Citigroup’s Michael Hart does a nice job of laying out the reasons why “the USD’s role as the world’s pre-eminent reserve currency is unlikely to be threatened in the short term.” He argues that it will remain dominant for many more years even as the Euro becomes a more relevant back-stop. And he maintains (boldly) that the Chinese renminbi is poised only to become a regional (pan-Asia) trading currency; he doesn’t foresee a time in the near future that RMB will have reserve currency status – for reasons having to do with how Beijing’s bosses run China’s political economy.
Archive for April 14th, 2009
Bank Rescue Plan, Credit Crisis, Credit Markets, Real Estate / Comments Off
Even though it isn’t set to release eaarnings until a week from tomorrow (April 22), there’s more concern brewing about the commercial real estate portfolio of Susquehanna Bancshares. Moody’s Investors Service downgraded the bank’s subordinated debt to junk-bond status (Ba1 from Baa2) today and said the rating outlook remains negative, all because the company’s capital adequacy and profitability will be “challenged” by rising credit costs in its commercial real estate portfolio. Specifically, Moody’s said the bank’s CRE portfolio of $2.9 billion is a high four-times tangible common equity. If real estate weakens further, as many expect, this will put even more pressure on financial institutions like Susquehanna. The bank received $300 million in TARP money ast fall, but despite that, Moody’s sees pressures. So do investors – the stock fell 13.55% today, or $1.32, to $8.42. It had a 52-week high of $27.70 last September and a low of $6.63 in March of this year.
Bank Rescue Plan, Credit Crisis, Credit Markets, Wall Street, Washington / Comments Off
The failure of Lehman Brothers and AIG last fall turned very fragile credit markets into non-existent markets. What that meant was companies looking to borrow short-term funds couldn’t do so. Same with municipalities. Banks couldn’t get overnight loans, either, putting the entire banking system on the edge. Various federal programs that have pumped money into the financial system have begun to thaw parts of these markets. But a crucial market that remains clogged is the asset-backed securities market. This is the market that ultimately allows for more consumer loans to be made by banks by alowing these loans to be packaged into securities and sold to investors around the world. Things like auto loans, credit-card receivables and mortgages. The government has a financing program aimed at opening this market back up. But many won’t participate because investors are concerned Congress will do its populist thing again and retroactively impose pay restrictions etc. on those who become part of the program. Good article on the importance of this market in most recent BusinessWeek.
Bank Rescue Plan, Corporate Governance, Executive Compensation, Wall Street, Washington / 1 Comment
We knew compensation was going to be an issue as government aids and owns pieces of large banks and financial institutions. That’s certainly been the case.
But the problems and conflicts inherent in the U.S. government’s deep involvement with big banks is wider than a say on pay for executives.
Those wider conflicts were well illustrated in a Wall Street Journal article April 13 (see article) whose first paragraph informs us that the committee overseeing government bank aid programs is “investigating” bank practices “following a rash of complaints about increases in interest rates and fees.”
As a former fatty determined never to go back to the bad old days, I’m a walking calorie-counter. I’ve been mentally attaching a caloric value to every bite I eat for decades. (I round up when I’m unsure.) All that said, I never weigh myself – I don’t want to become obsessed by every ounce fluctuation. If a doctor insists on putting me on a scale, I shut my eyes. I gauge my relative fat-ness by how my clothes fit. I was intrigued by a recent Health Journal column in the WSJ titled, “Why That Big Meal You Just Ate Made You Hungry.” Columnist and colleague Melinda Beck focuses on a noted physician who argues that certain food groups make people feel full while others make people crave more of the same. Louis J. Aronne’s prescription is: avoid “fullness resistant” foods if you want to lose weight.