Hanks Bad Gamble – CRITICS: Rescue Plan Bungles Make Profits Less Likely
2008-12-02 – NYpost.com
“All we’ve created is dead banks, not true value in their stock,” said Paul Miller, a banking analyst with FBR Capital Markets.
Of course the government just buying common equity stakes wouldn’t be so great either, unless they were going to get serious about taking an active stake in management, and forcing increased consumer lending.
But then, what exactly would we be left with? Not a private free market, that’s for sure. Almost makes one pine for New Deal-era direct consumer lending programs and work programs.
There seem to be no good solutions — no matter what Hank does, there are very serious (if not fatal) flaws with the plan. And by continously shifting plans, even more confusion is added, which is toxic to the market. Hank and Ben seem to want to do a little bit of everything, without really committing anything, which seems to be a horrible recipe for success.
Or maybe its just that every intervention is a bad intervention. Is this all really better than just letting the system fall apart so something new can take its place? As far as the list of things we were trying to prevent, the stock market has already collapsed (though it could go further), mortgage lendering is still too constrained for most people (given prices), and consumer lending is still being choked off. What exactly are we gaining from all this intervention and “official” uncertainty?
Understanding De-Leveraging, Merideth Whitney on Credit Cards
2008-12-02 - Optionamrageddon.com
If you want to understand de-leveraging, you could do worse than Meredith Whitney’s op-ed in yesterday’s Financial Times. She noted that $3 trillion of credit had been “expunged” from the economy so far this year. She also said credit card lines could be substantially reduced:
“I estimate that the mortgage market will shrink for the first time in US history and that the credit card market will be 18 months behind it. While just over 70 per cent of US households have access to credit cards, 90 per cent of these people use credit cards as a cash-flow management vehicle, or revolve payments at least once a year. While the credit card market is small relative to the mortgage market, it has grown to play a key role in consumer liquidity. Declining liquidity here will have disastrous effects on consumer spending and the economy. My primary concern is preserving liquidity to consumers, who command more than two-thirds of gross domestic product,” said, Whitney.
Private Mortgage Insurance Applications Continue Slide
2008-12-01 —thetruthaboutmortgage.com
“Private mortgage insurance volume sunk further in October as defaults continued to rise, the Mortgage Companies of America (MICA) said today.”
It’s official: US has been in a recession all year
2008-12-01 — yahoo.com
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