Daily Ticker

  • “Completely Wasteful”: Steven Rattner Slams Govt. Support for Corn Ethanol

    By Aaron Task | Daily Ticker – 1 hour 6 minutes ago

    Democrats and Republicans are locked in a death-grip over how to cut the deficit but agree the government must get its financial house in order. So you'd think there'd be bipartisan support to end the $6 billion annual subsidy for corn ethanol, which most experts agree is money poorly spent.

    Former Car Czar Steven Rattner calls the corn ethanol subsidy "completely wasteful" and almost entirely about naked politics.

    "Almost since Iowa — our biggest corn-producing state — grabbed the lead position in the presidential sweepstakes four decades ago, support for the biofuel has been nearly a prerequisite for politicians seeking the presidency," Rattner writes in a recent NYT op-ed entitled The Great Corn Con.

    "Those hopefuls have seen no need for a foolish consistency. John McCain and John Kerry were against ethanol subsidies, then as candidates were for them. Having lost the presidency, Mr. McCain is now against them again. Al Gore was for ethanol before he was against it. This time, one Read More »

  • Bank Of America To Pay $8.5 Billion To Limit Risk On Countrywide Mortgage Fiasco

    By Henry Blodget | Daily Ticker – 18 hours ago

    Bank of America has agreed to pay $8.5 billion to settle lawsuits brought against its Countrywide unit for sloppy mortgage underwriting during the housing boom.

    $8.5 billion is a huge amount of money, but it's tiny compared to the face value of the mortgages in question ($424 billion) and the principal still outstanding on those mortgages ($221 billion). So investors have acted with relief and bid up Bank of America's stock a few percentage points.

    The bank is still exposed to securities industry lawsuits and other mortgage-related litigation, but this settlement should begin to reassure investors that Bank of America's balance sheet won't get completely nuked by a devastating ruling.

    It will also begin to end the nightmare that began with Bank of America buying Countrywide at the top of the housing boom, only to see the company collapse and nearly take Bank of America down with it when the bubble burst.

    A judge still has to approve the settlement.

    Read More »

  • The Greek Charade, Act II: Europeans Keep Kicking the Can, Stocks Rally

    By Aaron Task | Daily Ticker – 20 hours ago

    Financial markets exhaled Wednesday as the Greek parliament passed a $40 billion austerity package. A second vote on implementing the package is set for tomorrow and ongoing protests in Athens could change the political calculus. But the expectation now is Greece will receive a $17 billion tranche of its EU-IMF bailout package and avoid a short-term default.

    That's the good news, at least as far as the markets are concerned. European stocks rallied sharply overnight as the euro climbed vs. the dollar. The Dow was recently up 0.6%, on track for a third-straight gain.

    The bad news is Greece is going to be unable to pay its debts beyond next month and the austerity package will likely cripple its already struggling economy.

    "No country in modern economic history has faced similar debt levels to those of Greece — a debt-to-GDP ratio above 150% - and avoided a default," write analysts at Open Europe, a London-based think tank. "Even with the help of a second bailout and a debt rollover, Read More »

  • Frank Holmes: Three Reasons $100 Oil Is Here to Stay

    By Stacy Curtin | Daily Ticker – Wed, Jun 29, 2011 7:24 AM EDT

    Oil prices are currently trading just around $90 a barrel, down from the recent triple-digit highs of the first quarter. But despite the recent signs of weakness in oil prices, gone are the days of $20, $30 or even $40 a barrel, says Frank Holmes, CEO of U.S. Global Investors. (See: "Straight-jacket Time": Dow, Crude Tumble After Obama Releases Strategic Reserves)

    Holmes believes $100 oil is here to stay. Here are his three big reasons why, as laid out on U.S. Global's website:

    #1) Long-Term U.S. Dollar Weakness (Due to Fiscal Crisis in Washington):

    "Even if Washington decided on a comprehensive plan to fix entitlement overspending, trim defense spending and reduce the U.S. deficit today, it would take years to see any meaningful shift in these figures.

    Therefore, we feel the recent uptrend in the U.S. dollar is a short-term reprieve from a long-term downtrend."

    #2) Emerging Market Demand Outpacing Developed Market Demand:

    "While developed world demand has struggled to retrieve Read More »

  • Europe on Edge: What Happens in Greece Will NOT Stay in Greece, Minton Beddoes Says

    By Aaron Task | Daily Ticker – Tue, Jun 28, 2011 10:20 PM EDT

    On the eve of the Greek Parliament's critical vote on austerity measures, ECB President Jean-Claude Trichet stressed the need "to develop a renewed vision of the kind of Europe we want and indeed need," Bloomberg reports.

    In case it isn't already clear, what's happening in Greece has ramifications for the broader European Union --- and quite possibly the entire global economy. Financial markets rallied Tuesday ahead of the Greek vote but huge questions remain about "where, in a strategic way, the Europeans are going with their project…of European integration," says Zanny Minton Beddoes, economics editor at The Economist.

    Amid serious discussion by "serious" people about whether Greece should drop the euro, Minton Beddoes notes it's not so simple as an old-fashioned currency devaluation. Greece dropping the euro — either voluntarily or by force — would represent a "rupturing" of the single currency and spur a "rethink about the safety of debt in Europe," she says. That, in turn, would Read More »

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