The Congressional Oversight Panel released a new report assessing the overall effectiveness of the Troubled Asset Relief Program (TARP) which was introduced six months ago. The executive summary is worth a quick review particularly given that TARP is very much in the news these days with the Wall Street Journal and others reporting an expansion of the program to life insurers that were previously not eligible for assistance. Read this post for details.
Leaders of the Group of 20 nations released a communiqué today outlining a number of measures intended to help the global economy recover from the current worldwide recession. While the details of the massive $1 trillion commitment quadrupling the capacity of the IMF has dominated most headlines, I found the strong language intended to discourage protectionism to be perhaps more important.
There has been much debate in recent days regarding whether the market for Credit Default Swaps (CDS) should be more tightly regulated. Let’s take a look at the nature of credit default swaps and whether arguments for tighter regulation have merit.
Anyone reading this who is a taxpayer in the United States is, in effect, a shareholder of AIG due to the Federal Government’s infusion of $173.3 billion in bailouts over the past six months. These bailout funds have resulted in the near total nationalization of AIG with the Federal Government owning nearly 80% of the business. Putting aside the question of whether the government was correct to bail out AIG in the first place, it is very important to look at the potential problems that now exist as a result of government ownership and the political, rather than economic, calculations driving the operations of the company. Read this post for one viewpoint regarding the bonus fury at AIG.
One of the interesting effects of the turmoil in financial markets since September involves the level of implied inflation expectations embedded within the market prices for Treasury Notes and Bonds. This is a very interesting development given the Federal Reserve’s accommodative monetary policy and the large deficit financed spending plans proposed by the Obama Administration. Read this post for more details.