If the Fed cuts rates, and goes negative, it will have a direct impact on top consumer banks' balance sheets.» Read More
Irving Picard is busier than a garment district loan shark after the Yankees drop a double header to The Mariners.
Picard has until midnight on Saturday , which is two years to the day after Madoff was criminally charged, to file suit against those individuals and institutions. He and his team expect to file more than 1,000 lawsuits before the deadline.
Who's in the club? Here's a rundown of some highlights:
Americans who have been on unemployment benefits for a very long time might have felt a twinge of relief when they learned that the tax deal cut in Washington, DC this week would extend unemployment benefits for another 13-months.
But if those who have been on unemployment for close to the maximum time permitted in their state thought the new “extension” would keep them from getting cut off, they’ve made a mistake.
The “extension” does not extend the number of weeks on which anyone can collect unemployment. That number still stands exactly where it did before the extension.
In five states with the least joblessness, the unemployed can collect for sixty weeks. In 23 other states, workers can collect for between 73 and 93 weeks. In the 25 worst hit states, unemployment compensation is available for 99 weeks.
The Obama administration hopes that a one-year, 2 percent cut in payroll taxes will stimulate spending by consumers and give the economy a boost. But if the reaction from personal finance sites is any indication, consumers are likely to save more of the money than the administration hopes.
Take SmartMoney. This morning it came out with a rather straight-forward article entitled “What To Do With A Payroll Tax Cut.” It begins by pointing out that the Obama administration has a theory that this kind of tax cut—which delivers a small boost in workers’ paychecks—will encourage more spending and provide more economic stimulus than the Bush era rebate checks did. \(This theory is, to say the least, unproven. We pointed out some serious flaws in it yesterday .\)
The Fed: Who Still Owes What? (DealBook New York Times) DealBook itemizes what's still outstanding through emergency programs and open credit lines:"Hedge funds, pension funds and other investors have some $25 billion in outstanding loans from the Fed, some backed by subprime consumer debt. The central bank’s books are stocked with $66 billion of securities related to Bear Stearns and the American International Group, and the troubled insurer also owes $20 billion on a Fed credit line."
China: US in Worse Shape than Europe (CNBC via Reuters) Is it political—or do the Chinese really believe this? "The U.S. dollar will be safe for the next six to 12 months, because global markets are focused on the euro zone's troubles, Chinese central bank adviser Li Daokui said on Wednesday when asked about U.S. President Barack Obama's plan to extend tax cuts for all Americans. Treasurys are likely to become cheaper, the central bank adviser said. But Li, an academic adviser on the People's Bank of China monetary policy committee, said the fiscal health of the United States was in fact worse than Europe's, and that U.S. bond prices and the dollar would fall when the European economic situation stabilizes."
Dollar up on Jump in Treasury Yields \(CNBC via Reuters\) "The dollar extended gains on Wednesday on a spike in U.S. Treasury yields as a proposed extension of tax cuts raised growth expectations for the U.S. economy. Traders took their cue as the 10-year U.S. Treasury yield rose to 3.25 percent, a level not seen since late June and beyond Tuesday's high of 3.18 percent. The rise in yields was broadly seen as dollar supportive near-term, despite the adverse fiscal impact of the U.S. government's tax plan."
Today the Obama administration and congressional Republicans struck a tentative deal to extend Bush era tax cuts for another two years.
Under the terms of the proposal, income tax rates will not change for anyone—regardless of income—until at least 2013. A separate concession, included in the proposed package of legislation, would raise the estate tax exemption to $5 million.
But is this a compromise no one can be happy with—least of all the president's own party?
This phrase may be a leading indicator: "The Obama-McConnell Plan".
In what may become symbolic of a developing theme, Mary Landrieu, the senior Democratic senator from the state of Louisiana, has named the proposal just that. The Wall Street Journal reports:
I've never brought a guest such an elaborate breakfast- but when legendary investor Jim Rogers wants to come on my show- I go all out. Truth be told, it wasn't entirely Suzy Anchorwoman of me—it was secretly a good jumping off point for his favorite topic these days- inflation.
“Have you tried to buy any cotton recently? Have you tried to buy any sugar recently?" he said pointing down to the spread in front of him.
Co-hosting with me this morning on “Worldwide Exchange” over a breakfast of Diet Coke, candy and bagels, CEO of Rogers Holdings Jim Rogers was as usual all about commodities as an inflation hedge: the sugar he adores along with gold and silver.
Brian Carney, my brother and the editor of the Wall Street Journal Europe’s editorial page, explains what’s wrong with the hounding of WikiLeaks founder Julian Assange.
There’s an old adage: you can fool some of the people some of the time, but economists are foolish people most of the time.
Economists at Deutsche Bank prompted us to recall this bit of wisdom today when they raised their projections for GDP growth next year from 3.3 percent to 4.1 percent. Their reason for the raise was that the tax deal agreed in Washington, DC last night promises a payroll tax holiday. Their basic reasoning seems straight forward enough—if you increase the amount of money that shows up in the paychecks of workers, they’ll go out and spend most of that money, which will help the economy grow.
Unfortunately, it’s not so simple. In fact, temporary tax relief tends not to increase consumer spending by very much. What’s more, tax relief that comes in the form of a temporary payroll tax cut is even less likely to stimulate spending.
But first let’s give the Deutsche Bankers their due. As you’ll see, they have lots of math on their side.
The "doom loop" is shaking up stock markets as worries of negative interest rates in the US may come.
The rivalry between Bill Gross and his former company Pimco looks set to hinge on the U.S. economy this year. FT reports.
Tender issued for euro-denominated unsecured bonds worth 3 billion euros and dollar-denominated bonds worth $2 billion.