USA:WSTREET CAE, BANCOS MUY FUERTE

Nueva York. (EFE).- La bolsa de Nueva York finalizó hoy con un descenso del 4 por ciento una jornada en la que las entidades financieras registraron una fuerte depreciación de sus acciones y Barack Obama se convirtió en el nuevo presidente de Estados Unidos.

El índice Dow Jones de Industriales, que agrupa a algunas de las mayores empresas estadounidenses, cedió 332,13 puntos (-4,01%) hasta situarse en las 7.949,09 unidades.

El mercado Nasdaq retrocedió un 5,78% (-88,47 puntos), hasta los 1.440,86 enteros y el selectivo S&P 500 retrocedió el 5,28% (-44,9 puntos) y quedó en las 805,22 unidades.

El mercado neoyorquino, que inició la jornada a la baja, aceleró el descenso en la última hora de negociaciones y el mayor descalabro se lo llevaron un día más las entidades bancarias incluidas en el Dow Jones de Industriales.

Bank of America encabezó el descenso con una pérdida de casi el 29 por ciento respecto del viernes y le siguió Citigroup, con un descenso del 20 por ciento en el valor de sus acciones.

Esas dos entidades informaron la pasada semana de pérdidas multimillonarias en los tres últimos meses de 2008 y Citigroup se ha visto obligado a reorganizar de forma drástica sus operaciones, para tratar de ganar en eficacia y calmar las inquietudes del mercado en torno a su futuro.

Las acciones de JPMorgan, que también registró resultados desfavorables el año pasado, perdieron casi un 20,7 por ciento de valor y las de Amercian Express, que difundirá resultados el día 26, se depreciaron el 8,29 por ciento.

El descenso bursátil arrastró incluso a la empresa Johnson & Johnson que informó de que su beneficio por acción en el cuarto trimestre de 2008 fue de 97 centavos y superó las previsiones de los analistas de Wall Street, aunque prevé ganar este año menos de lo que esperaban los expertos.

Sus acciones se depreciaron un 1,2 por ciento y terminaron a 56,75 dólares.

El precio del barril de crudo de Texas subió un 6,1 por ciento, pero eso no evitó que las acciones de la petrolera Exxon Mobil bajaran un 2,3 por ciento y las de Chevron se depreciaran un 4,78 por ciento.

Los títulos de la empresa The New York Times se depreciaron el 7,8%, hasta los 5,91 dólares, después de dar a conocer el lunes un acuerdo con Banco Inbursa e Inmobiliaria Carso, controladas por el empresario mexicano Carlos Slim, por el que recibirá una inyección de capital de 250 millones de dólares.

Los bonos de la deuda pública a diez años bajaban de precio y su rentabilidad se situaba en el 2,37 por ciento.

OBAMA: PRIMER DISCURSO PRESIDENCIAL

JAPAN: QUANTIATIVE EASING, DID IT WORK?

A lesson from Japan

January 15, 2009 – 11:11 am

In March of 2001, to jumpstart a stagnant economy, the Bank of Japan became the first central bank to attempt "quantitative easing."  Japan, of course, suffered from the collapse of its own real estate bubble in 1990.  Did it work?  Did it revive the economy?

Taking the Nikkei stock average as a measure of real wealth creation in Japan, the economy is, today, at its lowest point in over 30 years.

Certainly you could have made money trading the volatility, but the buy-and-hold strategy for Japanese blue-chips has been dead money for a generation.

Clearly the BOJ's QE policy from 2001 to 2006 didn't rescue Japan's economy, which remains stagnant despite rock-bottom interest rates.

Below is a quote from a December op-ed in the FT by John Richards (bold mine):

About all quantitative easing did on the positive side for Japan was to help the BoJ keep its independence from the politicians by giving the appearance of action.

The costs were the shutting down of the money market, although it revived fairly quickly when QE ended, and a dangerous bond-bubble, whose popping threatened the recovery and destabilised the financial system.

One of the lessons of this episode for policymakers is that while quantitative easing may help to solve the short-run liquidity problems that arise in times of extreme financial duress, it is not a substitute for some of the harder choices governments must make.

