Tag Archives: banks

Is the Bond Market Ready to Crash?

The media hype is for a sharp sell off in the bond market. Some “gloom and doom” pundits are even predicting a crash that will plummet the world into a worldwide depression. The US Federal Reserve has ended its $4.5 trillion bond purchase program. Fed Chairperson, Janet Yellen, has maintained a “stead as she goes” policy without a definitive time frame for raising rates. This has left analysts in a state of suspended animation.Continue Reading

The Detroit Bankruptcy Case – Municipal Bondholders Take Note

For the past 16 months the city of Detroit has gone through a gut-wrenching series of negotiations to settle the largest bankruptcy in US history. Detroit has a population of 680,000 and a land mass larger than Manhattan, Boston and San Francisco combined.Continue Reading

Investing in China – A Time for Caution

The Chinese economy is in a state of transition from an export driven boom that preceded the US stock market crash of 2008-09 to a consumer driven economy that draws upon its citizens’ thirst for material goods. Much like the heydays of the housing boom in the US, China has had its own real estate frenzy. There has been rapid expansion both in infrastructure and local housing growth. Like in the US, now the roosters have come home to roost. China is now faced with a similar situation that preceded the US housing bubble. Risky loans were made, some with no collateral. Banks have had to either try to sell them at a hefty discount or keep rolling them over on bank balance sheets, thus hiding the true amount of losses.Continue Reading

Banks Under Siege

Headline: JP Morgan Chase announces that the bank will quit their physical commodities trading. What we have is the remaking of history. To understand what is going on, we must go back into our financial past during the Great Depression. The crash of 1929 was largely blamed on the bankers for their unscrupulous trading activities. The aftermath saw a plethora of investigations and cries for reform. The Glass Steagall Act of 1932 followed by the Banking Act of 1933 sought to curb some of the excesses in the financial system. Foremost among them was a mandate to separate Commercial Banking from Investment Banking. It prohibited deposit institutions from dealing in securities for customers, investing in securities transfers, underwriting or distributing securities or to be affiliated with those companies and any sharing of employees in similar activities.Continue Reading