February 2008

The Senate Banking Committee took testimony today from Federal Reserve chairman Ben Bernanke, Treasury Secretary Hank Paulson and SEC head Christopher Cox. The headline here is that Bernanke testified that the economy will see a “period of sluggish growth, followed by a somewhat stronger pace of growth starting later this year as the effects of monetary and fiscal stimulus begin to be ... read more

The market rallied on Tuesday on the news that Buffett is stepping in to reinsure up to $800bn in municipal bonds at the beleaguered bond insurers. But it seems like someone's reality check has bounced here. Read behind the news. This is not Buffett the white knight, he's not taking on the bond insurers' liabilities--he’s selling reinsurance to the bond insurers, to make money on a pretty ... read more

Why do I feel like everyone has lost their minds? The markets are hollering for even deepr cuts to the Fed funds rate. Futures markets are betting on a half-point cut in interest rates, from 3%. Traders put the chance of a three-quarter-point cut at 28%. I've said it before--rate cuts can't make all bad loans good again. Real rates are already near zero (after inflation). Rate cuts do debase ... read more

Ok, so now a battle royale is breaking out between Google, Microsoft and Yahoo! Pull up a chair, this fight is a good one--if anything a high stakes merger provides a distraction from the gloomy housing mess and Bernanke's attempts to apply the paddles to revive the Goldilocks economy. Google is offering to help Yahoo! fend off Microsoft’s hostile $44.6bn bid for the Internet bellwether, ... read more