video id 19975941

video id 14957991

from Rolfe Winkler:

No MSG Please

Cross-posted from today's Times.

The formidable skills of LeBron James probably won’t reach the stock market. Speculation is rampant he could soon be headed to the New York Knicks basketball team, whose owner is now trading on the Nasdaq.

The listing followed a spinoff of Madison Square Garden Inc. from the cable operator Cablevision to its shareholders last week. MSG is a collection of trophy assets but doesn’t seem to be a gold-plated investment.

from Rolfe Winkler:

Bank capital buffers increase, still not high enough

Q4 TCE graphic

(To enlarge the chart above in a new window, click here.)

The superstructure of financial reform may be stalled in Congress, but at least regulators are forcing banks to raise capital. Since the nadir of the financial crisis in the fourth quarter of 2008, the Big Four have more than doubled their common equity, raising another $55 billion just in the fourth quarter.

The question is whether they've raised enough. With capital only a bit above early '08 levels, especially among regional banks, the answer is most likely no.

from Rolfe Winkler:

Lunchtime Links 2-2

Homeownership rate falls to 2000 level (CR) At 67.2% it's still way overstated. Home "ownership" is a misnomer in cases when the owner has withdrawn mortgage equity or when the price of the home has fallen below the principal value of the mortgage. A better measure of homeownership, I think, is just to look at total owner's equity as a % of household real estate. The most recent Fed Flow of Funds report (page 104, line 50) puts the figure at just 37.6%...

U.S. could extend bank fee beyond 10 years, Geithner says (Di Leo/Crittenden, WSJ) The proposed tax on non-deposit liabilities should be permanent, and should target ALL liabilities, including repos. Deposits are guaranteed via FDIC. While that insurance is dramatically underpriced (witness the cash-strapped state of the DIF) at least banks pay something for it. Non-deposit liabilities are also effectively guaranteed, for the biggest banks anyway, via the promise that none which is too big will be allowed to fail. To counter moral hazard, this implicit guarantee must be taxed in order to offset any benefit derived from lower funding costs.

from Rolfe Winkler:

Lunchtime Links 2-1

President's budget (gpoaccess.gov)

Barney Frank: The poor should rent, not own (Indiviglio, Atlantic)

Citigroup said to plan sale of private equity unit (Keoun/Keehner, Bloomberg) Citi cites raising cash to pay down debt as the reason to sell this unit. Of course this would also get Pandit some brownie points with Paul Volcker, who wants commercial banks out of private equity, hedge funds and proprietary trading...

HCA owners get $1.75 billion payout (Lattam, WSJ) Speaking of private equity...a nice payout for investors in one of the biggest LBOs in history.

from Rolfe Winkler:

Obama’s blowout budget

Now that the worst of the financial crisis is behind us, one would think the budget deficit might start to come down. Actually, no. Obama's proposed budget sets a new deficit record -- $1.6 trillion this year compared to $1.4 trillion last year.

The President thinks he can help the economy with more deficit spending. But debt is the reason we have a jobs problem in the first place. We've accumulated more debt than our incomes can support (see chart at bottom) so the economy is trying to pay it down, leading to less spending and higher unemployment. Adding to the debt pile only makes the employment picture uglier in the long-run.

from Rolfe Winkler:

Lunchtime Links 1-31

Paulson says Russia urged China to dump Fannie/Freddie holdings (McKee/Nicholson, Bloomberg)

Avatar breaks $2 billion worldwide box office mark (Box Office Mojo) Very impressive of course, though on an inflation-adjusted basis, Avatar ranks just 25th all time. Nothing will ever beat Gone with the Wind.

from Rolfe Winkler:

Bank failure Friday

#10

    Failed bank: First National Bank of Georgia, Carrollton GA Acquiring bank: Community & Southern Bank, Carrollton GA Vitals: at 9/30/09, assets of $832.6m, deposits of $757.9m Estimated DIF damage: $260.4m

#11

    Failed bank: Florida Community Bank, Immokalee FL Acquiring bank: Premier American Bank NA, Miami FL Vitals: at 9/30/09, assets of $875.5m, depoists of $795.5m Estimated DIF damage: $352.6m

#12

from Rolfe Winkler:

Spanish canary in the European coal mine

The quote of the day comes from Marc Chandler, currency strategist at Brown Brothers Harriman, who has graciously offered to let me reprint a note he sent today.

While Greece gets much of the news, Chandler argues that it's in Spain where the policy dilemma is "most stark."

from Funds Hub:

Milan’s deserted depots point to double dip

 Travelling towards Italy's major financial centre Milan last Sunday on my way back to Zurich, I spotted something out of the window that had little effect on my fellow train passengers but made my blood run cold.

 The massive storage depot just outside the city was practically devoid of goods containers.

  •