These include underwriting of systemic financial risks, e.g. by guaranteeing bank deposits, the re-capitalisation (forced or voluntary) of the banks, regulatory pressure on banks to disclose and write down the bad assets, or the pressures on businesses directly via their banks to restructure and deleverage or shut down.

Rolfe here.  If you'll permit me a digression: I disagree with him strongly on underwriting systemic risks.  It makes all the other hard but necessary choices he outlines impossible. To wit: if the government guarantees bank deposits but doesn't actually have the cash to make good (FDIC doesn't), then it must do everything it can to prevent anything that threatens bank solvency.  This is the great conundrum of the current banking malaise we find ourselves in.

On the one hand, we're all taxpayers.  None of us likes the idea of bailing out failed banks.  We think the financial system should swallow its medicine: writing down bad assets, de-leveraging, all of the other prescriptions outlined above.

On the other hand, we're all bank depositors too.  If the banks take their medicine it threatens our deposits.  And we've decided that we like the idea of protecting bank deposits via federal insurance (FDIC).

We're like a Florida homeowner that decides to insure himself from a hurricane without putting any money aside for a rainy day!  We shop for the highest interest rates on bank CDs even though we know these are typically offered by the weakest banks, comforting ourselves that FDIC insurance will be there if our bank fails.

But FDIC is us!  As taxpayers we demand that the government spend all it collects in taxes and then some in order to support our high standard of living, putting nothing away to protect ourselves if, for instance, the banking system fails.

We can't have our cake and eat it too.  We can't NOT bail out banks and expect that our deposits will be safe.

Government deposit insurance should be abolished.

Continuing with Richards' piece:

A worst-case current scenario is that policymakers rushing to quantitative easing fail to understand [the need for structural reforms], giving us a bond-bubble but no permanent fixes of the underlying structural problems. In that case, when the bond-bubble bursts, paradoxically, quantitative easing will have increased systemic financial risks instead of decreasing them.

Our Fed is now creating its own bond bubble by printing money to buy bonds, manufacturing artificial demand for debt securities in an attempt to bail out banks and investors from poor lending decisions.  I recommend Richards' whole article.

More on this topic (What's this?)

Bernanke: U.S. Financial Crisis Worse than Japan's Lost Decade, but We'll Still Copy the Japanese... (George Washington's Blog, 1/13/09)

Hard Times Call for Creative Solutions (Financial Armageddon, 1/3/09)

Japan's Tertiary Index -0,9% in Nov. (Think! Finances, Investment and ..., 1/20/09)

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USA:DEFLACION AVANZA

U.S. CPI: Lowest since 1954 - deflation here we 

Posted January 16th, 2009 in Economy By Edward Harrison |

The United States Department of Labor released its monthly data on

inflation today at 8:30AM. The data showed that inflation rose only

0.1% over the last year, the lowest reading since 1954. I should note

that oil and food prices continue to fall. Combine this with slow

consumer demand which will feed through into consumer prices and you

have deflation by next month.

While we should welcome lower prices, we should be aware that they are

due entirely to falling demand and excess supply; that is a world of

difference to deflation from productivity gains. This is the

environment of depressions. The economy is looking more and more like

the 1930s every day.

Consumer prices fell by a slightly smaller-than-expected margin in

December, according to government data on Friday that showed a sagging

economy was exerting downward pressure on prices and raising the

specter of deflation.

The annual pace of price increases was the slowest in more than 50

years. The Labor Department said its closely watched Consumer Price

Index dropped 0.7 percent after falling 1.7 percent in November —

tumbling for a third straight month. Analysts polled by Reuters had

forecast headline CPI dropping 0.9 percent in December.

Core prices, which exclude food and energy items, were flat for

the second month in a row in December. That compared to analysts'

prediction for a 0.1 percent increase.

On a year-over-year basis, consumer prices rose 0.1 percent,

braking from a 1.1 percent increase the prior month. It was the

weakest reading since CPI fell 0.7 percent in December 1954.

Energy prices fell 8.3 percent in December, after declining 17

percent the prior month. Compared to the same period last year, energy

prices fell a record 21.3 percent.