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Edward Harrison submits:So why did we rescue this institution with a massive bailout? Elizabeth Warren, who chairs the Congressional Oversight panel of the TARP program, doesn’t understand any more than taxpayers do. This is another example of the malinvestment and zombie finance which bailouts have fostered. Here’s a question for you: if GMAC was a U.S. auto financing company, why was it speculating in mortgage finance… in Spain? That’s what I was asking back in July:Complete Story »

Dr. Duru submits: In her Nightly Business Report blog, Terri Cullen summarizes the potential economic impact of Toyota’sproblems in “Toyota Recalls and the Economy.” In this article, Cullens suggests that what is bad for Toyota (TM) might be good for the U.S.: The Toyota recalls may turn out to have a positive impact on the U.S. auto industry — and in turn the U.S. economy itself — in the near-term as nervous owners trade in their vehicles for competing models. With the federal ‘Cash for Clunkers’ stimulus program now over, the industry will take whatever consumer incentives it can get.Complete Story »

Miriam Metzinger submits: Stocks discussed on Jim Cramer's Stop Trading! TV Segment, Thursday March 11. Citigroup (C), Goldman Sachs (GS), Hershey (HSY)Complete Story »

Miriam Metzinger submits: Stocks discussed on the lightning round session of Jim Cramer's Mad Money TV Program, Thursday March 11. Bullish Calls:Ford (F), Ford Preferred (F-PS): "We may have a $12.5m auto buildout in this country… do you know what that means for Ford? It means sales are really exploding…I want to buy Ford, I want to buy FORD Preferred, I want to buy them right here, right now, any time of the week."Complete Story »

Miriam Metzinger submits: Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday March 11. JDS Uniphase (JDSU), Cree (CREE), F-5 Networks (FFIV), Apple (AAPL), Akamai (AKAM), Salesforce.com (CRM), VMware (VMW), Oracle (ORCL)Complete Story »

Karl Denninger submits: Sarbanes-Oxley was supposed to prevent crap like this: click to enlarge From the paper: Lehman employed off-balance sheet devices, known within Lehman as “Repo 105” and “Repo 108” transactions, to temporarily remove securities inventory from its balance sheet, usually for a period of seven to ten days, and to create a materially misleading picture of the firm’s financial condition in late 2007 and 2008.Complete Story »

Jamie Allsopp submits: Jamie Allsopp joined London-based Insparo Asset Management in November 2009, bringing nearly a decade of first-hand experience of African markets to his role, which combines investment research and allocation with marketing the firm’s Africa and Middle East fund in Insparo’s target regions. Jamie was previously with New Star Asset Management for eight years. During his tenure, Jamie rose from equity analyst to portfolio manager for two of New Star´s high profile funds. In 2007, Jamie launched the New Star Heart of Africa Fund, which invested in Sub Saharan equities.Complete Story »

John Lounsbury submits:An article by Francesco Guerrera, Nicole Bullock and Henny Sender at ft.com discusses a report by the court-appointed examiner Anton Valukas looking into the collapse of Lehman Brothers (LEHMQ.PK) in September of 2008. The article says:The hard-hitting report found evidence that Mr Fuld and Christopher O’Meara, Erin Callan and Ian Lowitt, who were chief financial officers of Lehman during its last days, failed to disclose the use of an accounting device that enabled the bank to hold $50bn off its balance sheet in both the first and second quarter of 2008.Complete Story »

Hickey and Walters (Bespoke) submit:
The S&P 500 made a new bull market closing high yesterday. Sure, it was by 0.01 points (1,150.24 vs. 1,150.23), but it's still a new high! We'll obviously need to see some follow-through over the next couple of days to confirm the breakout, and if we get it, then the next level of significant resistance is right around 1,200.The pre-Lehman S&P 500 level that many are looking for is 1,250, which is a gain of 8.70% from here. (click to enlarge)Complete Story »

Calafia Beach Pundit submits:
Here's my belated update of the federal budget charts for February, with data released Wednesday. (Click on all charts to enlarge) The bad news is that the deficit for the 12 months ended February was $1.5 trillion, just over 10% of GDP. There's a study going around that says that deficits become a significant drag on growth once they reach 10% of GDP or so, and that makes sense to me. When the federal government borrows that much, that effectively soaks up a lot of the economy's savings, which could otherwise have been put to more productive use. Complete Story »

