April 20th, 2009
03:26 PM ET

Why Washington won’t take its money back…just yet

Program Note: Tune in to hear more from Ali Velshi tonight on AC360° at 10 p.m. ET.

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Ali Velshi
CNN Chief Business Correspondent

On May 4th, The Administration will unveil the results of the “stress tests” that it is conducting on the country’s 19 largest financial institutions. The goal is to figure out – in the government’s worst-case scenario – how much MORE taxpayer money the government may have to put up to prevent a major collapse. The government is not likely to detail each bank’s financial position, for fear that new of an “unhealthy” bank could trigger a run on that bank by both investors and customers, thereby hastening its demise. But it IS likely to say something like “if unemployment were to increase dramatically, and home prices were to drop by a certain percent more, we’re likely to need this amount of money.”

Until the government finishes its tests, it’s not likely to even discuss taking back any of the big money that it has lent those big banks, despite the fact that many of them have reported profits for the first three months of this year, and say they WANT to give the money back. That could put $88 BILLION back into TARP’s coffers (right now the government has about $115 BILLION left of the $700 BILLION, and is counting on about $20 BILLION coming back.); money that can be used for other banks, preventing the administration from going back to a Congress without much of an appetite to lend more taxpayer money to Wall Street.


Filed under: Ali Velshi • Economy
April 14th, 2009
04:45 PM ET

The Economy: Better, or just less worse?

Program Note: Tune in to hear more from Ali Velshi tonight on AC360° at 10 p.m. ET.

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Ali Velshi
CNN Chief Business Correspondent

President Obama delivered a speech in which he outlined what the government is doing – and has done – to get out of this recession, which is now (I think) in its 17th month. Federal Reserve Chair Ben Bernanke said today that there are "tentative signs" that the economy's slide is slowing, but that a full recovery won't come until the financial sector stabilizes.

Markets are having a rough day, largely because of some economic indicators that show things aren’t all that rosy. Retail Sales for March, as measured by the government, were weaker than expected, after seeing what seemed to be an uptrend. And inflation continues to be lower, as consumer demand fails to pick up.

So where do we stand right now?

Banks are starting to show signs of life, but it may have something to do with the fact that they got low interest money from the government and got to loan it out at higher interest. TARP only has about $135 BILLION left (of $700 BILLION) and there’s no appetite on Capitol Hill to be giving Wall Street more money. BUT, a number of banks (Wells Fargo, Goldman) are talking about giving back their TARP money – this could end up adding $50-$100 BILLION to TARP. Still, we don’t know how this Treasury ‘Bank Plan’ is going to work.


Filed under: Ali Velshi • Economy
March 30th, 2009
07:36 AM ET

Hints of recovery?

In the most recent CNN Money Summit, Ali Velshi and panelists discuss the good news from Wall Street last week and how much the economy has improved this year.

Filed under: Ali Velshi • CNN Money Summit • David Gergen
March 27th, 2009
01:37 PM ET

Glimmers of hope in the economy?

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Ali Velshi
CNN Chief Business Correspondent

We’ve seen a week of positive indicators, capped with news that personal spending is up a bit.

– Mortgage rates remain at lows we haven’t seen in more than 50 years

– Markets are down for the day, but strongly up for the week – we are likely to see the 3rd back-to-back week of gains, which would be the first time that has happened since Roman Times (not really, but it’s been a long time)

– In fact, markets are up almost 20% from the lows that we hit on March 9th

– Have we hit a bottom, or just an “emotional” bottom (we’re over the complaining and are actually starting to look for deals.)

– The President is smokin’ the peace pipe with major financial CEO’s at the White House

BUT, unemployment is up in 49 states, and we’re a week away from an unemployment report that is expected to show that more than 600,000 people were laid-off in March, and that the nation’s unemployment rate increased from 8.1% to 8.5% (it was 4.9% when the recession started.)

AND, we have a CNN Money Summit tackling all of this tonight at 11pm ET.

Filed under: Ali Velshi • Economy • Raw Politics
March 26th, 2009
12:06 PM ET

Power grab, or just good sense?

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Ali Velshi
CNN Chief Business Correspondent

The free-marketers are all over the government's "power grab" to more closely regulate large non-bank financial companies.

We've heard everything from it's "unconstitutional" because it violates unlawful search and seizure laws.

Others say the idea that there is a regulator encourages failure because someone will bail you out.

