Monday, 8 Nov 2010 | 4:26 PM ET

What's Really Driving Unemployment?

Posted By: John Carney

Everyone these days is citing the findings of Narayana Kocherlakota of the Minneapolis Federal Reserve explaining why unemployment rate has risen even while the job vacancy rate has as well.

Unemployment line
Getty Images
Unemployment line

Kocherlakota states:

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  Monday, 8 Nov 2010 | 3:38 PM ET

Big Banks Are Destroying Resolution Authority

Posted By: John Carney

In the aftermath of the Wall Street bailouts, nearly everyone agreed that one of the greatest priorities for reforming the financial system was to make sure that this wouldn't happen again.

"Never again will the American taxpayer be held hostage by a bank that is too big to fail," Barack Obama told the American people.

The primary mechanism put in place to avoid another round of bailouts is called "resolution authority." The idea is that instead of keeping failing financial giants alive, regulators will swoop into a failing financial institution, fire the executives, cram down the creditors and wipe-out shareholders.

The dire prospects of falling into resolution are supposed to discipline managers to avoid excessive risk and incentivize bondholders to monitor risk at banks. The combination of management and bondholder risk awareness should improve performance and decrease systemic risk.

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  Monday, 8 Nov 2010 | 3:30 PM ET

Dick Bove Sees No Put-Back Apocalypse for Citi: Losses Could Be as Little as $5 Billion

Posted By: Ash Bennington

How much is Citi likely to have to spend to buy back mortgages from investors?

Citigroup Building
Getty Images
Citigroup Building

Well-known banking sector analyst Dick Bove thinks that Citi is at risk for $40 billion in put-back claims. Only $8 billion of those claims will ulimately be successful, in Bove's view. And, after recovering on the mortgages which it will have to repurchase, the total loss could be as low as $5 billion.

Bove begins his analysis of Citigroup's potential repurchase exposure with Citigroup's $504 billion portfolio of serviced but not held (SBNH) loans.

Bove nets out 22 percent of Citi's SBNH loan portfolio, to account for Citi's third party indemnifications. \(Third party indemnifiers have agreed, according to Citigroup, to cover losses on the indemnified portion of the SBNH portfolio.\) Once the indemnified portion of the portfolio is removed, we are left with the remaining 78 percent, or $393 billion. This number represents the total unhedged exposure of Citi's SBNH loan portfolio.

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  Monday, 8 Nov 2010 | 3:27 PM ET

Silver Rallies On: Three Things To Consider

Posted By: Lori Spechler

Silver has been rallying off the charts, fueled in part by some of the same issues behind the gold rally: very low interest rates, easy money and fear of inflation.

Silver bar and coins
Thomas Northcut | Photodisc | Getty Images
Silver bar and coins

But, here are three things to consider before jumping into the pool.

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  Monday, 8 Nov 2010 | 2:26 PM ET

Four More Banks Fail; 2010 the New Leader

Posted By: Jeff Cox

The four bank failures over the weekend take the 2010 total past the previous year as the industry struggles to recover from the beating it took during the financial crisis.

Regulators shuttered four new banks over the weekend — two in California, one each in Washington and Maryland — bringing the year’s total to 143 and past the 2009 mark of 140. The collapse of the subprime mortgage system and the ensuing fallout has claimed 311 institutions \(not to mention the entire industry’s credibility\) since 2007.

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  Monday, 8 Nov 2010 | 1:46 PM ET

Dow Theory Sends a Shouting Buy Signal

Posted By: Jeff Cox

All the investors out there snapping up stocks in this seemingly tireless rally have one more reason to rejoice: Dow Theory says the cyclical bull run is for real.


Industrials and transports both broke their April highs last week, a key metric to tell whether Dow Theory applies. The idea is that if the two indices break out consecutively then Dow Theory comes into play and the market is likely to trend higher.

“Based on the Dow Theory, the US equity market is in a primary bull trend from the summer 2009 Dow Theory buy signal,” Bank of America Merrill Lynch analysts wrote in a research note.

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  Monday, 8 Nov 2010 | 1:06 PM ET

Sarah Palin Shames Fed Critics by Sounding Just Like Them

Posted By: John Carney

So you think you are a smarty-pants critic of Ben Bernanke's latest quantitative easing program?

Sarah Palin
Sarah Palin

Well, I've got some news for you. You probably don't sound any smarter than Sarah Palin.

The National Reviewreports:

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  Monday, 8 Nov 2010 | 12:07 PM ET

Did Cops Target Hit-And-Run Driver Because He Was A Rich Private Wealth Manager?

Posted By: John Carney

No doubt this is going to become one of those legendary stories of the wealthy being treated differently by the judicial system. And by differently, I mean more leniently.

The Daily Mail lays out the basic facts :

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  Monday, 8 Nov 2010 | 11:41 AM ET

Do We Have Income Inequality Backward?

Posted By: John Carney

While the growth of income inequality in the United States is shocking and is surely transforming the economic and political landscape, the transformation may be very different from what many analysts expect.

Jupiterimages | Comstock Images | Getty Images

Over the weekend, New York Times columnist Nick Kristoff drew attention to an epically-long series on inequality by Slate's Timothy Noah . I won't pretend to have read the entire thing yet. But Kristoff summarizes the jumping off point nicely: "The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976.

Keep in mind that when Noah and Kristoff discuss income inequality, what they are discussing is a relative measure of yearly household income. By many absolute measures, Americans of all economic classes are far better off than they were 35 years ago.

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  Monday, 8 Nov 2010 | 10:39 AM ET

Barry Glassman: QE2 Will Not Fix the Housing Crisis

Posted By: Lori Ann LaRocco

Despite the Fed announcing QE2, there are still huge headwinds facing the real estate sector. Many hope the lower interest rates will help the limping market, but others suspect QE2 just another crutch designed to keep the market artificially afloat for a few more months.

Sometimes it seems instead of just ripping the band-aid off and letting the raw wound heal another band aid is put on top. Banks are already sitting on a trillion dollars. Many CEOs like Wilbur Ross are skeptical the additional cash will entice banks to lend.

I decided to sit down and speak with Barry Glassman, of Glassman Wealth Services. Barry called the ARM Tsunami before it hit the real estate market. I asked him what is needed to solve the housing problem once and for all.

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  • Jeff Cox is finance editor for CNBC.com.

  • Lawrence Develingne

    Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.

  • Stephanie Landsman is one of the producers of "Fast Money."

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