The Future of Public Debt

Extremely interesting piece from John Mauldin on public debt, its trajectory and its impact on the economy in this great recession. A few snippets with the link to the full piece, triggered by a paper from the BIS. Definitely worth a reading. “The politics of public debt vary by country. In some, seared by unpleasant experience, there is a culture of frugality. In others, however, profligate official spending is...

BofA needs 34bn$

Somebody please help me understanding this: BofA, capitalization 74bn$, needs to raise 34bn$ because it is apparently failing the requirements of the stress test. This would probably mean a diluiting of 50%. Yet the stock is up 7%. Below from Yahoo! finance: NEW YORK (AP) — Bank of America Corp. stock rose as investors appeared comforted by reports that the bank has the means to cover a potential $34 billion...

Global Recession?

From Mish’s Global Economic Trend Analysis, a concise representation of the current situation: Global Recession Headed Our Way The world is heading for a global recession and a sure bet is that it will be blamed on a subprime crisis in the US. The reality is the greatest liquidity experiment in history is now crashing to earth. The root cause of this crisis is fractional reserve lending, and micromanagement of...

Bank of America 10bn$ capital raise

How on earth a bank that spends 50bn$ to buy Merrill Lynch would after a month need to raise 10bn$ at a discount of some 20/30% versus market price, diluting existing shareholders, in a market that is extremely tight on cash? It seems to me that some people might not have understood how serious the situation is, if they think they can go shopping and later easily present the bill to shareholders.