September 2008

You have no doubt heard the term "Libor" mentioned on air much recently.   Here's why. Libor stands for the London interbank offered rate. It is the interest rate banks charge each other to make overnight loans.   Most loans that eventually find their way to you begin at the top with the 16 banks that set Libor.  And because banks are increasingly nervous about each others' financial ... read more

The folks in Bloomington and Kankakee, Illinois should be asking why their Congressman didn't vote for the bailout bill.   Jerry Weller was the only member of the House who was a no-show. Weller has said he will not seek re-election, but that's no excuse on this historic ... read more

While Washington debates, there may be a "shadow bailout" taking place and acting as a de facto rescue plan. For the last several days the U.S. Fed and central banks around the world have been aggressively adding money and liquidity to the markets.   Yesterday the Fed announced a $150 billion dollar lending program for banks as well as an additional $330 billion dollar "swap line" with ... read more

Last night on FBN and again this morning I reiterated what I was hearing on the Hill; that this bill had a good chance of not passing.   Few others were discussing the possibility of failure because of the continued optimism of Democratic leaders.   But working the Congressional halls Sunday it was clear there was much opposition.   Those sources turned out to be correct.   All in all, ... read more

The JP Morgan/Washington Mutual and Citigroup/Wachovia deals may provide some valuable insight into the illness of the loan market. JP Morgan said it will write down about $31 billion from the $176 billion in loans it acquired from Washington Mutual.   That's about 1/8th of the loan book. Citigroup said it will "absorb" up to $42 billion in losses (basically what it thinks it may write ... read more

Having been in Washington since Thursday it's been interesting watching the "rescue package" bill - now officially called the "Emergency Economic Stabilization Act of 2008" (full text of Act) - take shape.    When not on-air, I've spent much of the weekend on Capitol Hill and trolling Congressional offices.   Having obtained a copy of the proposed bill, a few things stick out: 1. ... read more

Comparing big, bad ole SUVs to big, bad ole mortgage assets is the best I can do in helping convey the key sticking point in the debate over the "Trouble Asset Relief Plan", or TARP (though I am considering calling it just "The Plan," or "TP" for short). First things first.  The debate about whether we will have a financial rescue plan is over.   Listening to Sen. Chuck Schumer's ... read more

The blame-game surrounding the current housing & financial crisis has elevated to new heights in the last few weeks. Daily now we hear Republicans and Senators from both parties express their outrage - outrage! - about the state of affairs. The finger pointing primarily is headed from Washington right up I-95 to Wall Street. Congress is demanding to know what happened. Maybe Congress should ... read more

The popular buzz phrase in the media - particularly the non-financial media - about the $700-plus billion dollar rescue plan is "Wall Street bailout." Certainly the plan, which will most likely top $1 trillion dollars, is primarily designed to buy bad mortgage-related assets from the books of Wall Street firms.   That may ease up on the pressure which exists in the remaining large-cap ... read more

Noted economist and newsletter editor Dennis Gartman advised his readers today that we may be in for a new period of reflation.   Certainly looks like Dennis was right.   Many of the 'hard' commodities like oil and gold are soaring today. The reasons range from fear of a devalued dollar from higher deficits to a push into 'real' assets as stocks resume their fall from Fridays likely-short ... read more