Best of Financial News

Articles Worth Reading

IMF warns that markets could collapse by another 20%
Summary: IMF comments during G7 meeting to discuss banking system
Favorite Quote:

Olivier Blanchard, his chief economist, said stock markets had further to fall. “At the worst, the governments will need another few weeks to make the right assessment and the stock exchanges could fall by another 20%; then there will be a turnaround,”

http://business.timesonline.co.uk/tol/business/economics/article4926584.ece

Ford, After Almost 3 Decades as Investor, May Sell Mazda Stake
http://www.bloomberg.com/apps/news?pid=20601103&sid=a.Ks4ZvFG7vU&refer=news

Will the US current account deficit fall faster than the IMF forecasts?

Summary: US dollar to rise as US consumption of imports fall
Favorite Quote:

From say 2002 to 2005 the US did drive global demand growth, but starting in 2005 the EU picked up and from 2006 through 2008 it carried the baton.

The simultaneous increase in the Gulf’s surplus and China’s surplus explains why the combined deficit of the US and Europe became so large — it was the only way the global economy could balance.

http://blogs.cfr.org/setser/2008/10/09/will-the-us-current-account-deficit-fall-faster-than-the-imf-forecasts/#more-3855

Norway’s sovereign “oil fund” takes heavy hit

Summary: Norway got screwed
Favorite Quote:

Aftenposten figures that at the end of 2007, the oil fund had earned NOK 302 billion over the first 10 years since it was established. By June 2008, the fund’s gains had been cut to NOK 165 billion.

http://www.icenews.is/index.php/2008/10/09/norways-sovereign-%E2%80%9Coil-fund%E2%80%9D-takes-heavy-hit/

Headlines

Mazda set to switch dealer financing from Ford Credit to Chase
http://www.leftlanenews.com/mazda-set-to-switch-dealer-financing-from-ford-credit-to-chase.html

Headlines

UK’s B&B to be nationalised
Summary: Bondholders and shareholders lose out and retailers don’t lose a thing
http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/09/bb_to_be_nationalised.html

Articles Worth Reading

The Perfect Storm: Even with Bailout, Economy Is Hurting
Summary: The US economy sucks
Favourite Quote:

As our second chart below painfully shows, the labor market continues to suffer. For the week through September 20, fresh claims for unemployment benefits jumped sharply to 493,000, the Labor Department reports. The last time initial claims were reaching so close to the 500,000 mark was September 2001.

http://www.capitalspectator.com/archives/2008/09/another_bailout.html#more

Headlines

Berkshire buying $5 billion stake in Goldman Sachs
Summary: Buffet
Favorite Quote:

The warrants allow Berkshire to buy $5 billion in common stock at $115 per share any time over the next five years.

http://biz.yahoo.com/ap/080923/goldman_sachs_berkshire.html

Video from Washington

Bush to Work With Congress to Pass Bailout Bill
Summary: Bush says – I wasn’t going to do anything until someone told me he had too because it affects a citizens capacity to borrow and spend money
Favourite quote:

“My first instinct wasn’t…tuhhh… you know layout uhhh layout a huge market plan.”

“it would affect the average citizen, and how, well it would affect their capacity to borrow money (pause) to buy a house or to finance a college loan”

“but right now the government needed to send a clear signal that we understood the instability (pause) it could ripple throughout and it could affect the working people and the average family and we weren’t going to let that happen”

http://www.youtube.com/watch?v=EMU8V_kg6A0&eurl=http://news.google.com/

Headlines

GM to Tap Rest of $4.5 Billion Credit Line
http://online.wsj.com/article/SB122186953006359023.html?mod=testMod

Articles Worth Reading

AIG in 30, or More Like 45, Seconds
Summary: simple, and thorough explanation of AIG’s credit default swaps, or CDS’s problems
Favorite Quote:

The financial structure of the U.S. has been compared to a house of cards, but I think of it more like the game Jenga. This game consists of a tower of blocks, and each player has to choose a block to remove without allowing the entire tower to come crashing down. Some of the blocks can be moved, some can’t. AIG could prove catastrophic.

http://nymag.com/daily/intel/2008/09/aig_in_30_seconds_or_less.html?imw=Y

The Players Remaking Financial World
Summary: An account of last weekend’s high profile boardroom activities
Favorite Quote:

Also on Monday, according to regulatory filings, Mr. Fuld sold more than two million Lehman shares at about 20 cents a share. The sale netted him almost $525,000, filings show.
Those same shares were valued at more than $145 million at the beginning of 2008.

http://finance.yahoo.com/banking-budgeting/article/105802/Street-Scenes:-The-Players-Remaking-Financial-World

Buffett’s “time bomb” goes off on Wall Street
Summary: Buffet knows when what is real risk
Favorite Quote:

In one notorious case, a small hedge fund agreed to insure UBS AG (UBSN.VX: Quote, Profile, Research, Stock Buzz), the Swiss banking giant, from losses related to defaults on $1.3 billion of subprime mortgages for an annual premium of about $2 million.
The trouble was, the hedge fund set up a subsidiary to stand behind the guarantee — and capitalized it with just $4.6 million. As long as the loans performed, the fund made a killing, raking in an annualized return of nearly 44 percent.
But in the summer of 2007, as home owners began to default, things got ugly. UBS demanded the hedge fund put up additional collateral. The fund balked. UBS sued.

http://www.reuters.com/article/newsOne/idUSN1837154020080918

Headlines

UK FSA’s short-selling ban seen drastic but necessary
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSLJ55666920080919