Square One

From the New York Times: “Speaking at a conference in New York in December, Walter M. Pressey, president of Boston Private Wealth Management, a healthy bank with a mostly affluent clientele, said there were no immediate plans to do much with the $154 million it received from the Treasury. “With that capital in hand, not only do we feel comfortable that we can ride out the recession,” he said, “but we also feel that we’ll be in a position to take advantage of opportunities that present themselves once this recession is sorted out.” The report on the TARP concluded that the Treasury’s top priority seemed to be to “stabilize financial markets” by simply giving healthy banks more money and letting them decide how best to use it. The report also said it was not clear how giving billions to banks “advances both the goal of financial stability and the well-being of taxpayers, including homeowners threatened by foreclosure, people losing their jobs, and families unable to pay their credit cards.” For Mr. Hope, the Whitney National Bank chairman, “the main motivation for TARP” was not more loans, but rather to safeguard against the “possibility things could get a lot worse.” He said Whitney would continue making loans “that we would have made with or without TARP.” “We see TARP as an insurance policy,” he said. “That when all this stuff is finally over, no matter how bad it gets, we’re going to be one of the remaining banks.” WHAT UNBELIEVABLE CYNICISM. Isn’t this the same kind of greediness that got us here? Now, thanks to the bailouts, China and the Middle East hold the mortgage on the entire country – first and second lien, as it were. The higher ups don’t care – they will just go live in Europe. (The woman is indifferent to all this. She is actually disillusioned too.)

Saxo Bank

There’s this bank in Denmark called the Saxo Bank. It was founded by two men who only have a high school education. Since they have done very well, they can now afford the best talent in the field so that they really don’t need to know anything other than how to motivate their people (they have 1000 employees) and read the bottom line, where it reads “net income.” They have come out with a ridiculous list of prognostications for 2009. Here it is: 1. There will be an Iranian Revolution, 2. Crude oil will hit $25 a barrel, 3. The S&P 500 will hit 500, 4. Italy will drop the EURO, 5. The Aussie dollar will slump, 6. The U.S. Dollar will outstrip the Euro, 7. China’s GDP will go down to zero, 8. Eastern European currencies will fall, 9. Commodity prices will plunge, 10. The Yen will become a currency peg for other Asian currencies. All of this is way off base, but Saxo Bank (an online broker like Scottrade and Etrade but with a banking license) is putting it out to generate some publicity. I shall refer to this list every month to see how their projections are going. I think the woman at left is Danish but that's really irrelevant.

Stocks

Take a good look at the man in this picture. One can almost feel the same relief he is feeling at seeing the numbers go up on the board at the NYSE. I hope you bought lots of stock when I advised you to buy a few days ago. I knew the market would go up soon - it simply couldn't go down any further. I will never hesitate to tell you "I told you so." The economic troubles are not solved by any means, but at least the market has been stabilized. The other side of the coin is that the government has gone into debt. That will cause problems, but not for another two or three years. Enjoy the upturn, and don't forget to save as much as you can.