April 22, 2009
The Dow and the S&P 500 fell a little, while the NASDAQ Composite
closed up a skosh. The NASDAQ
wafted up 2.27
to end the day at 1,646;
while the Dow
to close at 7,887;
and the S&P 500 slipped 6.53
points (-0.77%) to 844.
Oil jumped to $48.48, while gold rose $9.80
to finish at $892.50. The VIX climbed to 38.10.
Treasury Secretary Geithner reassured the country
yesterday when he said that the "vast majority" of banks are
well capitalized. Paul Krugman last night (in Permanent Link to Vast majorities)
observed that the vast majority of the Fed’s list of
1,722 “large commercial banks” probably are in fine shape. "But,"
he says, "the
big guys are where the money is. The top 10 institutions on that list have
58 percent of the assets. (If we looked at bank holding companies rather
than only commercial banks, assets would be even more concentrated.) So
it’s perfectly possible that the “vast majority” of US banks are
well-capitalized, but that banks with, say, a third of the system’s
assets are insolvent.
Geithner said, then, was true but useless. If anything, his wording was
cause for concern: Treasury knows the difference between raw numbers of
banks and asset holdings, even if the press seemed to miss the
distinction, and if he’d meant to say that the vast majority of assets
are held by sound banks, he would have."
In an update, Dr. Krugman adds,
DeLong had the same reaction.
"'The failure to assure us that the vast majority
of bank assets are in well-capitalized institutions seemed to me to speak
volumes. Nobody ever thought that the vast majority of banks are not well
capitalized–it’s the highly leveraged New York high flyers.'"
Marketwatch's Dr. Irwin Kellner sees cogent indications
that the economy has bottomed: Dr. Kellner looks at stress-test optimism.
The Treasury Secretary followed yesterday's remark that
the vast majority of banks are well-capitalized, with a statement today
proper corrective measures have been and are being taken to put global
crisis in the past."
The International Monetary Fund announced yesterday
that there is, "No quick end in sight for the worldwide recession."
Paul Krugman commented upon this yesterday: Permanent Link to Imformation.