Best quote today

As longer time readers may remember, I like to read the Wall Street Journal at night. Hey, the news was old since it hit my doorstep, so reading it at night is fine by me. In fact, I consider the WSJ the official paper of record here at the TLRB.

Well, the page one headline today is “Market Pans Bank Rescue Plan”, which we discussed yesterday in “Oh Tim“. This is where I found the quote of the day. One Ethan Harris, chief U.S. economist at Barclays Capital said

“This is the shock and ugh plan.”

I thought that was just about perfect. I suppose it was intended for dry finance types like myself, so don’t feel bad if you didn’t find it funny. It made my day though.

The Role of Credit Agencies in the Financial Crisis

We had a good question regarding the role credit agencies have played in creating this financial mess. By “credit agency” we don’t mean Experian, Equifax or Transunion which I wrote about earlier this week. While those focus on consumer credit profiles and scores, there are a few more “agencies” that had a direct impact in fueling this crisis and they are household names: Moody’s and Standard & Poor’s.

Oh, Hank

I wish Hank [Paulson] would just shut up. It seems every time he does a press conference, the market sells off. It could be a coincidence, but maybe not. Regardless, his press appearances are not helping things. I bring this up because many, many people are being hard on Hank right now. Few commentators seem to approve of anything he does, says or proposes.

An Observation: WSJ

It is shortly after 11:30pm local time and I just finished reading today’s Wall Street Journal.  The WSJ is my paper of record having been a daily reader for well over a decade.  Why am I reading a newspaper at 11pm?  Isn’t the news old?  Why am I reading a paper at all?  Good questions for this internet age, I suppose.

Ugly Numbers: Where the Market Stands

I am out of antacid and almost out of hair after today’s plunge in the stock markets.  In my September 15th, 2008 post, “The Most Difficult Decision An Investor Must Make” I wrote:

“I can at least promise the coming weeks will be exciting- at least as exciting as market watching gets.”

I continue to stand by the things I shared in that post and recommend a re-read.  For now, let me provide a little market history and perspective from the proprietary research at SFP.

Crisis Update

Deep breath.  Ok.  First, I’d like to apologize for too few posts in the past week.  As you can imagine, it has been quite hectic around here.  Add the end of the quarter which requires massive reporting to clients and I am simply swamped.  Excuses, excuses, I know.  So without further adieu, let’s talk crisis.

Congress finally passed the Paulson Plan.  We will call just that, the “Paulson Plan” or rescue package and not a bailout as previously discussed.  The fear as of late last week was that perhaps it was too late.  Indeed the credit markets are deeply frozen.  Student loans thought to be approved, failed to consummate.  Some students were sent scrambling as were schools trying to find alternative sources of financing.  So much for this being “just” a Wall St problem huh?

Mark To Market

Some headlines from Bloomberg today:

Manufacturing in U.S. Contracts at Faster Pace Than Economists Estimated
Cash-Starved Corporations Scrap Dividends, Tap Credit Lines to Raise Funds
Trichet Says Congress Must Back Bailout Plan for ‘Sake of Global Finance”
Treasuries Rise; U.S. Growth May Slow Regardless of Rescue Plan
Bank Bond Spreads in Europe at Record on Funding Woes

Aside from a relief rally in stocks yesterday, you can see from the headlines things have not improved much in the credit market trenches. Of note was a “clarification” by the SEC and Financial Accounting Standards

Gambling America’s Future

Numeroligists should be very excited today.  The Dow fell 777.68 points today and 777 is definitely an interesting number.  It couldn’t be just a coincidence right?  In fact, if you just round off that last digit, you get four 7′s.  A client joked with me today “isn’t 7 lucky in craps?”  It couldn’t have been a better set up since seven is both lucky and unlucky in craps depending on the situation.  Today, the U.S. House of Representatives voted against the Paulson Plan we have discussed here which sent stocks tumbling by that interesting number.  Incidentally, that fall represented 7% of the market’s value- a cool $1 Trillion.  Since I did not intend to waste electronic ink espousing why numerology is bunk, I’ll go with the gambling analogy. 

Finally, a plan

Each of the past few days I sat down to write about the bailout plan, the details of the plan changed. We can chalk that up to politics, but in this instance, I think the end result was better than the original framework. Details are still sketchy, but reports are that the plan limits compensation and gives the government rights to buy stock in participating firms. These features help contain the moral hazard problem. By limiting pay,

Buffett and Bailouts

I always pay attention when Warren Buffett makes a move.  The “Oracle of Omaha” is the world’s greatest investor and a stand up guy to boot.  He has been sitting on the sidelines during this crisis, refusing to have any part of AIG even though parts of it would mesh perfectly with Berkshire’s insurance operations.  I suspect he is waiting to buy pieces in the fire sale.  Even more interesting to me, is last night’s news.