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New Banking Bailout Plan: Just More of the Same
By relying on asset-backed securities, large amounts of leverage and unregulated hedge funds as its key elements, the U.S. Treasury Department’s overhaul of the banking-system bailout plan is essentially relying on some of the same ingredients that caused the financial crisis in the first place.
This time around, someone should take the punch bowl away before the party even gets started. Otherwise, as Yogi Berra once said, it will be “Déjàvu all over again.”
The only difference this time around is that the U.S. Treasury Department is calling the plays.
Backdrop on a Bailout
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So Far, So…Mediocre
Weak.
Remember last week when I said I expected the market to come off a little bit from the recent buying spree, and that it was healthy for the market to behave in such a way? Well, it did, and it was. I expected the market to (hopefully) bounce up again afterwards. It did.
But until Thursday, it has done so with about as much conviction as a handshake from a crying three-year-old.
The market’s behavior in the past month or so has closely resembled that of the “bouncing ball” experiment that most of us did in science class. Each time the…
6Feb2009 | Oxbury Research | 0 comments | ContinuedJapanese Bank Bid Suffers Setback
Mitsubishi UFJ Financial Group’s (ADR: MTU) $3 billion bid to obtain California’s UnionBanCal Corp. (UB) suffered a blow yesterday (Thursday) when a shareholder advisory committee determined the offer price was too low.
“The proposed price does not reflect the strength of UnionBanCal’s strong capital position, the superior credit quality of its assets, and its potential for profitable asset and core deposit growth in the current market environment,†Richard Farman, chairman of the special committee said, The Financial Times reported.
Soon after the $3 billion offer was announced, investors bid the share price higher. Shares closed at $65.46, yesterday, over $2 more than Mitsubishi’s…
15Aug2008 | Money Morning | Comments Off | ContinuedBuying Bank Stocks: Good Bet or Big Gamble?
If you have followed the market over the past year, you know what’s been happening if you’ve been thinking about buying bank stocks.
A good proxy for the group is KBW Bank ETF (AMEX: KBE), an exchange-traded fund that holds all of the nation’s major banks. The fund has lost nearly half of its value over the past 13 months.
The index of smaller, regional banks – Regional Bank HOLDRS (AMEX: RKH) – has fallen even more.
And some banks – even the large ones – are going down for the count. Two weeks ago, for instance, we saw the federal takeover of…
31Jul2008 | Investment U | Comments Off | ContinuedHSBC Chief Calls for Tougher Inflation Fight, Industry Changes
The chief executive officer of HSBC Holdings PLC (ADR: HBC), Europe’s biggest lender, today (Tuesday) called on the U.S. Federal Reserve and other central banks to make fighting inflation a priority.
“Inflation is a long-term problem because there is no long-term will to solve it,” Chief Executive Officer Michael Geoghegan said during an informal shareholders meeting in Hong Kong.
He went on to criticize central banks that have kept interest rates low in response to curtailed economic growth and weak housing markets. But due in part to low interest rates, inflation has escalated as costs for food and energy soar, dampening consumer…
27May2008 | Money Morning | Comments Off | Continued
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