Of Things Known and Unknown

U.S. Treasury Secretary Paulson admitted that the thing we don't know is,is there fraud going on,is there collusion.I won't have a view until I see the evidence,Mr.Paulson stated.Naked short-selling is wrong anywhere.Our banking system is safe and sound.I don't think you're going to see any insured depositors lose a penny.The most important thing we can do to support the dollar is have confidence in our economy,he added.In a black suit,light blue shirt and red tie,and seated before a backdrop of U.S. Treasury seals,Mr.Paulson held that America's long term prospects are strong compared with any other economy.

The Importance of Housing Reform

The housing correction needs to run its course,U.S. Treasury Secretary Hank Paulson believes.Only at that time will we be entirely through this period of stress in the financial markets.One key in the housing crisis is having mortgage finance available.Housing reform is more important in magnitude than anything else.I'm focused on the job in front of me,not what happens after the U.S. presidential election.The more flexible the authorities are,the more confidence there will be in the marketplace.Government shouldn't try to impede the correction in housing,the Secretary continued.

Special Access:With the Treasury Secretary

U.S. Treasury Secretary Hank Paulson says he is speaking,and he listens.One of the things they're going to hear is,keep marking to market,and if you need to,go out and raise some capital.Banks need to keep marking books to assets.We are seeking to show stability for the capital markets.If necessary,the Treasury is ready to put capital in the Government-Sponsored Enterprises Fannie Mae and Freddie Mac,which are so important to the stability of the capital markets,the former Wall Street executive said.

More Struggle Ahead,Economists Say

The National Association for Business Economics has released the results of a survey of economists.According to the participants,the U.S. may avoid a recession,but growth will be anemic for the rest of 2008.Jobs and capital spending will be stable,as industry demand is rising across the board.The economy will be struggling for a few more quarters.Selling prices rose at the highest rate since Q1 of 2007.Higher materials costs were reported by 75% of the participants,which is a record.Increased capital spending was expected by 40% of the economists,which is down only 2% from Q1 2008.Overall,the NABE survey charts a difficult but passable road in the medium term.This week,Gross Domestic Product and employment reports could move the markets.

Shop Talk

People in Cary,North Carolina and Roubaix,France are reading this.It's good to have you and all my readers along on the knowledge journey.I am committed to working through the problems,not pretending they aren't there.In that way,we will be better at the end of the crisis.Being an idealogue would not yield anything but hot air.Have an enriching session.

The Last Bear

The last bear market was from 2000-2003.It lasted a total of 31 months.During that bear market,there were six rallies,which lasted from two to four months each.The current bear market arose about a year ago.It could extend as far as 2010,given the depth and breadth of the financial crisis,and the difficulty of owning up to it.

Citigroup Trends Better

Citigroup(C),the largest U.S. financial company,has reported its Q2 results.The firm suffered a loss of 2.5 billion dollars,or .54 a share.For the past three quarters,Citi's losses have been shrinking.In recognition of this ,Deutsche Bank(DB) has upgraded Citi's stock.Its Q2 results were in line with most banks that have reported earnings,says Richard Bove of Ladenburg Thalmann.Its other sources of income are great enough to cover the losses in its loan portfolio.The banks as a group are lending plenty of money;their margins are not in distress;and they are gaining deposits.The industry is in much less trouble than people think.It has more equity,more reserves,more loans and more deposits,Mr.Bove indicated.Shares of Asian regional banks rose on Monday,their first chance to respond to Citigroup's news.On the other hand,there can still be setbacks for Citi and the other banks,investors should realize.The financial system has been shaken hard,so recovery will be a jagged process.