MBS- FNMA 4.5 price: 100-24
10-yr Treasury Yield: 3.64%
8 people with 5 instruments from 4 Continents speaking 3 languages for 1 song.
Jam Session 2.0 from Cain Mosni on Vimeo.
Week 4, January 2010
Indeed, it’s quite a challenge to write about banking and finance on a regular basis without just blowing my top about it. See here for an example of why. I read the financial news every day as part of my due diligence in this business and I recognize how important it is for our economy that the public have confidence in the financial system. The consistent trouble is though, that we, as rational human beings, expect industries to EARN our trust and confidence— and therein lies the rub. How do we trust this banking industry that seems wholly incapable of understanding that maybe they owe MORE than just a pay-back of the money that bailed out their industry’s very existence? How do we trust an industry that created and funded loan products for high risk borrowers, then sold them to investors touted as solid securities, and then used shareholder funds to basically casino-gamble that these same securities would fail? And lastly, how do we trust an industry that is currently engaged in mega-millions of dollars worth of lobbying Congress to derail reforms that will reign in the totally unregulated derivatives market and will separate insured-deposit banking enterprises from securities-trading enterprises? The answer, in my opinion, is WE DON’T. We don’t. The best redress I’ve seen and read about is the movement to utilize the free market in its most ideal form by transferring our money into the community banking system whose operations, by the way, were not obliged to the derivatives market to the tune of billions of dollars and whose lending practices DID NOT engage in funding high risk loans without regard to the investors who would eventually own those promissory notes. Let community banking earn your trust and confidence. As a daily reader of financial news, this is my advice.
See here for more about the nationwide “Move Your Money” campaign
To contact me about financing your dream-home click here.
Weekend Wanderer’s Events
…finding the treasures in your town and beyond.
Two for This Weekend:
V. Sattui Winery Barrel Tasting Party: Doesn’t a trip to the wine country sound nice? That’s what I thought when I read about this wine tasting party happening this Saturday at the beautiful V. Sattui Winery. This one will include barrel tasting of the 2009 wines that they claim have developed uniquely well despite the reduced rainfall in 2009. Additionally, “slow comfort foods” and new releases including a 2005 Reserve Cabernet will be offered as well. Looks like a stellar event!
SF Winter Music Festival: Starting this weekend at The Bottom of the Hill. From the Squid List: “Opening night kicks off at 8:00pm with national buzz acts The Action Design, Rykarda Parasol, Dave Smallen and The Trophy Fire. The excitement continues all week with buzz artists across the spectrum of rock and pop, including Tempo No Tempo, Bird By Bird, Grand Lake, Bhi Bhiman, Eric McFadden, Scene Of Action, the eclectic Duckmandu, the soulful musings of Kuma/Koshka, and the aptly named Damn Handsome and the Birthday Suits to name but a few.”
Help Your Fellow Living Beings:
HelpHaitiNow.org: These folks have been on the case for Haiti long before the 2010 earthquake. From their website: “Help Haiti Now was established in 2005 to provide food, water, medicine, and educational support to Haitians suffering from abject poverty. HHN is an all-volunteer organization that has been serving several missions in Haiti for over five years. Help Haiti Now is a non-profit 501c3 organization and all donations are tax deductible.”
Two Weekends from Now:
Romance for the Soul: A piano concert: Next Saturday night at the San Francisco Conservatory of Music will arrive your chance to see and hear the great pianist Alexander Sung. His performance will include his acclaimed interpretations of Mozart, Schubert, Schumann, and Liszt. “Romance for the Soul” just compelled my attention as I scrolled through the listings for next week. Hope it’s as great as it sounds— no pun intended.
Pic of the Week… from my phone camera:
Ocean Beach last Saturday afternoon
MBS- FNMA 4.5 price: 100-21
10-yr Treasury Yield: 3.65%
From Les Leopold:
No matter what Rick Santelli proclaims, government interference didn’t cause the crash. Greedy, stupid home buyers didn’t cause the crash. Poor people backed by the Community Reinvestment Act didn’t crash the system. And China didn’t cause it either. The book should be closed on this: Wall Street’s fantasy finance casino did us in. (Please see The Looting of America for a fuller account.) Source
From The Huffington Post:
President Obama won’t tell us in his State of the Union address. The deficit hawks won’t crow about it. Don’t expect the Tea Party or Rush and Beck to highlight our generosity either. But the sad fact is this: During the worst year since the Great Depression, with 30 million people out of work or forced into part-time jobs, Wall Street is awarding itself $150 billion in bonus money…..and it comes from us!
That’s $500 for every man, women and child in the country — $2,000 for a family of four. (Maybe we should try deducting it from our income taxes as a charitable donation.)
Had we not bailed out the financial sector, there would be no bonus pool this year. Zip, zero, ziltch. Link to article…
From The Motley Fool:
Why don’t they walk away?
