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bailout: Economic recovery based on consumer sentiment and stronger banks - 05/20/09 05:49 AM
An apparent gap exists among different economic indicators as to the state of the recovery.  Surveys of consumer sentiment and home builders both indicated significant improvement in recent weeks. Economists and markets quickly pointed to these surveys as evidence that the economy is nearing the bottom.
Consumer confidence and GDP
These reports though were followed by hard data that were contrary to the surveys. For Consumer Confidence the better-than-expected improvement was countered by a worse than expected drop in Gross Domestic Product and lower Retail Sales figures. These in addition to continuing high unemployment figures.
Builder sentiment and housing starts
This … (26 comments)

bailout: FNMA in trouble? asking for more money - 05/08/09 12:51 PM
The most recent reports about Fannie Mae do not sound good. AP news writer Alan Zibel published an account of Fannie Mae's recent quarterly loss.
In the article Alan Zibel writes, "In a regulatory filing the company said "there is significant uncertainty as to our long-term financial sustainability." Even more government aid, it added, "may not be sufficient to keep us in a solvent condition."
Fannie Mae and Freddie Mac's troubles began a couple years ago when they decided to enter the Alt A and Subprime market as a large end investor. They never made these loans directly, but did make … (5 comments)

bailout: Bailout money rich richer - money directed toward bank acquisition - 10/28/08 06:35 AM
There is more on the use of bailout funds in today's AP press. Banks are apparently using the capital investment funds to purchase other banks. At least a partial purpose for these acquisitons was mentioned to ease the possible need for Federal takover of weaker banks and to strenghten the overall banking system.
This may be a good policy goal, although it looks more like government is now in the business of determining which banks will win out and which banks will lose.
To me it just seems like more indication that the bailout lacks direction and its effectiveness may very well be … (11 comments)

bailout: Bailout plan without direction - 10/27/08 12:56 PM
One of the problems with approving the initial bailout plan was that there were few details about the details and the mechanics of purchasing defaulted loans. Further problems with passing the bailout was concerns whether purchasing the mortgages would actually help with the mortgage markets. Questions were also asked as to how the bailout purchases would help struggling homeowners and slow foreclosure trends.
The plan was passed after much pressure and much pork was added.
Then the plan was changed to focus more on purchases of bank stock, with the idea that adding capital rather buying defaulted mortgages would have greater impact on market liquidity.
Over the weekend it appears … (4 comments)

bailout: Federal response market recovery - 10/07/08 08:07 PM
The market response after the bailout bill has been disappointing, but the bill actually did little to address the economy's problem. As massive as it is, as costly as it is, as loaded with pork as it is, the bailout did not address foreclosures, home inventory, unemployment, unfreezing the credit markets, or increasing home lending.
The bailout seems like a good solution to working out solutions for bad mortgages, and I think it will not be too costly to the US Treasury. It just does not address the problems.
This week the Federal Reserve has taken creative steps to move the economy … (4 comments)

bailout: House rejects bailout - good or bad? UPDATED 9/30 - 09/29/08 01:00 PM
The house vote has come in - the answer NO.
Is it back to the drawing board to rework the bailout plan?
Is it a total rejection of this type of solution? Let the market sort out the troubles?
Main street evidently won the vote by overwhelming the representatives with their anger over the bill.
Not even sure that Wall Street wanted the bailout.
With the President, the Treasury Department, the Federal Reserve, the Speaker, the Chairman of the House Financial Services, both Presidential candidates and many others telling the world that this is necessary or else, what happens now?
There … (12 comments)

bailout: Bailout plan compromise reached - 09/29/08 06:45 AM
This morning after midnight the final details of the bailout plan were reached. The bill goes to the House today for a vote. The Senate is expected to vote by Wednesday. The plan follows the basic outline of the initial Treasury proposal presented to key lawmakers September 18. It calls for $700 billion from the US Treasury to be used to purchase mortgage securities.
Largest government intervention since Great Depression, action taken because of concerns resulting from bank to bank short term lending freeze that occurred two weeks ago. Several national central banks coordinated efforts to put $180 billion into the markets … (1 comments)

bailout: Treasury Announces Massive Bailout - Full text of Sec Paulson's speech on plan to restore market - 09/19/08 11:29 AM
Federal agencies plan comprehensive mortgage bailout Treasury Secretary Paulson has announced plans to implement a massive and  "comprehensive approach" to relieve "stressess on our financial institutions and markets."
Basically the US Treasury will take on the entire mass of delinquent mortgage assets, in order to restore liquidity to the markets, on a systematic method. 
I think the announcement is being made today, before details are known, in order to restore some investor and institutional confidence in the market. Otherwise, the global financial system was about to just freeze up.
Fannie and Freddie will increase purchases of mortgage securities, above the goal announce earlier this month. This … (20 comments)

bailout: Federal Reserve market action - UPDATE- A billion here and a billion there - Federal Reserve monetary policy management - 09/17/08 09:29 PM
News reports have announced that the Federal Reserve has infused the economy with billions of dollars to promote stability and liquidity in the financial markets. Does this mean that these actions are using tax payer money to bail out banks and other financial institutions?
UPDATE 9/18: World's major central banks coordinate efforts to put more cash in global markets. The AP has reported a coordinated effort for the world central banks to inject as much as $180 billion into the world economy. The joint effort includes the Federal Reserve, the European Central Bank, the Bank of Canada, the Bank of England, the Bank of … (11 comments)

 
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