DB makes 6 billion on trading

http://www.bloomberg.com/apps/news?pid=20601087&sid=aRSJrvEz8GMA&refer=home

Deutsche Bank Trading Rebound Seen Leading Return to Profit

By Jann Bettinga

April 24 (Bloomberg) -- Deutsche Bank AG, Germany's biggest bank, may report record trading revenue at its securities division in the first quarter as credit markets stabilized.

Buying and selling bonds, currencies and commodities probably boosted trading revenue, excluding writedowns, above the 5.07 billion-euro ($6.7 billion) record in the first three months of 2007, people familiar with the matter said. The rebound will propel earnings at the Frankfurt-based bank, which posted a 4.8 billion-euro loss in the final quarter of 2008, analysts said.

Credit Suisse Group AG, Goldman Sachs Group Inc., Citigroup Inc. and JPMorgan Chase & Co. announced first-quarter results in the last two weeks that beat analysts' forecasts as trading revenue surged. Deutsche Bank may report first-quarter net income of 804 million euros, according to the median estimate of 10 analysts surveyed by Bloomberg News.

"We expect a very good result if you strip out the writedowns," said Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets who recommends buying the stock. "Trading should benefit from wider spreads, higher bond issuance volumes and market-share gains."

Deutsche Bank spokesman Michael Golden declined to comment before the release of earnings on April 28.

World leaders miss the target, depression deepens

http://www.youtube.com/watch?v=IM-Zwqa2WyA&feature=related Gerald Celente False Flag Recovery pt ¼

CELENTE CHANNEL... http://www.youtube.com/profile_video_blog?user=GeraldCelenteChannel

One of the few upsides to this devastating downturn, as I suggested a few weeks ago, is the clarifying effect it has had on our understanding of how our economy actually works--and for whom. Each passing bailout debate seems to reveal something new about the broad fraud American capitalism has become, just how rigged our system is in favor of the favored few and just how critical (and hypocritical) Washington has been in subverting and perverting our supposedly free markets. ... http://www.forbes.com/2009/04/14/obama-defense-budget-opinions-columnists-gerstein_print.html

The theory is controversial, to say the least, and many economists give it short shrift. But to hear Mr. Gordon tell it, the Kondratieff Cycle is real, it's in its "winter" phase, and the outlook for the next several years as a grim as it gets. "We are in a 15-year deflationary depression that will be worse than 1929-32," he warned. There will be a collapse in real estate prices - as much as two-thirds in the U.S. World trade will collapse. Government revenues will dry up and they will be unable to provide needed services. Pension plans will fail. The Dow will bottom out at around 1,000. Feel depressed yet?....    http://www.rgemonitor.com/roubini-monitor/256412/degrees_of_bearishness_press_report_of_a_recent_event_with_nouriel_roubini_meredith_whitney_and_other_bearish_analysts

http://www.atimes.com/atimes/Global_Economy/KD15Dj04.html
World leaders miss the target
By Henry C K Liu

Leaders attending the Group of 20 second Summit on Financial Markets and the World Economy in London on April 2, echoing the first such gathering in Washington in November 2008, continued the tradition of superficial posturing for political theater on global television, while missing the real target - that is, the need not so much to revive dysfunctional trade that has collapsed from its own internal contradictions, but to redefine the predatory terms of international trade created by dollar hegemony.

The big question in our own mind is the depth of complicity and the motivations of the government, the media and major institutions in continuing to support this financial corruption through silence or participation.

... http://jessescrossroadscafe.blogspot.com/2009/04/crisis-of-our-democracy-corruption-in.html

Is the US Russia? The question seems provocative, if not outrageous. Yet the person asking it is Simon Johnson, former chief economist at the International Monetary Fund and a professor at the Sloan School of Management at the Massachusetts Institute of Technology. In an article in the May issue of the Atlantic Monthly, Prof Johnson compares the hold of the "financial oligarchy" over US policy with that of business elites in emerging countries. Do such comparisons make sense? The answer is Yes, but only up to a point....    http://www.ft.com/cms/s/0/09f8c996-2930-11de-bc5e-00144feabdc0.html

"To restore the wealth lost in the current financial crisis, the Treasury would have to monetize some $30 trillion of toxic assets, almost ten times what the Geithner Treasury is currently contemplating, and twice the size of current U.S. annual GDP. Add to that about $10 trillion of value lost in the collapse of commodity prices and another $10 trillion in real property values, and we have a wealth loss of $50 trillion." ~ Henry Liu, Asia Times via Mike Whitney...    http://www.marketoracle.co.uk/Article10033.html

informational capital is uniquely important

Capital, Not Toasters, Dr. Krugman

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Ann Rutledge | Apr 13, 2009

It wasn't Dr. Krugman's hate-mail treatment of securitization that made my brain go tilt.

