Tuesday, November 24, 2009

Saturday 11/21 Radio Show Leftover Information

As is well known, there is no way to cover all information and topics every week.  These were leftover from last Saturday.

Treasury will auction the TARP warrants of J. P. Morgan, CapitalOne, and TCF Financial, because those banks do not want to buy their warrants back.

IMF officials made opposing public statements over whether the dollar should continue as a single world reserve currency or whether it is no longer reliable, implying the need for a basket of currencies as is already used to settle trade accounts between nations,

China said low United States interest rates threaten the world economy.

United Kingdom regulators will be allowed to tear up some bank bonus agreements --- they also are proposing to limit banker salaries and to make it easier for banks to be sued (until the late 19th Century, British bankers could be held personally liable for bank failures).

UK currency still bears "Bank of England: I promise to pay bearer on demand ___ pounds."

Lloyd's faces paying 54 million pounds tax bill on HBOS tax avoidance in which HBOS transferred swap transactions to Cayman Islands subsidiary.

Roubini, the NYU economist, said there are two economies --- a small recovery economy and a larger economy in a deep, persistent downturn; he expects lower revision of Q3 GDP from 3.5% as does Dallas FED President, Fisher.

60 day delinquent mortgage loans are up to 6.25% in Q3 2009 --- record high --- foreclosure action is at 1.42% --- there are 14.4% loans in foreclosure.

Fitch warned insurers face $23 billion loss on commercial property --- insurers hold $450 billion in commercial loans --- MetLife and Prudential have both indicated defaults will rise next year,

Japan Q3 GDP was up 1.23% but it is expected to slow to .3% in Q4 and to .1% in Q1 2010.

Some analysts are voicing a concern that a real estate bubble may be building in China (although Krugman says their population requires building --- no big deal) because their stimulus program appears to be encouraging investment in unused buildings, implying speculation.

Geithner is urging Congress to legislate financial system reforms but he only wants a single regulator --- the Fed.  Democrat Representative DeFazio has called for the resignations of Geithner and Larry Summers.

UCBH, whose bank failure two weeks ago cost TARP $298.7 million, paid $7.5 million in dividends in May and did not make their August TARP payment.

The Dodd financial reform proposals, which are functionally dead in a a puddle of pretense, would actually politicize the Fed by substituting political appointees for the 3 business sector directors and 3 public interest with no bank ownership interests of each Fed district bank.  6 political appointees combined with 3 bank member directors is a major step to dis-functional abuse.  On the other hand, it would have the boundaries of each Fed district redrawn.  This is long overdue --- San Francisco is way too big, as one example.

Bernanke said, "The flow of credit remains constrained, economic activity weak, and unemployment much too high.  Future setbacks are possible."  He also said economic headwinds have reduced bank lending.

Bullard, St. Louis Fed President, said we need a falling unemployment rate before the Fed can take action to avoid spurring inflation.

Plosser, Philadelphia Fed President, denied asset bubble in Asia and sees no concern in the weak dollar, although commercial real estate remains a problem.

Lacker, Richmond Fed President, is hopeful there will be a reasonable rate of growth, but there will not be a rapid improvement in the labor market conditions.  Patches of weakness will persist into recovery and that creates a threat that business and consumer sectors will develop a lack of confidence with respect to inflation and the necessity to continue policies to promote recovery.

Hoenig, Kansas City Fed President, said the economy faces significant weakness, financial institutions need to be allowed to fail, there were flaws in financial oversight, and credit agencies need reform.

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