An interesting quirk of economics is that the dismal science generally assumes that all agents in an economy work in their own best interest. But this doesn’t always happen in real life.The mortgage crisis is a case in point. For many of the underwater homeowners in today’s market, paying down their mortgage isn’t really in their best financial interest. Particularly in states like Arizona — where mortgages are nonrecourse, meaning the lender can’t go after any of the homeowner’s assets other than the property itself — it makes little sense to continue paying a large mortgage on a devalued house when comparable rental rates are far below the monthly mortgage payment.
The situation had University of Arizona law professor Brent White scratching his head, and as a result he wrote a very interesting paper on the subject, which University of Chicago luminary Richard Thaler brought to an even broader audience over the weekend. Link to article…
From Market Watch:
Rep. Ed Towns, D-N.Y., chairman of the House Oversight and Government Reform committee, said the bailout “creates an air of suspicion and distrust among the American people.” He expressed concerns about the decision by the New York Fed to try to keep the names of derivative counterparties of AIG receiving taxpayer bailouts private. Under pressure from Congress, the names of derivative counterparties were eventually disclosed.
“The New York Fed argued that disclosing the names of the counterparties would somehow injure AIG,” Towns said. “In fact, when the information was finally released under pressure from Congress, nothing happened…But it did have an effect on the credibility of the Federal Reserve and it called into question the Fed’s penchant for secrecy.”
The Federal Reserve’s use of its extraordinary powers to assist AIG has angered many members of Congress of both political parties. Lately, lawmakers have expanded their criticism of the Obama administration’s bailout efforts, which they contend resulted in expanded benefits to Wall Street at the expense of Main Street.
“The government gave Goldman Sachs more than it had any right to expect, but at the same time no financial relief was given to millions of Americans facing a foreclosure crisis,” said Rep. Dennis Kucinich, D-Ohio. Link to article…
MBS- FNMA 4.5 price: 101-00
10-yr Treasury Yield: 3.60%
From Market Watch:
In retrospect, all of that bailout money should have been earmarked for Wall Street bonuses. Without deep cash, your bankers are probably considering jumping to more lucrative jobs elsewhere, perhaps in Major League Baseball or playing the lottery. They’re not focused on stabilizing the financial system, and the resulting problems are our fault for questioning you. Understand that we don’t get paid the big bucks for a reason.
No, we just have our shrinking 401(k)s, our individual retirement accounts and maybe, if we’re lucky, our homes. We’re too dense to see how bulletproof the financial system is and really no amount of taxpayer support could ever pay you back for all of the good times we’ve had during the last two years.
So, Wall Street, forgive us for our meddlesome ways. Forgive us, and Paul Volcker, for wanting a return to boring old banking. Forgive us for the sarcasm.
Most of all, forgive us for ever trusting you in the first place. Link to article…
From the BBC today:
AIG was initially bailed out for $85bn (£52bn), but its total rescue package has since amounted to more than $180bn. Link to article…
From the NY Times and CNBC:
Mr. Barofsky’s report on the uses of government money found that some institutions had applied it to projects that directly contradicted the Congressional intent for the program.
The public seems pleased that someone is standing up to the banks and the officials who bailed them out. A Web site that Mr. Barofsky set up for tips has received about 30 million hits, he said. And Congress expanded his powers last year.
He made his most recent waves in November, when he issued the results of an eight-month audit of how tens of billions of dollars, sent by the government to a teetering A.I.G., wound up at a group of big banks in the United States and Europe. Link to article…
MBS- FNMA 4.5 price: 100-29
10-yr Treasury Yield: 3.60%
From Chicago-based finance consultant Janet Tavakoli:
Taxpayers currently subsidize banks with cheap money supplied by the Federal Reserve. Even banks that nearly crashed our economy borrow at nearly zero interest rates, while some consumers pay nearly 30% on credit card debt.
Banks enjoy a Term Asset-Backed Securities Loan Facility (TASLF) that allows them to borrow against problem assets. New banks have each issued tens of billions in FDIC guaranteed debt through the Temporary Liquidity Guarantee Program (TLGP). Banks get interest payments on the excess reserves they keep with the Fed. Accounting rules were changed in March 2009, so banks make up their own prices for assets and more easily hide losses. These are only a few of many newly-created hidden subsidies.
Taxpayers are paid only peanuts in fees for these massive subsidies while being squeezed with high interest rates and mortgage foreclosures–after our economy was devastated chiefly by several banks’ malicious mischief.
What has the financial crisis taught us? Among other things, we should show Bernanke and Geithner, enablers from the previous administration, the door. Paul Volcker is right to ask for a return to Glass-Steagall. It worked until it was eroded over several decades by bank lobbying. Banking and speculative trading activities–even when done for “customers”–don’t mix. Link to article…