(I say this even though we concur with Barry Ritholz's reasoning in his blog article, "Paul Krugman is Wrong About Securitization." )

What really got to me was the reference to toaster giveaways. [Excerpt Only]

Toasters! Sylvain paid $5 for ours -- used -- twenty years ago, and it works just fine, thank you very much. A new toaster would not motivate any of my friends or family members to open a bank account. Nor anyone in my daily life: postman, hairdresser, restaurant manager, butcher, bus driver. I do not think any of the octogenarians who called us last year to ask if their pension plans were in imminent danger of going bust would take solace in a toaster, either.

(What a sad commentary on the general state of trust in American institutions that is -- that people looking for truthful answers would turn to strangers quoted in a newspaper!)

The depositor has gone the way of the toaster. After expenses, interest and taxes, few Americans in their earning years have any income left over to put in a savings account, and retirees can't live on deposit interest either. But something else is going on, too. Trying to make ends meet in our service economy has turned most of us into unwitting entrepreneurs. The average working American knows the meaning of the phrase "ownership society," because an increasing share of the operating and financial risks in our economy have been foisted on us by commercial entities seeking infinite returns through endless expense management, not genuine growth. As we reach the limit of self-reliance in an economy that is stacked against us, working Americans are coming dangerously close to realizing that we are the real capitalists; that it is our energy, optimism and ideas that feed the growth of the economy.

And capitalists do not need toasters. We need capital.

Working Americans need access to funding at a fair cost of capital -- meaning at rates that reflect the value of what we produce and the reliability with which we repay our financial backers. Small business owners, freelancers and entrepreneurs need access to finance, no different than corporate CFOs. We need to be able to respond to business opportunities and, at the same time, plan for the provision of care and education for our children, who are the future intangible wealth of the economy. Yet we have far fewer resources at our command than CFOs, and we are the first to be taxed by the government or be saddled with hidden taxes by the banks.

Let's not kid ourselves. A 70s-style banking system cannot serve the American small business owner any better today than it did in the 1970s. Nor can a 70s-style education system, which failed us in math and science, enable us to thrive in an information-based economy. By now it is abundantly clear that our economy cannot be pumped up by consumption. We have consumed ourselves and our environment to death, literally.

Economic revival requires that the tables be turned: ordinary Americans need to be treated with respect as the capable producers we are, or can be, not the mindless consumers that we are expected to be. For this inversion to take place, the economy must be re-engineered to listen, think, judge, respond, take responsibility and above all adapt, through the use of informational feedback. In an economy that rewards responsible resource allocation and renewability, informational capital is uniquely important because its value increases – rather than being depleted -- through utilization.

All of which brings me back to securitization: the only form of credit extension that can realign the incentive structure so as to reward value creation by transforming data into informational capital and using it as a partial substitute for monetary capital.

That is what securitization was before the banks set out to sabotage it. Sylvain and I watched the abuses begin in earnest after 1998 and the failure of Long-Term Capital. It took about a decade to completely dismantle the securitization market by subverting its rules, which were not well known outside the circle of practitioners. Because ignorance kept the easy money machine well-lubricated, everyone had a hand in its destruction, including the people whose best interest it was not to destroy it: investors, regulators, finance professors, journalists and ordinary Americans who were allegedly too dumb to understand it.

Supposedly, the economic crisis is going to teach the American consumers a lesson or two about their spendthrift ways: more second-hand toasters, and fewer plasma TVs funded by the "home ATM." But what about the people who got off scot-free with our equity? What have they learned?

And more importantly, when can we expect the return of a real economy?

We are used to being taxed. We accept the necessity of sacrifice. Yes, there is pride and honor and a sense of due accountability in the label "taxpayer." At the same time, we have a right to expect that the economy we help finance has incentives in place for our children to live secure, wholesome, meaningful lives. Because we live in a commercial society that regulates itself through information, raising the incentives means raising the standards on informational disclosure, which will have the effect of lowering the barriers to entry for anyone who demonstrates the ability to generate that which others value.

