Rolfe Winkler

Lunchtime Links 2-18

February 18, 2010

Reader note: off on vacation the next few days so posting will be light. But LOTS of great links today….2 days of reading here!

Evening Links 2-17

February 17, 2010

Worldwide cumulative current account (Wikipedia) Interesting chart…

Fed officials debated shrinking balance sheet (Bloomberg) The latest FOMC minutes were released. The Fed is ever so slowly moving towards shrinking its balance sheet. Most likely it will happen without outright asset sales. Bernanke can let the balance sheet shrink slowly as mortgages underlying MBS are prepaid.

Lunchtime Links 2-16

February 16, 2010

New flower for North Korea may be succession ploy (Lim, Bloomberg)

Greece’s Goldman Sachs swaps spawn EU dispute on disclosure (Martinuzzi/Finch, Bloomberg) Greece was rebuked as early as 2004 by the EU for “deficit inaccuracies,” and again last month for under-reporting deficit figures for the past decade. The latest disclosure about swaps used to hide debt may make a bailout more distasteful, but won’t stop it. Too much is at stake.

No MSG Please

February 15, 2010

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.

Evening Links 2-14

February 15, 2010

Wall St. helped Greece to mask debt, fueling Europe’s crisis (Story/Thomas Jr./Schwartz) When an addict is hooked on a drugs, whose fault is it? The guy selling him the junk? Or his own for getting hooked in the first place? It’s convenient (and not entirely wrong) to blame bankers, mortgage brokers, real estate agents and others who sell us debt to finance more lavish lifestyles than we can afford. They do so to generate income via transaction fees. But at the end of the day, the Greek government knew what it was doing. As do most folks piling on leverage…

No bank failures this Friday

February 13, 2010

With the problem bank list 552 names long, and the unofficial list even longer, one might expect FDIC to pick up the pace of bank closures. Yet here we are, six Fridays into the new year, and only 16 banks have been put into receivership, with none this week and only one last week. At that rate, we’ll see 136 closures in 2010, short of the 140 that were closed last year.

Lunchtime Links 2-12

February 12, 2010

China tightens rules on bank lending to curb inflation (Bradsher, NYT) Banks in China are chock full o’ excess reserves. Because their economy is growing, loan demand is healthy, so excess reserves are being lent out….multiplying the money supply and causing inflation. U.S. stocks are taking it on the chin because China is the world’s main economic driver at the moment…moves to cool it down, while totally prudent, are bad for stocks.

Bank capital buffers increase, still not high enough

February 11, 2010

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.

Lunchtime Links 2-11

February 11, 2010

EU seals deal to help Greece, details murky (Grajewski/Toyer, Reuters) We need to know more about what help is being offered and what strings will be attached to it.

Lunchtime Links 2-10

February 10, 2010

How a new jobless era will transform America (Peck, Atlantic)

Bernanke testimony (Fed) Key line: “Also, before long, we expect to consider a modest increase in the spread between the discount rate and the target federal funds rate.” That’s not the same as raising the Fed Funds rate or the rate paid on excess reserves, but it’s the first time Bernanke has indicated policy may be tightened. Also, the balance sheet will be allowed to shrink on its own as mortgagees prepay.

Evening Links 2-8

February 8, 2010

Housing rebound in Canada spurs talk of new bubble (Dvorak, WSJ) Last week Paul Krugman toasted the sobriety of Canadian banks. Among other things, he said that low rates aren’t enough to cause a bubble since Canadian rates are low and, well, they don’t have a bubble. If this article is to be believed, Krugman didn’t look closely enough. Banks may use less leverage in Canada, but low rates are encouraging households to borrow big — debt to disposable income is a bubbly 1.42x. Key quote in this piece is near the bottom, where a real estate agent notes that rising prices mean rents are only barely covering mortgage payments for real estate investments. The best definition of a bubble is when debt service payments finally eclipse rents. Then buyers/lenders are betting on continued appreciation, which can only be driven by still-easier credit. Canadian real estate appears to be headed in that direction.

MBA dumps 1331 L

February 8, 2010

Readers of this blog dating back to its days on ML-Implode, may remember our exposé about former MBA CEO Jonathan Kempner’s misadventures at 1331 L St., NW, in Washington DC. The final chapter was written on Friday when…

Spiking Greek CDS

February 5, 2010

Funny how the market is just waking up to the Euro debt problem. Many have argued that debt levels are unsustainable, yet the IMF has adopted the neo-Keynesian line that governments can spend with impunity so long as unemployment is high. If there are unemployed workers in the economy, then conventional wage-push inflation — i.e. workers negotiating higher wages, which in turn drives up consumer prices — can’t happen. Or so the argument goes.

Bank failure Friday

February 5, 2010

Just one small bank this week it appears…

#16

    Failed bank: First American State Bank of Minnesota, Hancock MN Acquiring bank: Community Development Bank, Ogema MN Vitals: at 12/31/09, assets of $18.2 million, deposits of $16.3 million Estimated DIF damage: $3.1 million

Lunchtime Links 2-5

February 5, 2010

Euro debt fears roil global markets (Shah, WSJ) The U.S. is less worse than Euro economies, so Euro trouble causes flight to the dollar. Funny that we’re viewed as quality: When you factor in the debt of state and local governments, we’re in similar trouble….never mind unfunded liabilities for Medicare and SS.