These arguments hold little water.

The FDIC is universally seen as the most effective and most successful regulator through this entire recession.

Geithner today is using the argument that that is the model he suggests using.

He's right on this one.

Filed under: Ali Velshi • Economy • Finance • Treasury Secretary
March 26th, 2009
09:29 AM ET

Whoa – did you say stocks are up?

Program Note: Tune in to hear more from Ali Velshi on AC360° at 10 p.m. ET and make sure to catch CNN's Money Summit on Friday at 11 p.m. ET.

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Ali Velshi
CNN Chief Business Correspondent

Get this: Markets are now higher since Barack Obama became president.

I mean the broader stock market. The Dow is still down slightly. But the S&P 500 and the NASDAQ are both up since their Jan. 20 close.

And the S&P 500 is on track for its best monthly percentage gain since - wait, are you sitting down? – since 1987.

What should we make of that?

Filed under: Ali Velshi • Economy • Finance
March 25th, 2009
10:20 AM ET

Wednesday money...

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Ali Velshi
CNN Chief Business Correspondent

What we saw happen in the hours after the Fed injected a trillion dollars into the economy last Wednesday was confirmed today.  Rates for a 30-year fixed mortgage dropped to 4.63%.

"Mortgage rates fell sharply to low levels not seen in six decades following the Federal Reserve's announcement on the Treasury bond and mortgage-backed securities purchase programs," the Mortgage Banker's Association reports.

But that's not all: on TOP of the uptick we saw on Monday in existing home sales, and on TOP of the banking plan that was finally detailed on Monday, orders for durable good were up.  Durable goods are manufactured goods that are built to last more than 3 years.  Everything from washing machines to military equipment.


Filed under: Ali Velshi • Economy • Finance • U.S. Federal Reserve
March 23rd, 2009
04:26 PM ET

What the plan means

Program Note: Tune in tonight to hear more from Ali Velshi on AC360° at 10 p.m. ET.

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Ali Velshi
CNN Chief Business Correspondent

Basically the Govt has set-up a structure to allow it to partner with large private investors to buy the "toxic assets" from the banks. If it works, it will free-up up to a TRILLION dollars, which banks can then use to lend to businesses and consumers.

Follow-up questions:

"What's in it for the Americans?"

These are investments in the so-called "toxic assets." These are assets (real estate, other investments based on the value of that real estate) that are expected to increase over time. These are not "bailouts" but rather, purchases of things that are "taking up space" at the banks, but could be of value to others (think about selling your old, out of style ties on ebay, to someone who'll dry clean them, put them in nice presentation boxes, and wait until the come back into style). When the joint government-private funds that bought these assets sell them, it SHOULD make money for the taxpayer.

"Is this enough?"

Estimates for how much the banks need are as high as $2 TRILLION. Critics say this money may not be enough, but others say what's more important here is that a structure has been set up that hasn't been set up before. If it works, it can be expanded.

Filed under: Ali Velshi • Economy • Finance
March 23rd, 2009
11:56 AM ET

Just as he was running out of chips...

Program Note: For more from Ali Velshi on Geithner's plan, tune in tonight for AC360° at 10 p.m. ET.

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Ali Velshi
CNN Chief Business Correspondent

...Timothy Geithner shows his hand. Coming out with MOST of the rest of the banking plan (final details will come at the end of April, when the results of the "stress tests" on the bank come in).

So far Wall St. likes the deal, putting the Dow above 7,500 before noon. The plan basically allows private companies to partner with the government to buy some of these so-called "toxic assets" at a good price, with government backing.

It's sort of like the government telling you it'll set aside the best, undiscovered antiques at every garage sale – the stuff that's taking up space for homeowners but the experts know are hidden gems, once they get cleaned-up and displayed properly. Not only that, but the government will come up with half the money if you want it (although when you polish-up and sell the antique, you split the winnings with the government). And if you don't have enough money to take part in this plan, the government will lend it to you.


Filed under: Ali Velshi • Economy • Finance • Treasury Secretary
March 19th, 2009
08:20 PM ET

Geithner informed about bonuses

Timothy Geithner explains when he knew about the bonuses paid to AIG executives. To see more of Ali Velshi's interview tune in to AC360° at 10pm ET tonight.

Filed under: AIG • Ali Velshi • Economy • Raw Politics • T1
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