As a good faith gesture towards the re-establishment of the economy on a fairer footing, we ask the government to acknowledge that we are being made the lenders of last return in the attempt to restart a baking system that, as yet, we have no reason to trust. We deserve to know precisely how big our transfers of wealth are going to be. And then, we'd like reasons to believe we will never be asked again.

 

Originally published at the R&R Consulting website and reproduced here with the author's permission.

http://www.rgemonitor.com/financemarkets-monitor/256391/capital_not_toasters_dr_krugman

Artificial Intelligence to tackle rogue traders

http://ablogus.sunderland.ac.uk/2009/04/artificial_intelligence_to_tac.html Artificial Intelligence to tackle rogue traders

As the Credit Crunch continues to affect the worldwide markets the need for efficient methods to combat financial fraud has become more important than ever. Now researchers at the University of Sunderland are working on a smart computer that they believe will be able to detect insider trading fraud within the stock exchange almost instantly.

Angry citizens sharpen their pitchforks

April 12, 2009

As many as two hundred mostly mature and educated demonstrators yesterday flaunted witty, well-crafted signs of outrage against the Obama adminstration's bailout of banks, calling for failed banking institutions to be broken up, nationalized and regulated...    http://www.fogcityjournal.com/wordpress/2009/04/12/demonstrators-protest-obama-administrations-bailout-of-failed-institutions/

Washington's mayor, Adrian M. Fenty, has proposed a "streetlight user fee" of $4.25 a month, to be added to electric bills, that would cover the cost of operating and maintaining the city's streetlights. New York City recently expanded its anti-idling law to include anyone parked near a school who leaves the engine running for more than a minute. Doing that will cost you $100.

http://www.msnbc.msn.com/id/30162245/

The Upcoming Black Swan Of Black Swans

The Incredibly Shrinking Market Liquidity, Or The Upcoming Black Swan Of Black Swans

Posted by Tyler Durden at 3:40 PM

"Anyone who is doing anything sensible right now is either losing money or is out of the market entirely." These are the words of a quant trader, who is seeing something scary in the capital markets. ... http://zerohedge.blogspot.com/2009/04/incredibly-shrinking-market-liquidity.html

The big issue is of course the financial sector reform process. Some of my colleagues expressed great satisfaction with the progress made by the G20. But progressing down a blind alley is not something to be pleased about. I have yet to hear a single responsible official in any industrial country state what is obvious to most technocrats who are not currently officials: anything too big to fail is too big to exist. ...    http://baselinescenario.com/2009/04/09/what-next-for-banks/

But we're not at the beginning of the end. I'm not even sure we're at the end of the beginning. All of these pieces of upbeat news are connected by one fact: the flood of money the Fed has been releasing into the economy. Of course mortage rates are declining, mortgage orginations are surging, and people and companies are borrowing more. So much money is sloshing around the economy that its price is bound to drop. And cheap money is bound to induce some borrowing. The real question is whether this means an economic turnaround. The answer is it doesn't....    http://robertreich.blogspot.com/2009/04/why-were-not-at-beginning-of-end-and.html

The job ax is falling hard on men in general. For men over 20, the unemployment rate is 8.8 percent; for women, it is 7 percent. In the mid-1970s, by way of comparison, the figures were nearly opposite. In today's market, the sectors that are shedding employees—construction, manufacturing, industry—have a higher proportion of male workers, many of whom do not need advanced degrees for their jobs. These industries are being hit not simply by the current crisis but by the combined effects of technology and globalization....    http://www.newsweek.com/id/193585/output/print

Banks all pass stress test – everyone gets a star

Philosopher John Gray: 'We're not facing our problems. We've got Prozac politics'

The philosopher John Gray is riding high as one of the few thinkers to have predicted the current economic chaos. Here, he tells Deborah Orr how we got into this mess – and how we might get out of it ....    http://www.independent.co.uk/news/world/politics/philosopher-john-gray-were-not-facing-our-problems-weve-got-prozac-politics-1666033.html

The empire's facilitator

Beneath his seemingly boundless charisma and charm, Barack Obama has always been an utterly ruthless politician. He has been a compromiser who has danced with the darkest forces of political and criminal power, while winning over common people; a consensus-abiding chameleon and a "pragmatist." Obama is the true model of what George W. Bush only claimed to be: "a uniter, not a divider."

