| AP Executive Morning Briefing
WASHINGTON (AP)—Federal Reserve Chairman Ben Bernanke, criticized last year for being too tentative in cutting interest rates, has shown he can act boldly. But the Fed's two aggressive rate cuts in the past eight days have left investors demanding still more. That may be a sign of how much trouble the economy is facing, with many analysts contending that the country is flirting with a recession and may, in fact, already be in one. ——— House, Senate at Odds on Stimulus WASHINGTON (AP)—The Senate is set to begin voting on dueling economic aid proposals, as senators rush to add jobless benefits and tax rebates for high earners, the elderly, and disabled veterans to a House-passed package. Senate Democrats and some Republicans are teaming up to tack $32 billion onto the House measure with a bill that would send rebates of $500-$1,000 to all but the richest taxpayers.
Bonds Rally as Citi, Retail Woes Send Investors to Safety
Treasurys rallied on Tuesday as a drop in Christmas sales and Citigroup's first ever quarterly loss sent stocks sharply lower, rekindling investors' penchant for safety. Citigroup wrote off a colossal $18.1 billion and posted a fourth-quarter loss of $9.83 billion, a reminder that the financial sector was still reeling from bad bets on the mortgage sector. The housing downturn was affecting consumers as well. December retail sales fell 0.4 percent, worse than expected and a particularly disappointing result given the importance of the holiday shopping season for retailers. "This puts pressure on the Fed to cut interest rates," said Michael Metz, chief investment strategist at Oppenheimer & Co. .
Brain Imaging And Genetic Studies Link Thinking Patterns To Addiction
ScienceDaily (Dec. 30, 2007) Scientists have for the first time identified brain sites that fire up more when people make impulsive decisions. In a study comparing brain activity of sober alcoholics and non-addicted people making financial decisions, the group of sober alcoholics showed significantly more "impulsive" neural activity. .
Is this the Breaking of the Bear?
With a primary value driver linked to the biggest drag on the US economy for the last century or so, Bear Stearn's excessive reliance on highly "modeled" and real asset/mortgage backed products in its portfolio may potentially be its undoing. This is exacerbated significantly by leverage, lack of transparency, and products that are relatively illiquid, even when the mortgage days were good. The last year at the Bear hasn't been a good one - a quick recap Bear Stearns Companies Inc (BSC) has been at the forefront of the ongoing subprime mortgage crisis and has been considered the main trigger for the credit turmoil with the failure of its two hedge funds in July 2007. These failures marked the beginning of credit turmoil and severely tarnished the company's reputation.
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