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Posts published in “Finance”

Cities and States Need a Bailout, And Your Pension Is At Risk

Instead of bailing out states at the federal level, Senate Majority Leader Mitch McConnell said he prefers states struggling with high public employee pension costs to declare bankruptcy.

“I would certainly be in favor of allowing states to use the bankruptcy route,” he said Wednesday. “It’s saved some cities, and there’s no good reason for it not to be available.”

Public Debt Skyrockets Worldwide

Public debt is skyrocketing as central banks expand their balance sheets to record levels. 

“The amounts being purchased are enormous, and it just tells you how much support is needed when the economy is closed down,” said Torsten Slok, Deutsche Bank’s chief economist. “Just have a look at how long it took to unwind from the financial crisis of 2008 and 2009. Now we are adding at a pace that is multiples faster.”

Global Fund Managers See “Extreme Investor Pessimism”

Bank of America’s survey of global fund managers showed “extreme investor pessimism” regarding cash held to the bleak outlook they hold for the global economy.

Paul Singer’s Elliott Management said global stocks might lose half or more of their value from the high reached in February, predicting a 1930s-esque Great Depression. In a letter to clients, the New York-based hedge fund wrote that the sharp market decline seen between late February and late March “provided a heavy bookend to a dozen years of basically nonstop positive returns in global stocks, bonds, and real estate.” 

BlackRock to Oversee the Federal Reserve’s Asset Purchases

BlackRock, the world’s largest asset manager, will oversee the Fed’s efforts to stabilize the bond market. The central bank was tapped during the 2008 crisis, but was slow to disclose the specific terms of its agreement with BlackRock during the last crisis, and even today the full details of what the firm earned have not been disclosed in that deal. The details of the current deal are unknown. 

Unlimited QE or the Willy Wonka Money Factory

Financial crises recur in part because memories fade.” – Ben S. Bernanke, Timothy F. Geithner and Henry M. Paulson Jr in “Firefighting: The Financial Crisis and Its Lessons.”

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis told CBS’s “60 Minutes” that “there is an infinite amount of cash in the Federal Reserve. We will do whatever we need to do make sure there’s enough cash in the banking system.”