Showing posts from 2015

How Bernanke's Encouragment of Bue Sky Thinking Shaped the Fed's Responses in the Financial Crisis

At Bernanke's behest, in response to early tremors foreshadowing the financial crisis, Federal Reserve board members and staff engaged in a process of idea generation and brainstorming. The effort was aimed at finding creative ways to provide emergency short-term lending and guarantee programs to extinguish the potential fires of financial panic and restore collapsed financial markets. 

This blue sky thinking was well underway by September 2007 and prepared the Fed for what Bernanke calls "the dark abyss" at the height of the panic and pushed the limits of the Fed's authority in the bailouts of Bear Stearns and AIG. 

By Robert Stowe England
October 30, 2015

Before former Federal Reserve Chairman Ben Bernanke came up with an array of lending facilities to put out the fires of financial panic that broke out in 2007, he laid the groundwork inside the Fed with a brainstorming effort he called blue sky thinking. “We had ongoing conversations that were like a doctors diagno…

With or Without a New Bailout, Greek Banks "Insolvent," Need Capital Injections

Rising loan delinquencies and declining public confidence will require banks to recapitalize. Based on their Texas ratios, they are already bankrupt, according to U.S. economist Steve Hanke.

By Robert Stowe England
July 11, 2015

With or without a new bailout package for Greece, it will take more than a green light by the European Central Bank to raise the Bank of Greece’s ceiling for Emergency Liquidity Assistance to undo the damage done from the capital controls imposed Greek banks on June 29. Indeed, their financial condition was already deteriorating over the course of the last six months, as customers withdrew more than €40 billion in deposits. When the banks re-open, there’s worry the exodus of deposits could resume.

With hope rising for a new bailout package for Greece, it will take more than a fres flow of funds from the European Central Bank to the Bank of Greece and out to the Greek economy to undo the damage done by shutting down the banking system for two weeks except for s…

Greek Prime Minister Alexis Tsipras Capitulates

There's no way to interpret the proposal of terms from Greece to obtain yet another bailout other than to say Greek Prime Minister Alexis Tsipras has caved to European Union demands, mostly the terms of Germany's finance minister Wolfgang Schaeuble.

July 10, 2015

Here is the Greek proposal.

Also, see scathing analysis from naked capitalism here.

Also, see analysis from The Business Insider here.

Dennis Gartman: Own European stocks, sell euro

Dennis Gartman of The Gartman Letter talks about how to  trade Europe amid Greek tensions on CNBC, June 25, 2015. He thinks that the euro would be better off without Greece in it and would prefer to see a Grexit than to see Greece stay in the monetary union.

In 2014 America's Corporate Pension Plans Gave Up Most of Their Funding Level Gains From 2013

U.S. defined benefit plans, which sharply improved their funding status in 2013, gave up most of those gains in 2014, according an analysis of pension plan data at 411 of the Fortune 1000 companies completed recently by Towers Watson. 
February 27, 2015 By Robert Stowe England
When it comes to restoring funding levels lost in the financial crisis, U.S. corporate pension plans seem to be on a treadmill going nowhere.
In 2012, the funding level for U.S. corporate plans stood at 77 percent. Funding then rose sharply to 89 percent in 2013 as market returns soared, giving the plans their best funding status since before the recession. During 2014, however, plans gave up 9 percentage points, as funding levels fell to 80 percent, according to Towers Watson.
The stumble in funding status in the current cycle is a big disappointment for struggling pension plans and may call for diminished expectations for a full recovery, according to Alan Glickstein, a senior retirement consultant at Towers …