green shoots

  • 12 Mar 2010 at 4:15 PM

Is That All There Is? A Green Shoots Retrospective

By Art Buono

I remember when I was a very little girl, our house caught on fire.
I’ll never forget the look on my father’s face as he gathered me up
in his arms and raced through the burning building out to the pavement.
I stood there shivering in my pajamas and watched the whole world go up in flames.
And when it was all over I said to myself, “Is that all there is to a fire?”

March 15, 2010, marks the anniversary of a special day. Can you guess what it is? Ides of March? Yes, but no. St. Patrick’s Day? Too soon. Give up? It’s National Green Shoots Day. That’s right, March 15th marks one year to the day 60 Minutes broadcast Fed Chairman Ben Bernanke softly cooing in the ear of the market. It’s been all clover and honey since then, as we all know. Unemployment up? Who cares! GDP down? Bah! CPI negative? Not to worry. Your house? Fuhgeddaboudit! Your meager, all-stock bonus? So sorry! (But that’s another story.)

You may be asking, is that all there is to a recovery? Of course not. Goldman Sachs has booked a unit every other day since then, banks in general are feeling much, much better, the threat of financial reform recedes in the rearview mirror, and the federal funds rate will remain exceptionally low for an extended period, thank you very much! Continue reading »

  • 16 Jun 2009 at 12:02 PM

The Everyman’s Bailout

By Greg Michaels

Bailoutman.jpgYou know there are some vibrant green shoots when major credit card issuers are voluntarily taking 65% haircuts on some outstanding balances.

Consider Bedros Alikcioglu, a gas station owner in Newport Beach, Calif. He owed $112,000 on four cards and was paying $3,000 a month in interest and late fees. “It was so hard to earn that money, and paying it to nowhere didn’t make sense anymore,” said Mr. Alikcioglu, 75.
He signed up with a debt settlement company named Hope Financial, which negotiated deals with his creditors to settle for about 35 percent of his balance. Hope Financial is charging Mr. Alikcioglu about 12 percent of his original debt.

So banks with major consumer exposure are now faced with a rather peculiar situation. The overly leveraged consumer who is chronically delinquent now has leverage over the banks because it’s increasingly likely the value of that debt to the bank will be zero in the coming months. You don’t need the threat of cramdown legislation when things are this bad.
Credit Bailout: Issuers Slashing Card Balances [NYT]