According to Bloomberg,
Five years after Federal Reserve Chairman Ben S. Bernanke dropped U.S. interest rates toward zero to end the worst economic crisis since the Great Depression, America’s financial markets have become the envy of the world.
From money-market rates to yields on government and company bonds to equity prices, financial conditions in the U.S. are healthier than before Lehman Brothers Holdings Inc. collapsed in 2008, even as growth falters in Asia and Europe. The U.S. now has the strongest economy among industrialized nations, which would be its highest rank since 2000, according to David Woo, the New York-based global head of interest rate and currency strategy at Bank of America Corp.
“Resilient is the word that comes to mind in regards to the U.S.,” Paul Montaquila, the fixed-income investment officer at BNP Paribas SA’s Bank of the West, which oversees $62 billion in assets, said in a telephone interview from San Ramon, California. The strength of the financial markets demonstrates “the U.S. is still the preferred market of choice for global investors and the most-important engine of growth.”
While the Fed’s decision to push borrowing costs to historical lows in December 2008 helped developing economies recover more quickly as the U.S. housing bust crippled Americans’ ability to spend, investors are now showing greater conviction that the nation will underpin growth globally.
Posted in Economy, Equity Markets, equity trading, Events, Fixed Income
Tagged Bank of America, Ben Bernanke, Bloomberg, BNP Paribas, bofa, Federal Reserve System, finance, financial markets, Great Depression, Paul Montaquila, San Ramon California, United States
Fed Chairman Ben S. Bernanke (Bloomberg)
According to Bloomberg,
Federal Reserve Chairman Ben S. Bernanke said a process under development that would allow regulators to take down a failing bank will help ensure investors discipline weak firms and prevent them from taking risks without consequence.
“As we try to make the financial system safer, we must inevitably confront the problem of moral hazard,” Bernanke said today in remarks at an International Monetary Fund conference in Washington. “Market discipline can only limit moral hazard to the extent that debt and equity holders believe that, in the event of distress, they will bear costs.”
He addressed the economy only briefly during the panel discussion, saying that there was still “an awful lot of slack in the labor market” and said that was justification for the Fed taking “strong actions to try to support job creation.”
In response to audience questions, Bernanke said that the high level of student debt is “another drag on the recovery” although it is not likely to cause a financial crisis because most such loans are owned by the government, not financial institutions.
Bernanke spoke as part of a panel discussion that included Harvard University’s Kenneth Rogoff, the co-author of the history of financial crises titled “This Time Is Different: Eight Centuries of Financial Folly”; former Bank of Israel governor Stanley Fischer; and former U.S. Treasury Secretary Larry Summers.
Posted in Commodities, Economy, Events, Finance, Fixed Income
Tagged Ben Bernanke, Bernanke, Federal Reserve System, finance, Harvard University, International Monetary Fund, Stanley Fischer, Washington
Should You Use Venture Capital: Which America Are You In?
In my two previous blogs, I noted that 99.95 percent of you will not get venture capital, and that 99.997 percent of you may want to refuse VC, even if offered. Are these results universal or are there other factors that affect venture success?
One of the most enduring and influential beliefs of the last few decades has been that entrepreneurs need venture capital to build giant companies. This might be true – but only in Silicon Valley.
Silicon Valley has been the land of milk, honey, and money for entrepreneurs and venture capitalists. Arguably Silicon Valley VCs have helped to build perhaps the greatest assemblage of giant, non-financial companies the world has seen. Starting from around the early 1970s, using all types of venture-capital funding arrangements (rich individuals, family funds, small business investment companies, and VC limited partnerships), they have amassed a string of successes ranging from Intel INTC -1.42% to Facebook FB +2.76%.
Posted in Finance, Opinion, Venture Capita;, Venture Capital
Tagged Entrepreneur, finance, Intel, Limited partnership, Silicon Valley, Small Business Administration, Venture Capital, Victoria Cross
Hedge Fund’s Suit on Fannie and Freddie May Spell Trouble for U.S.
The lawsuit brought by the hedge fund Perry Capital against the federal government over the Fannie Maeand Freddie Mac bailout may be the case that finally subjects the government’s bailout practices to closer outside scrutiny.
The Fannie Mae and Freddie Mac bailouts were two of the biggest and earliest of the financial crisis. In September 2008, a government team led by the Treasury secretary at the time, Henry M. Paulson Jr., placed the companies into a conservatorship and provided them with hundreds of billions of dollars in backstop financing. In return, the government required the companies to issue super-preferred stock to the Treasury Department, stock that would pay the government before all other creditors, at a 10 percent rate.Read more
Posted in Breaking news, Economy, Events, Finance, Financial Crisis, Opinion, Subprime mortgages
Tagged Fannie Mae, Federal Housing Finance Agency, Federal takeover of Fannie Mae and Freddie Mac, finance, Freddie Mac, Perry Capital, Treasury, United States Department of the Treasury
DEALTALK-Regulators put chill on U.S. private-equity insurance deals
(Reuters) – With acquisitions in the U.S. financial services industry slowing to a crawl since the 2008-09 financial crisis, private equity funds have provided a rare bright spot with their pursuit of annuity portfolios that insurers have been eager to sell.
But the dealmaking may have hit a roadblock now that New York’s top financial regulator has decided to launch a review, concerned that the private equity firms are taking on too much risk – at the expense of consumers who hold the annuities.
As a consequence, some insurers are putting on hold plans to sell their businesses, while bankers and attorneys who are working on two deals nearing completion are worried that the probe could derail them completely.
Posted in Breaking news, Equity Markets, Events, Finance, Private Equity, Regulation
Tagged finance, Financial Services, insurance, New York, Private Equity, Private equity firm, Private equity fund, regulation, Reuters
According to The Wall Street Journal’s Ben Rooney, Venture Capital, Russia, Europe, Venture Capital, Finance, Netherlands, Germany, France, Economy, U.K Data on venture-capital funding show the extent of the boom in Russia’s technology sector over the past six years.
In our report Monday, we wrote that the U.K. led the overall European venture-funding pecking order, followed by Germany, France and the Netherlands. That was for all sectors, based on data produced by Dow Jones VentureSource.
Looking at the numbers for just the tech sector, a rather different pecking order emerges.
The revised tech figures push the Netherlands right off the grid (there was a large deal in 2012 in the biopharmaceuticals sector, which is why the Netherlands was ranked fourth overall). As of 2012, the top five nations were, in order: the U.K. (€867.46 million), France (€508.76 million), Germany (€431 million), Russia (€236.55 million) and Sweden (€88.93 million).
Posted in Economy, emerging market, Finance, Venture Capital
Tagged Economy, Europe, finance, France, Germany, Netherlands, Russia, U.K., Venture Capital