Calafia Beach Pundit submits:
According to the Federal Reserve's calculations, the net worth of U.S. households as of last December had increased by $5.7 trillion (up 11.6%) from the low of last March. The gains came from a combination of higher equity and bond prices and reduced debt that overwhelmed declining real estate values. This reflects a healthy realignment of households' balance sheets (lower debt ratios, less reliance on real estate), as well as healthy improvement overall. However, it will take a few more years before households have recovered their peak net worth. I note that the ratio of household's tangible asset holdings to total assets is now 33.7%, which is below the average of this ratio (36.6%) since records began to be kept in 1950 (see chart below, click to enlarge). To me, this suggests that the correction in real estate prices has largely run its course. You might say that real estate is now somewhat "cheap" relative to financial assets. Think of the "tangible asset ratio" as a measure of how enthusiastic households are to own real estate instead of other sources of wealth such as stocks and bonds. Also note that the public's willingness to pay up for real estate is roughly correlated with underlying inflation, as the chart suggests. Tangible assets are a natural inflation hedge, so this makes a lot of sense. If inflation has bottomed out this past year and begins to rise in the years to come, then we could expect tangible asset prices to recover.Complete Story »

Edward Harrison submits:Seasonally-adjusted jobless claims dipped 6,000 to 462,000 for the week ending 6 Mar 2010. This is significantly lower than the revised 498,000 number we saw two weeks prior. Nevertheless, 4-week average jobless claims are still over 475,000. This number is actually higher than the previous week’s 470,500 average.Complete Story »

Rolfe Winkler, CFA submits: The just-released examiner’s report of the Lehman (LEHMQ.PK) collapse reads like the financial crisis equivalent of the 9/11 Commission Report. WSJ has hosted the 2,200 page document in 9 parts on Scribd.Complete Story »

Greentech Media submits: by Michael KanellosChinese companies know technology -- and the U.S. political system, too.Complete Story »

Felix Salmon submits: Many thanks to Tim Fernholz, of The American Prospect, and Taylor Griffin, of Hamilton Place Strategies, for helping me out via IM yesterday afternoon to explain to me what on earth is going on with Chris Dodd and the financial regulatory reform bill. The Reuters headline says that talks have failed, and that Dodd is going solo, but in fact it’s not quite as bleak as that. The important context to bear in mind here is that Dodd, in Griffin’s words, “is staring down the barrel of an April recess and knows he needs to get something moving”. Or, as Simon Johnson puts it, “a week or two lost now can derail completely opportunity for reform along any dimension”. It’s all well and good for Dodd to negotiate with Corker in good faith, but if the talks are dragging out far too long, it makes sense for Dodd to put some deadlines on negotiations with the Republicans. And the way that he’s doing that is by taking a bill to the full committee, and allowing just one week for it to sit there in markup.Complete Story »

Felix Salmon submits: Kevin Drum has a couple of good questions about credit default swaps, and the final link in his post literally made me laugh out loud, so I’ll do my best to answer him. If the bond issuer does default, and there are a hundred speculators who own CDS protection on one of its bond, you’ve gone from, say, a $10 million event to a $1 billion event. Basically, when things go bad — and eventually they always do — widespread CDS protection can cause things to spiral far more out of control than they would otherwise.Complete Story »

The Pragmatic Capitalist submits: The warning flags continue to pop up all over the place and investors continue to run head first into stocks. None of the recent warning flags are as alarming as yesterday’s huge spike in individual investor sentiment. Small investor bullishness surged to 45.3% versus last week as the market continued to melt higher. This has served as a fairly reliable contrarian indicator in the past as small investors tend to pile into stocks near the end of rallies. Individual investor sentiment has reached levels that have historically been followed by very poor equity returns. A few of the notable periods when investor sentiment was this high include:Complete Story »

BlindReason submits: Exporters are having a difficult time securing shipping from U.S. ports. I find interesting the "stickiness" in the ability of shipping companies to adapt.Complete Story »

Wall Street Post Game submits: We saw how the collapse of Greece brought down the Euro. Many say that this is just the beginning for Europe – Spain, Portugal, Ireland and other neighboring countries are very unstable. Watching the Euro plummet made me question my take on other currencies as well. The following is why I believe the Japanese Yen may face a downfall. According to Alexander Tepper of TKNG Capital, the Japanese labor force is shrinking because the population is starting to age and retire. The retirees will demand Japanese goods, then eventually go to imports because of the lack of production from fewer workers. As the Japanese retire and exit the work force, the economy will face an unhealthy supply shock, which will inevitably lead to the Yen falling. The population is declining, and so is the savings rate. This is not a good sign for the economy, or the currency. This will make financing government deficits an incredible challenge.Complete Story »

One year ago this week many were wondering if the economy was going to collapse. The market found itself at 666 on the S&P. Most investors had once again lost 50% of their life savings for the second time in less than 10 years.I was seriously worried that we were not going to be able to break out of the economic "death spiral" that started in the fall of 2008.Complete Story »