Rolfe Winkler

Central Bank Schizophrenia

June 30, 2008

The Fed’s critics have complained very loudly since Ben Bernanke began lowering interest rates last Fall. They argue that low interest rates encourage more borrowing and consequently more spending. And that low interest rates depress the the foreign exchange value of the dollar. They say all of the above are driving inflation higher and point to exploding food and oil prices worldwide as evidence.

$200 oil?

June 25, 2008

If Israel bombs Iran, $200 oil is a distinct possibility. Both look more likely given recent developments. Consider:

Reconsidering the “Home-ownership Rate”

June 22, 2008
    “Rise in Renters Erasing Gains in Ownership,” New York Times, June 21st 2008

The story above is based on home-ownership data released by the Census Bureau back in April. The article bemoans the fall in the home-ownership rate from 69.1% in the first quarter of 2005 to 67.8% as of the first quarter this year. Yet I wonder: did the home-ownership rate ever really reach 69.1%?U.S. Homeownership Rate

BankUnited imploding

June 19, 2008

After an analyst downgrade sent their stock diving 30% to $2.35 today, BankUnited Financial of Florida tonight issued a press release announcing a secondary stock offering. The bank is looking to raise $400 million of capital, which at the current stock price would translate into an additional 170m shares.

Not Backing the Buck

June 17, 2008

Yesterday’s Page One article in the Journal suggested the Fed is in no rush to boost interest rates to protect the value of the dollar:

NYT: We need a bailout now!

June 15, 2008

The New York Times editorial board devotes today’s top editorial to criticizing the Bush administration, and John McCain, for doing “so little” in response to “the foreclosure crisis.” [Not the first time they’ve called for a bailout.] Doing “nothing” to prevent foreclosures will have an unacceptably large negative impact on the broader economy, they argue.

P/E Ratio Defined

June 14, 2008

This is the second part of a three-part tutorial on measuring a company’s valuation. You can find Part 1 here. Part 3 is coming soon.

Abu Dhabi negotiating to buy Chrysler building

June 11, 2008

The latest high profile investment by a sovereign wealth fund (SWF) may be Abu Dhabi’s purchase of the Chrysler building here in New York.

Getting Over Our Debt Addiction

June 10, 2008

OptionARMageddon is all about raising awareness of our debt-fueled lives and economy. Debt is a dangerous crutch to lean on. It’s a drug, really, offering users the temporary and totally artificial high of having more stuff: the bigger house, the faster car, the size D breasts.

Finance: The next industry to be outsourced?

June 10, 2008

What could be a better bargain than hiring a kid out of college at $100,000 per year to work 90 hours per week? How ’bout hiring a Chinese kid to do the same thing for less than half that.

The New Dollar Carry Trade?

June 8, 2008

There’s been much chatter recently from bloggers covering China’s economy. It seems China is raking in foreign reserves at an astonishing rate so far this year. Perhaps as much as $365 billion through April. Drilling down into the sources of that cash suggests the emergence of a new and very sizable “carry trade,” in which investors sell a currency with a relatively low interest rate and buy a different currency yielding a higher interest rate.

Oil up $10 a barrel so far today

June 6, 2008

Update 2:28PM: oil now up over $11–

Oil is near $139 a barrel as I write this, a record high even after accounting for inflation.

Evander and Ed

June 5, 2008

What do Ed McMahon and Evander Holyfield have in common? Foreclosure.

But seriously folks, the Mortgage Bankers Association reported today (via HousingWire) that deliquencies are accelerating among prime borrowers faster than among subprime borrowers:

The Great Risk Dispersion that Wasn’t

June 5, 2008

The Daily Telegraph in London has an interesting article comparing bank strategies today with similar strategies used in 1929:

What is a share of stock?

June 4, 2008

[One of O.A.’s goals is to help readers with the vocabulary of investing and economics. This is the first in a regular series of posts I’ll call “tutorials.” We’ll collect these and post them under a tab at the top of the page….With that, I present Part 1 of our first tutorial]