The signs were clear from the early days of the presidential contest that Obama was, like every presidential candidate, a handpicked puppet... (bow)    http://onlinejournal.com/artman/publish/printer_4578.shtml

Big banks have reportedly passed the "stress tests." But the Treasury doesn't want them to talk about the results in their forthcoming earnings report. Will they keep their mouths shuts—and can regulators force them?.....    http://www.businessweek.com/investing/wall_street_news_blog/archives/2009/04/the_governments.html?chan=top+news_top+news+index+-+temp_news+%2B+analysis

Criticism continues to grow about the Geithner Plan, which is just a refurbished version of the original Paulson Plan. The consequences of this plan's failure — operational or political — could be severe. ...    http://www.rgemonitor.com/financemarkets-monitor/256360/the_best_way_to_rob_us_is_to_own_a_bank

This is a microcosm of what the Public-Private Investment Program (PPIP) is intended to do: create an incentive for investors to pay $90 for a bet that is only worth $50. It is bad economics and bad public policy and it is probably fraudulent. Congress should act pre-emptively to halt Treasury Secretary Tim Geithner's latest scheme..... http://www.marketoracle.co.uk/Article9974.html

The 20th century is well behind us, but we have not yet learned to live in the 21st, or at least to think in a way that fits it. That should not be as difficult as it seems, because the basic idea that dominated economics and politics in the last century has patently disappeared down the plughole of history. This was the....    http://www.guardian.co.uk/commentisfree/2009/apr/10/financial-crisis-capitalism-socialism-alternatives/print

Fed QE analysis by mainstreamers

Earlier, during the downturn in the equities market between December 1999 and September 2002, approximately $10 trillion of equity was erased. But a measure of financial system performance, the Keefe, Bruyette, & Woods BKX index of financial firms, fell less than 6% during that period. In the current downturn, the value of residential real estate has fallen by approximately $3 trillion, but the BKX index has now fallen 75% from its peak of January 2007. The financial sector has been devastated in this crisis, whereas it was almost completely unaffected by the downturn in the equities market early in this decade.

How can one crash that wipes out $10 trillion in assets cause no damage to the financial system and another that causes $3 trillion in losses devastate the financial system?

http://online.wsj.com/article/SB123897612802791281.html?mod=googlenews_wsj

The Fed has already started this process by starting to purchase $300 billion of Treasury Notes. This has pissed off China. They see the endgame.

Resistance is Futile.    http://seekingalpha.com/article/129529-the-economic-end-game-nuke-the-debt

THE MARGINAL PRODUCTIVITY OF DEBT

Why Obama's Stimulus Package Is Doomed to Failure

by Antal E. Fekete,

Professor of Money and Banking

San Francisco School of Economics

March 30, 2009    http://www.financialsense.com/editorials/fekete/2009/0330.html

The year 2006 was the watershed. Late in that year the marginal productivity of debt dropped to zero and went negative for the first time ever, switching on the red alert sign to warn of an imminent economic catastrophe. Indeed, in February, 2007, the risk of debt default as measured by the skyrocketing cost of CDS (credit default swaps) exploded and, as the saying goes, the rest is history.    http://www.marketoracle.co.uk/Article9753.html

The Radicalization of Ben Bernanke

He is throwing trillions of dollars at the financial crisis. What happens if his gambles don't pay off?    http://www.washingtonpost.com/wp-dyn/content/article/2009/04/02/AR2009040202573_pf.html

Hedge Fund landscape changes, risk controls, managed accounts spike up

http://www.ft.com/cms/s/0/f075ecf0-17d8-11de-8c9d-0000779fd2ac.html?nclick_check=1

Fears of record hedge fund withdrawals

By James Mackintosh in London

Published: March 23 2009 23:32 | Last updated: March 23 2009 23:32

Hedge fund investors believe the industry will see even bigger withdrawals this year than last, when record levels of cash were pulled from the sector.

A survey of investors by Deutsche Bank found a third expect more than $200bn to be withdrawn, after a net $155bn was taken out last year, according to calculations by Chicago consultancy Hedge Fund Research.

Only a quarter of investors expect net inflows into the industry, and 82 per cent of the 1,000 surveyed said redemptions were the biggest issue hedge fund managers face.

Deutsche found that most investors expected more than a fifth of hedge funds to go out of business this year, following a record year for closures last year, when performance was its worst on record.

However, Sean Capstick, head of capital introductions at Deutsche's prime brokerage, said the big managers were likely to survive as they could afford the expensive systems and controls investors increasingly demand.

