Posts Tagged ‘banks’
Friday, July 17th, 2009
America’s financial capital is now Washington, D.C. With Congress and the White House acting forcefully to stop the bleeding resulting from the worldwide financial crisis, numerous investors and brokers are relocating from New York to Washington because that’s where the action is these days.
One of the nation’s healthiest metropolitan areas, Washington is benefiting from government hiring as the Obama Administration works to strengthen the nation’s financial system. The collapse of prominent investment banking firms such as Lehman Brothers and Bear Stearns has triggered increased scrutiny of large banks and created a need for additional workers with auditing and investment expertise in government regulatory offices.
The government’s deep involvement in the financial sector is bringing in investment that in other times would have gone to Manhattan. German banks, for example, are investing significant dollars in hotels and office buildings.
According to Ramon Kochavi, regional manager of Marcus and Millichap, “The government will grow.” Kochvai foresees declining defense contracting and an expansion of biotech firms under the Obama administration. New R & D firms are opening facilities in Rockville, MD, and along Virginia’s Dulles Corridor to support the National Institutes of Health in Bethesda, MD. Medical services growth is also expected as access to healthcare is a national priority.
Tags: banks, Bear Stearns, biotech firms, Dulles, financial capital, financial system, German banks, government, Healthcare, hotels, investment banking, Lehman Brothers, Manhattan, Marcus and Millichap, MD, medical services, national, National Institutes of Health, New York, Obama administration, office buildings, R&D, Ramon Kochavi, Rockville, Virginia, Washington, Washington DC, White House
Posted in Financing | No Comments »
Wednesday, June 3rd, 2009
It’s no surprise that investors are still wary of investing in derivatives, given the financial devastation that these vehicles’ collapse caused last year. Proof of the fact is that the IPO of a financial instrument designed to be on American home prices failed because its auction did not generate adequate investor interest.
According to its Securities and Exchange Commission filing, MacroMarkets turned down all auction bids because there was an “insufficient demand for an equal number of Down and Up shares”. In other words, MacroMarkets was forced to abandon the auction process because the offering would work only if there was an equal number of shares in both the “up” and the “down” trusts – and if each pair of shares totaled $50. The firm had initially set a minimum closing investment pool of $125 million, though CEO Sam Masucci did not disclose the value of the bids received before pulling the plug.
MacroMarkets sought out investment from homebuilders and banks who want to hedge their housing exposure, as well as foreign investors seeking a stake in U.S. real estate. The problem is that investors had difficulty valuing the shares because it meant predicting the movement of the 10-city index on which the offering was based. That’s not easy in a housing market where prices may not have bottomed out yet.
When housing trusts eventually restart, their shares will trade under the symbols UMM for “up” and DMM for “down” on the NYSE Arca, the New York Stock Exchange’s all-electronic U.S. trading platform.
Tags: auction, auction bids, banks, derivatives, DMM, Down and Up shares, financial devastation, financial instrument, foreign investors, home, home prices, homebuilders, housing exposure, housing market, housing trusts, interest, investing, investment, investment pool, investor, investors, IPO, MacroMarkets, New York Stock Exchange, NYSE Arca, Sam Masucci, Securities and Exchange Commission, UMM, US real estate, US trading platform, value
Posted in Economics, Financing | No Comments »
Thursday, December 4th, 2008
Britain’s bailout of its ailing banks reflects a model that some critics characterize as nothing short of socialism, while the $750 billion bailout program in the United States is viewed as corporate welfare with very little oversight. Without supporting one or the other, following is a bare-bones comparison of the two programs:
In the United Kingdom:
- Bailout cash by written agreement must be infused into the economy to free up tight credit markets.
- Government representatives now sit on the rescued banks’ boards of directors, and have the right to vote on major decisions.
- The government will receive a 12 percent return on investment.
In the United States:
- Banks are not required to use bailout money to free up tight credit markets; in fact, some have used the money to compensate their CEOs and pay dividends to stockholders.
- The government gains no controlling interest in the banks, and no seats on the board.
- The government will receive a five percent return on investment.
- The oversight panel over the U.S. bailout still has not been created six weeks after passage of the bill.
