Posted on February 13, 2009 by MoneyBob
RGE Monitor
On Nouriel Roubini’s Global EconoMonitor, Nouriel Roubini argues that it is time for ‘Plan N’, namely a nationalization of insolvent banking systems. The very cumbersome U.S. Treasury proposal to dispose of toxic assets – presented by Treasury Secretary Tim Geithner – can be best understood as a combination of removing toxic assets off the banks’ balance sheet and also providing government guarantees to those private investors that will purchase them (and/or public capital provision to fund a public-private bad bank that would purchase such assets). Markets were expecting a clearer plan, but also a plan that would bail out shareholders and creditors of insolvent banks. Unfortunately that is not politically and fiscally feasible. It is thus time to start to think and plan ahead for Plan N (“nationalization” of insolvent banks). Check out: “It Is Time to Nationalize Insolvent Banking Systems”. Also don’t miss “Roubini Calls For Bank Nationalization – Latest Roubini Interviews on Bloomberg” and the discussion with Nouriel and Nassim Taleb “Predicting the Crisis: Dr. Doom & the Black Swan”
The Anglo-Saxon model of supervision and regulation of the financial system has failed. The supervisory system “relied on self-regulation that, in effect, meant no regulation; on market discipline that does not exist when there is euphoria and irrational exuberance; on internal risk management models that fail because – as a former chief executive of Citi put it – when the music is playing you gotta stand up and dance. Check out: “Roubini: Anglo-Saxon model has failed”
Filed under: Banking, Credit Crunch, Deflation, Depression, Dooms Day, economics, Economy, Nouriel Roubini | Tagged: Deflation, Depression, economics, Economy, Nouriel Roubini, RGE Monitor | Leave a comment »
Posted on February 9, 2009 by MoneyBob
Unemployment Rate Jumped to 7.6%
- Jan 2009: Payrolls fell 598,000 (biggest monthly decline since Dec 1974) after falling by 577,000 in Dec and 597,000 in Nov 2008, Unemployment rate rose from 7.2% in Dec 2008 to 7.6% in Jan (a 16-yr high)
- Payrolls have declined 3.57 mn since start of the recession in Dec 2007 (largest job losses during any post WW II recession); payrolls fell 2.6 mn in 2008
- Continued job losses in manufacturing (-207k), construction (-111k), residential const (-61k), non-res const (-47k), services (-279k) the sharpest 3-mo decline since 1950s; finance (-42k), auto and parts (-31k), real estate (-45k), business and professional services (-121k), leisure and hosp. (-28k). Job gains in health and education (+54k), govt (+6k)
Filed under: Credit Crunch, economics, Economy, Nouriel Roubini, Thoughts, Unemployment Rate, Work | Tagged: economics, Economy, Lost Jobs, Nouriel Roubini, Payrolls, RGE Monitor, Unemployment Rate | Leave a comment »
Posted on December 4, 2008 by MoneyBob
RGE Monitor
Filed under: Credit Crunch, Deflation, economics, Economy, Gold, Inflation, Interest Rates, Investing, Market History, Nouriel Roubini, US Dollar | Tagged: business, Deflation, economics, Economy, Inflation, Interest Rates, RGE Monitor, Work | 1 Comment »
Posted on November 28, 2008 by MoneyBob
RGE Monitor
Can Central Banks Go Broke? Fed Refuses To Disclose Collateral Composition And Recipients Of $2.8 Trillion Loans
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The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the U.S. GDP, to rescue the financial system since the credit markets seized up 15 months ago. Bernanke’s Fed is responsible for $4.4 trillion of pledges, or 60% of the total commitment of $7.4 trillion. The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions
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The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 bn Troubled Asset Relief Program (TARP)–> Regulators refuse to disclose who is receiving how much while Congress starts pushing for transparency and give authority over taxpayer money back to elected officials.
- see Cumberland Advisor’s real-time graph of Fed’s balance sheet and the contributions of different lending programs.
- The bailout includes a Fed program to buy as much as $2.4 trillion in short-term notes, called commercial paper, that companies use to pay bills, begun Oct. 27, and $1.4 trillion from the FDIC to guarantee bank-to-bank loans, started Oct. 14.
- Buiter: Can the central bank become insolvent? How and by whom or by what institution should the central bank be recapitalized, if its capital were deemed insufficient? These are relevant questions today wherever central banks have taken on large exposures to private credit risk as in the U.S., the Eurozone, and the UK.
- Nov 5, RGE: Fed Balance Sheet Expansion: Change in Formula for Interest Paid on Reserves –> banks are providing the reserves for the Fed’s balance sheet expansion themselves.
- Sep 17: Treasury Announces Supplementary Financing Program to fund the Federal Reserve’s Liquidity Facilities and to manage the balance sheet impact of these efforts.
Go to: http://www.rgemonitor.com for all the details. (Excellent Financial Site – You will recognize the writer, because he has been all over the TV recently.
Filed under: Credit Crunch, Dooms Day, economics, Economy, Nouriel Roubini, Retirement, Risk in Portfolio, Saving, The Fed, Treasury Department, US Dollar | Tagged: Deflation, economics, Economy, finance, Life, Nouriel Roubini, Personal Thoughts, Recession, RGE Monitor, Work | Leave a comment »