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Subject: TARP

The Troubled Asset Relief Program, commonly referred to as TARP, is a program of the United States government to purchase assets and equity from financial institutions to strengthen its financial sector. It is the largest component of the government’s measures in 2008 to address the subprime mortgage crisis. (Wikipedia Feb 2010)

A suckers rally?

Barriers to a bear market recovery

Flood barriers on the Thames

How long will the rally in US stocks that started in early 2009 last? Remember the ’suckers rally’ of 1932-1933 that signaled the end to the Great Depression too early.

There are three major barriers to a prolonged recovery in stock prices: a trillion dollars or so of executive stock options; the cost of TARP repayments; and the investment needs of retiring Baby Boomers.

Good and bad banks

Bank stress tests: aftermath and consequences

tarred and feathered

In May 2009, the Obama administration divided some of America’s largest banks into ‘good banks’ and ‘bad banks’.

This broke a long-standing practice of protecting the reputation of the US banking system. The Obama government seized TARP funds as an instrument of political power.

Banks, large and small, are now eager to escape the trap of taking TARP funds, which will require them to raise $74.6 billion, either by selling equities on the market, or from profits.

Bank nationalization

Should Obama take over Citicorp?

Is bank nationalization wise?

There have been suggestions that the Obama Administration should nationalize the ‘big bad banks’. Is this a good idea?

This article discusses possible consequences of nationalization of Citicorp by the US government.

These consequences may include lost of deposits, loss of customers, greater inefficiency, political favoritism in lending, the decline of Wall Street, and an impact on the US dollar as most favored international reserve currency.

Featured articles on inside pages

Stock buybacks

Accelerating to a buyback-option blowout

By Q1 2006, stock buybacks had multiplied to five times the level of 2000. Buybacks grew by 25% in 2005, with corporate profits after taxes increasing only 5.5%. At these rates, buybacks will exceed after-tax profits by 2009.
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Securities Analysis

Crowd sourcing investment research

Free, easily available investment information is largely unexploited. This is because there is too much of it. Information, to be useful, must be processed. This processing has a time cost. This article describes how new technology allows securities research to evolve beyond the industrial techniques of the 20th century.
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US Politics

What is the future of private pension plans?

Between 1999 and 2002, US private pension funds lost US$ 1.2 trillion in value. It would almost seem that pension fund managers had been speculating with retirement money, attempting to beat each others' short-term performance statistics, with little interest in safeguarding the assets of plan beneficiaries. More ...

US equities

Sarbanes-Oxley and the shortage of equities

The Sarbanes-Oxley Act of 2002, by discouraging companies to go public, will exacerbate the shortage of equities, with a negative effect on the US stock market, although this was not the intent of its authors. Poorly drafted, ill-conceived, and unfair this law does little to protect investors.
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US Bonds

The collapse of the dollar and US bonds?

The extreme spending of the Obama government, combined with irresponsible bank lending policies promoted by Barney Frank and Chris Dodd, portend rising interest rates, the collapse of the bond market, and the end of dollar supremacy. More ...

World Economy

What Is ‘International Liquidity’?

It used to be that the term 'international liquidity' meant the relative amount of resources available to a nation's monetary authorities that could be used to settle a balance of payments deficit. In the days of the gold standard, this would mean access to gold that could be used to redeem a nation's currency held by foreigners. More ...

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2010-08-25 16:03