We believe that there are bankers on both sides of the Atlantic who are principled and hold their interests of their stakeholders with the utmost concern. The question is: Which plan is more likely to work?
http://www.thenation.com/doc/20081117/klein
http://www.annistonstar.com/opinion/2008/as-editorials-1119-editorial-8k18u1219.htm
Tags: banks, Britain's bailout, CEOs, corporate welfare, socialism, United States
Posted in Economics | No Comments »
Tuesday, December 2nd, 2008
Inflation has returned with a vengeance, with a 1.1 percent increase reported during June – courtesy of soaring energy and food prices. The Federal Reserve reacted to the warning signs on June 25, when it froze the Fed funds rate at two percent – ending nine months of rate cuts that it hoped would revive the shaky economy. Right now, the Fed believes that rising food and energy costs will negatively impact the economy for several quarters to come. Consumers agree. A survey conducted by the University of Michigan’s Year-Ahead Inflation Survey concluded that consumers believe inflation will reach an annual rate of 5.2 next year, the highest level since 1982. Because they feel so pinched, people will be extremely cautious with their money.
Typically in an inflationary environment, investors look to lock their capital into assets that will protect value over the long term. However, every time the Fed hikes its overnight fund rates, it becomes more expensive for banks to lend money. So we have the capital markets acting as a restraint against the natural cycle of surging reinvestment in an inflationary environment. The best advice for investors seeking a haven is to focus on quality – triple-net-leased, high-credit buildings in strong markets. These buildings will protect the value of capital and even have good prospects for appreciation.
As consumers, we have the deflationary economy until the dwindling profits hit our businesses. What’s the best way to ease the slide?
Tags: banks, capital markets, Fed, Fed funds, Federal Reserve, fund rates, inflation, inflationary environment, investors, rising energy costs, rising food costs, surging investment
Posted in Economics | No Comments »
Monday, November 24th, 2008
Paulson’s TARP (Troubled Assets Relief Program) turnaround – he originally dismissed the bailout package as a recipe for “failure” -may demonstrate that his revised response is a gesture to public opinion. At present, the bailout also seems geared more to help Main Street than Wall Street, a strategy that will play well with the general population. Approximately half of the bailout money has been spent on emergency investments in banks and other institutions with the purpose of reviving the regular lending and borrowing that is vital to the nation’s economic health. According to Alan Ruskin, chief international strategist at RBS Global Banking and Markets, “This hasn’t done the Treasury’s credit a world of good. Basically, they found that the market would applaud direct capital injections more easily than understanding the complexities of reverse auctions to buy more assets, so it’s a pragmatic choice.”
Who’s right?
http://www.reuters.com/article/ousiv/idUSTRE4AB7P820081112
http://www.chicagotribune.com/business/chi-thu-crisis-bailout-shift-nov13,0,2664351.story
Tags: assets, bailout, banks, economic health, emergency investments, Main Street, RBS Global Banking, TARP, Treasury's credit, Troubled Assets Rel, Wall Street
Posted in Economics | 1 Comment »
Friday, November 7th, 2008
Ben Bernanke has spoken. The Fed chairman and the Federal Reserve moved recently to stimulate the economy when the policy-making committee cut the federal funds rate – the rate at which banks lend to each other – to just one percent. This represents a half percentage point cut from the previous 1.5 percent rate. By contrast, during the summer of 2007, this rate was 5.25 percent.
There is more good news. Treasury rates have stabilized. The value of the dollar and the yen are soaring. The price of oil has fallen to less than $70 a barrel. The New York Stock Exchange rose nearly 900 points in a single day, following the lead of markets ranging from Tokyo to Hong Kong to London. The inflation rate is just 4.9 percent. Unemployment is 5.7 percent – a lower proportion than was seen during previous recessions of recent decades.
And, according to NAI Global’s recent Capital Markets Update, the doomsayers who describe the current situation as “the worst economic situation ever” either are very young or have short memories. The seemingly endless stagflation of 1973 – 1981 was far worse; so was the collapse of the savings-and-loan industry from 1989 – 1993. The dot.com failure and September 11 wiped out more wealth when compared with the GDP.
Commercial real estate is in far better shape than the early 1990s, thanks to lower vacancy rates, higher rents and shorter construction pipelines. Delinquency rates are virtually non-existent, though that situation could easily change. Published in September of 2008, NAI Global’s report projects that recovery will occur within nine to 15 months.
Tags: banks, Ben Bernanke, commercial real estate, delinquency rates, dot.com, dot.com failure, Fed, federal funds rate, Federal Reserve, GDP, higher rents, Hong Kong, inflation rate, London, New York Stock Exchange, recession, savings-and-loan industry, September 11, shorter construction pipelines, stagflation, Tokyo, Treasury rates, unemployment, vacancy rates, yen
Posted in Economics | No Comments »