Some of the most powerful members of the business and investing community think the American economy is going to be just fine.» Read More
World Bank's Zoellick Says He Does Not Favor a Gold Standard (CNBC) In a conversation with CNBC, World Bank president and former U.S. Treasury official Robert Zoellick, said he was not suggesting a return to a gold standard, but that he favors a more international currency system that involves the dollar, euro, yen, pound, and yuan (For more on the gold standard debate and related topics, see my interview with Nouriel Roubini from yesterday.)
A gold standard would just make business cycles more extreme, according to co-founder and chairman of Roubini Global Economics, Nouriel Roubini.
What's more, a gold standard would make central banks unable to fight inflation or deflation, much less do anything to combat persistent unemployment, Roubini said in an interview with NetNet yesterday.
"A fixed exchange regime, even if it is not a gold standard… that world just doesn't work. Because in that world, monetary policy by definition instead of being countercyclical becomes procyclical," Roubini told NetNet. "Suppose you have a fixed exchange rate regime...it just exacerbates the business cycle."
Roubini asks us to imagine two countries: One that's growing very quickly, and one that's growing very slowly.
Wall Street Heroes: Great Men—or Just Greatly Compensated Men? (WSJ) The headline says it all: Great piece.
We love Victor Neiderhoffer's blog, Daily Speculations . One of the things we love most about it is that it's so damn difficult, at times, to figure out what Neiderhoffer is saying.
Today's entry is:
No sooner said that increase in inflation expectations might change the schedule of flexionic payments, then bonds go to a 3 month low. The vigilantes finally do their thing.
Anyone care to translate that into language the rest of us can understand?
Tapping the brakes on the silver rally, the CME sent a letter to its clearing member firms and others Tuesday raising the amount of margin needed to trade silver futures contracts.
The change will go into effect after the close of business Wednesday, November 10th, 2010.
The reason cited for the increase was a “…normal review of market volatility to ensure adequate collateral coverage…”
Will the next major asset bubble to burst be the tequila bubble?
According to a recent article in tequilaaficionado.com , 159 new tequila brands hit the market this year in the United States. There are now a total of 1,128 tequila brands on the market in the U.S.—more than double the number available just five years ago.
Christopher Zarus sets the scene for the tequila carnage to come in his article It’s The End of the Tequila World as we know it…and I feel fine. He describes the coming tequila "sucker hole" like this:
You had to see this coming: The Chinese cut our debt rating — again.
This time, the Chinese rating agency Dagong reduced our sovereign credit rating from "AA" to "A+". Why? No surprises here either: Quantitative Easing.
This report citation is reposted on The Financial Times Alphaville blog: "The new round of quantitative easing monetary policy adopted by the Federal Reserve has brought about an obvious trend of depreciation of the U.S. dollar, and the continuation and deepening of credit crisis in the U.S. Such a move entirely encroaches on the interests of the creditors, indicating the decline of the U.S. government’s intention of debt repayment."
Recent findings that much—or perhaps all—of the ability of some investors to outperform others raise the question—is the stock market unfair? And if it is unfair, what should be done about it?
The Brookings Institute recently completed a study which found that the returns to a passive investor in a diversified portfolio can differ strikingly over the long-term depending on the market conditions the occur over the lifetime of the investor. Similarly, findings by scholars studying the markets with an eye to the efficient market hypothesis suggest that there is little support for the idea that skill plays a large role in the success of actively managed funds. It seems to be mostly luck at work.
Citigroup is very confident that it has properly reserved for the potential impact of mortgage repurchase requests. But if Citi’s confidence is based on the work of KPMG, it may be misplaced.
As NetNet has reported , Citi has an enormous portfolio of mortgages it services but does not hold—which it says is a good proxy of mortgages it sold to outside investors in mortgage-backed securities. All told, Citi has over a half-trillion dollars of these mortgages that could potentially create put-back exposure.
To date, Citi says it has only set-aside slightly less than $1 billion of reserves against repurchase risk. The bank has told us that they feel comfortable with this level of reserves because historically realized repurchase risk has been quite small. In short, they haven’t had to pay out much on these claims in the past, so they figure they won’t pay out much in the future.
As my colleague Ash Bennington and I have explained at length, we think that the historical size of claims and payouts may not be a good guide to future claims and payouts. A quick summary of our reasoning:
Truth is a rare commodity in a crisis.
The truth of this is borne out once again today by FT Alphaville's discovery of two statements by top BP executives that the rumors of credit markets and trading partners shutting down business with BP over the summer were accurate. At the time, company representatives as well as other market players were denying the rumors.
As it turns out, it wasn't the rumors that were wrong. It was the denials.
CNBC's Patti Domm and Jeff Cox discuss the jobs report and the current dilemma of long-term unemployment.
CNBC's Patti Domm and Jeff Cox discuss the recent GDP numbers and what factors have been affecting it.
Investors give and investors take away, and nowhere has that been more true lately than in value stocks.
Bank of America asked a federal judge to throw out a verdict finding it liable for fraud over defective mortgages sold by its Countrywide unit.
An influential U.S. financial services industry group is downplaying concerns about possible breaches at JPMorgan Chase and other banks.
Since 1950, September is the worst performing month for the S&P 500 index.