"The industry is really moving away from being a cottage industry to being an institutional industry," he said.

The survey, which covered investors with $1,100bn invested in alternative assets, found they were increasingly demanding better transparency and rating risk management as more important than a manager's pedigree for the first time.

"People want to know where their money is and what it is invested in," Mr Capstick said.

As part of this trend managed accounts, where investors have their own account run by a manager, rather than putting money into a fund, are expected to grow sharply. Several big managers who have historically rejected managed accounts have recently begun accepting them.

Trading in second-hand hedge funds is also expected to grow sharply, as blocks on withdrawals by many funds force investors in need of cash to sell to others at a discount.

There were few bright spots in the survey, but an expected reduction in the cash held from $294bn to $212bn raised the prospect of some new investment in funds.

Those specialising in global macro (investing in interest rates, markets and currencies), distressed companies, long/short credit trading and convertible bond arbitrage were listed as most popular with investors. But more than 40 per cent of those surveyed planned to reduce their exposure to merger arbitrage and event-driven funds.

China calls for new reserve currency

China's central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People's Bank of China's website, Zhou Xiaochuan, the central bank's governor, said the goal would be to create a reserve currency "that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies".

http://www.ft.com/cms/s/0/7851925a-17a2-11de-8c9d-0000779fd2ac.html

99% of S&P stocks positive on $1 Trillion USD plan

http://www.bloomberg.com/apps/news?pid=20601087&sid=av3Y_L6a1pZI&refer=home
Global Stocks Advance, S&P 500 Rallies Most in Five Months

http://mpettis.com/2009/03/did-china-experiencing-january-hot-money-outflows/
The market (or at least that part of the market that obsesses over balance of payment flows) has been swept with rumors today that foreign exchange reserves were down in January by $30 billion. My experience with these sorts of rumors is that they tend to be fairly accurate, and I suspect they will soon be confirmed.

If true, what does this imply about hot money flows? The PBoC's accounts have been more opaque than ever and it is extremely difficult to figure out what is really happening, but let me give try at least to bracket the range of outcomes.

 

http://flowingdata.com/2009/03/13/27-visualizations-and-infographics-to-understand-the-financial-crisis/ Crisis in visualization

Oversight, regulation, punitive taxes

WASHINGTON: The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said. http://www.iht.com/articles/2009/03/22/america/22regulate.php

Obama will call for increased oversight of 'executive pay at all banks, Wall Street firms and possibly other companies'...

Orlando 'Tea Party' rally draws thousands...

CITI, BANK OF AMERICA, JPMORGAN Chiefs Criticize Limits on Bonuses...

Alarm over US moves for punitive taxes...

Legislation Likely to Be Upheld in Court...

Ponzimonium and the end of banking as we know it

Collapsing markets expose 'Ponzimonium' of scam artists http://www.guardian.co.uk/business/2009/mar/20/ponzi-schemes-ponzimonium-bart-chilton

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5947159.ece

Threat of 100% bonus tax raises fears for future of US banks

Zimbabwe ditches USD for RAND

http://www.marketskeptics.com/2009/03/zimbabwe-ditches-us-dollar-in-favor-of.html
Zimbabwe chooses rand as reference currency

http://www.mg.co.za/article/2009-03-21-zims-blueprint-for-recovery
Zimbabwe has unveiled an ambitious US$5-billion short-term economic recovery plan, which President Robert Mugabe was expected to announce on Thursday, laying out for the first time the coalition's plan to reverse years of economic turmoil under his rule.

Fed to Buy $300 Billion of Longer-Term Treasuries

Fed to Buy $300 Billion of Longer-Term Treasuries (Update2)

By Craig Torres

March 18 (Bloomberg) -- The Federal Reserve plans to buy $300 billion in Treasury securities and acquire more mortgage and agency debt in an effort to bolster housing and hasten the end of the recession.

"To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve's balance sheet further by purchasing up to an additional $750 billion of agency mortgage- backed securities," the Federal Open Market Committee said after a unanimous vote in Washington today. "Moreover, to help improve conditions in private credit markets, the committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months."

Chairman Ben S. Bernanke is opening a new front in monetary policy after unemployment climbed to 8.1 percent and economists forecast the economy will shrink through the middle of the year. Fed officials also kept the benchmark interest rate at between zero and 0.25 percent and said it will consider expanding the Term Asset-Backed Securities Loan Facility to include "other financial assets," the statement said.

