The Politics of Money

by: Bill Cara December 04, 2008    

Bill Cara

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[Excerpted from Bill Cara's Daily Report]

Traders are focused on banks today, both central banks and commercial banks. But since the central bankers are the agents of change, that’s where we are looking for answers. Today the Bank of England, European Central Bank and central banks of Sweden and of New Zealand took drastic action by chopping rates.

The FDIC data out today also paints an ugly picture. With US T-Bill yields falling to 0.015% yesterday (practically nil), it’s clear that depositors are still either concerned about the viability of banks and have turned to Treasury instruments or they have been drawing down their deposit savings in order to meet their current obligations.

In Canada, again, the equity markets sank on unsettling political news where the three political parties that had been recently trounced by the Conservative Party have been playing on the emotions of the populace who are hurting financially. At least they were trying. Now there is a backlash. Should the Prime Minister call for a new election, these other parties will shrivel into a pittance of their present position in the legislature.

The Toronto Composite (-30.85 -0.37% to 8296.96) and Venture Board (-19.02 -2.60% to 712.08) sold off for a second day while most international equity markets flourished. The people of Canada are not stupid; they are unhappy that political backroom players are trying to seize control soon after the general population voted them into a position of no power.

The Associated Press has reported that former New York Gov. Eliot Spitzer is back in the media, this time as a blogger. Last evening, the online magazine Slate posted Spitzer's first column, headlined "Too Big Not To Fail," which argued against costly economic government bailouts to huge financial institutions. Jacob Weinberg, the Slate editor-in-chief [it's owned by the Washington Post (WPO)] stated that Spitzer’s semi-monthly column will focus on the financial crisis, regulation and government.

Good on the Sheriff.

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This article has 1 comment:

  •  
    Dec 04 04:01 PM
    Thanks Bill. Please share at some point your thoughts on how to deal with CDS problem. Can the government declare a "CDS holiday"?
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