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“He who controls the money supply of a nation controls the nation”: James Garfield

The First Bank of the United States was Americas first attempt at forming a Central Bank. Inaugurated by Congress in 1791, it was followed by The Second Bank of the United States, which was dissolved in 1836.

And then The United States of America was without a Central Bank for 77 years. [more inside]
posted by Mutant on Oct 3, 2009 - 54 comments

Money for nothing: a new era of zero interest rates?

The Fed cut 100 bps. BOE cut 150 bps. ECB cut 50 bps. India, Vietnam, The Czech Republic, Switzerland, Denmark, South Korea and other nations have all cut interest rates in recent weeks, with many Central Banks cutting more than once. The G20 is now discussing the possibility of further, coordinated interest rate cuts. As interest rates globally plummet, we are observing what some analysts are calling "The Race to Zero". [more inside]
posted by Mutant on Nov 12, 2008 - 86 comments

The most obscure but perhaps the most important economic indicator we've got

How best to take the pulse of the global economy? While market driven rates such as LIBOR or US Government T-Bills reveal the state of fixed income and Credit Default Swaps tell the observer much about possible default rates, many analysts prefer a more basal view. The Baltic Dry Index is one such indicator. [more inside]
posted by Mutant on Oct 31, 2008 - 27 comments

You don't really own the shares you think you own

All the stocks and bonds you think you own are actually owned by a company you've probably never heard of, a company owned by the same people who own the US Federal Reserve. [more inside]
posted by Mutant on Oct 24, 2008 - 58 comments

Essential Credit Crunch Reading

Afraid to read the daily news? Need some broader perspective on The Credit Crunch? There are lots of different ideas by lots of different authors floating about ... [more inside]
posted by Mutant on Oct 13, 2008 - 34 comments

Another potentially huge settlement day for CDS contracts ...

Credit Default Swaps (CDS) are derivative instruments providing the purchaser with protection against default on an underlying financial asset. When Fannie Mae and Freddie Mac technically defaulted on September 7th there was much speculation that the CDS market would collapse as a result of protection being invoked on $1.4 trillion dollars worth of debt. On October 6th these derivative contracts settled, and the CDS market didn't collapse with recovery rates of 92% being observed. Today CDS contracts protecting against the default of Lehman Brothers settle. The problem? Because industry lacks a central clearinghouse for these derivatives, nobody is really sure how many CDS contracts were written either by Lehman or by other banks providing protection against a Lehman default. Next on the list are CDS' covering Washington Mutual, which are due to settle October 23rd.

Meanwhile efforts to create a clearing house continue, as some folks speculate that the settlement of Credit Default Swaps is a major reason why banks are hoarding cash.
posted by Mutant on Oct 10, 2008 - 155 comments

This is not your FDIC. This is the Rich White Man's FDIC.

A private FDIC?

The Certificate of Deposit Account Registry Service, or CDARS, is a way to conveniently spread bank accounts across multiple banks. CDARS, run by privately held Promontory Interfinancial Network, offers its customers up to $50 million of deposit insurance, or exactly 500 times single account limit mandated by the FDIC. Promontory does this by arranging to distribute client funds nationwide in $100K increments to over 2,300 banks. Promontory is nothing if not well connected: while founders Mark Jacobsen previously served as Chief of Staff at the FDIC, co-founders Alan Blinder was Vice Chairman of the Federal Reserve and Eugene Ludwig was Comptroller of the Currency, several former members of the FDIC currently serve on Promotory's board.

Not surprisingly, some folks are openly critical of Promotory, some going so far as to state "It undermines a lot of the safeguards around the FDIC deposit fund."
posted by Mutant on Sep 26, 2008 - 64 comments

Saturday night poker night is about to get a lot more interesting ...

Hedge Funds employ many different strategies to make money. There are long/short funds, event driven funds, emerging markets funds [.pdf], funds looking to profit from global macroeconomic trends and a large number of funds employing a wide range of arbitrage techniques to make money.

But these techniques are the tried and the true. As both assets under management and market turmoil have grown significantly, hedge funds are rapidly branching out into domains far, far detached from finance: art, litigation funding and now even poker.
posted by Mutant on Sep 22, 2008 - 44 comments

Banking shares: New Day or False Dawn?

A bottom for banking? Buying or selling shares in a company one manages - insider trading - is legal in The United States, provided the relevant forms are filed with The SEC. This information is then made available to the general public via EDGAR, Sec Form 4, or high level aggregators. Investors scour web sites for such filings, as purchases or sales of a companies shares by insiders are public evidence of managements private opinions regarding the future prospects of the firm they are running.

Even before yesterdays relief rally insider buying in banking shares hit a two decade high. So does this surge in buying indicate the worst is over in banking? When trading its best to pay close attention to a broad range of signals, because sometimes even the insiders get it wrong.
posted by Mutant on Sep 9, 2008 - 23 comments

"A national debt will be to us a national blessing." Alexander Hamilton, Secretary of Treasury,1780

Even as I.O.U.S.A, a documentary looking at the United States' $53T national debt, is to be shown at both the Democratic and Republican conventions, economists are beginning to openly discuss the previously unthinkable - should America should default on some or perhaps all it's obligations? [more inside]
posted by Mutant on Aug 26, 2008 - 84 comments

While this is timely information bank failures are normal part of life.

Worried about bank failures? First step: check if your bank is insured by the Federal Deposit Insurance Corporation (FDIC). If so, then your first $100K is insured against loss so no worries.

Got more than $100K? Well then, you'd better speak with EDIE. [more inside]
posted by Mutant on Jul 14, 2008 - 60 comments

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