"We are not even close to the bottom and therefore the Fed is engaging in a massive quantitative easing," William Poole, former president of the St. Louis Fed, said in an interview today with Bloomberg News. "We still have a very serious recession in front of us," said Poole, now a senior economic adviser to Merk Investments LLC in Palo Alto, California, and contributor to Bloomberg News.

Historic Rally

Treasuries surged, sending benchmark 10-year note yields down to 2.50 percent from 3.01 percent late yesterday, the biggest decline since 1962. The Standard & Poor's 500 Stock Index jumped 2.9 percent to 800.66 at 2:54 p.m. in New York.

Bernanke is trying to prevent the credit contraction from deepening what already may be the worst recession in 60 years. The U.S. jobless rate jumped to the highest level in more than a quarter century last month. Industrial production fell 1.4 percent, the fourth consecutive decline, while factory capacity in use slumped to 70.9 percent, matching the lowest level on record.

"Information received since the Federal Open Market Committee met in January indicates that the economy continues to contract," the FOMC said in the statement. "The committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth."

Global Contraction

The global economy will contract this year for the first time since World War II, the World Bank predicts, forcing central banks to keep pumping money into their economies when conventional interest rates are at, or close to, zero. The Bank of England is buying government bonds and corporate debt, the Bank of Japan is snapping up government notes and making subordinated loans to banks, and the Swiss National Bank is intervening to weaken the franc.

The Fed has cut the benchmark rate from 5.25 percent, beginning in September 2007, as credit froze and the economy buckled. Policy makers are now focused on how to further channel money to the economy. The Fed has already committed to buying $600 billion of mortgage-backed securities and bonds sold by government-sponsored housing agencies.

Home-Loan Rates

The Fed's actions pushed the average rate on a U.S. 30-year fixed rate mortgage to 5.03 percent on March 12, down from 5.15 percent the previous week. Still, rates are high relative to benchmark Treasury issues: Prior to today's meeting, the difference between rates on 30-year fixed mortgages and 10-year Treasuries is 2.1 percentage points, Bloomberg data show. That's up from an average of 1.75 percentage points in the decade before the subprime mortgage market collapsed.

Through emergency loans and liquidity backstops, U.S. central bankers have expanded Fed credit to the economy by an unprecedented $1 trillion over the past year. At the same time, forecasters at Macroeconomic Advisers LLC in St. Louis predict a 5.2 percent decline in first-quarter gross domestic product, following a 6.2 percent drop in the fourth quarter.

'Choked Off'

"It is the worst credit crunch since the Great Depression," Laurence Meyer, a former Fed governor and vice chairman of Macroeconomic Advisers, said before the decision. "The banking system is reeling, credit is being choked off, it is dramatic in size."

Banks worldwide have posted $1.2 trillion in write downs and credit losses on mortgage loans and other assets. U.S. Treasury officials will put the largest 19 banks through "stress tests" and decide whether they need more capital. The banks can raise equity privately or seek more government funds. Officials are also looking at ways to remove bad assets.

Bernanke, 55, told CBS Corp.'s "60 Minutes" on March 15 that he sees "green shoots" in some financial markets, and that the pace of economic decline "will begin to moderate."

The Standard and Poor's 500 index is up 11.5 percent this month. Chief executive officers from Bank of America Corp., JPMorgan Chase & Co., and Citigroup Inc. said their banks made money in the first two months of the year.

Coca-Cola Co., health insurer WellPoint Inc. and more than 30 other companies are tapping longer-term credit markets and paying down their short-term IOUs, a sign of some investor confidence.

Retail Sales

Sales at U.S. retailers in February fell less than forecast and a gain in January exceeded the previous estimate, indicating the biggest part of the economy may be starting to stabilize.

Housing starts in the U.S. unexpectedly snapped the longest streak of declines in 18 years in February, adding to the series of data that suggest the pace of the economy's decline may be easing.

Consumer prices rose 0.4 percent in February from a month earlier, the Commerce Department reported today. The annual core inflation rate increased to 1.8 percent, within the range most Fed officials say is their objective, easing concern about a deflationary spiral.

"There are always going to be some signs of revival; this is a resilient country," said Julian Mann, who helps manage $4 billion in bonds at First Pacific Advisors LLC in Los Angeles. "But consumers are fearful, and when they are fearful they aren't going to spend."

To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net.

Last Updated: March 18, 2009 14:59 EDT