Sunday, December 21, 2008


Above is the TARP capital infusions versus current stock market capitalization for the financial companies that have participated. I have included American Express, even though they have not received the funds yet. I continue to harp on this one because it is a clear example of the difference between the stock market and Federal government valuations of this sector. Nobody can compete with the sweet deals that the banks are getting. Aside from small market mergers, the ever changing landscape will not allow for a significant deal without a government backstop.

Similar story above. More and more financial companies are getting on board with issuing government backed debt, preventing the bond market from doing its job.

This just keeps getting worse. According to the latest data, home equity is only about 45%. The recovery in our economy has no chance unless the housing market bottoms. Any attempt to delay it only introduces additional risks.

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