Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.

A few days ago I wrote that I was hopelessly confused about what was going on with the economy.  Here’s Exhibit A: I thought it was a fantasy to expect banks to raise lots of private capital after the stress tests were completed, but apparently I was wildly, spectacularly wrong:

J.P. Morgan Chase & Co., Morgan Stanley, American Express Co. and regional bank KeyCorp said Tuesday they sold a combined $8.7 billion in common stock. That pushed the total value of shares sold by the 19 financial firms that were stress-tested by the government to at least $65 billion since the results were announced May 7.

Nonguaranteed debt sales and the conversion of preferred shares to common stock have generated roughly another $20 billion, for a total of $85 billion or more, giving most of the banks considerably more capital than U.S. regulators have required them to amass as they ride out the recession. Money is pouring in so fast that surprised bankers can hardly believe it, especially since most investors didn’t want to go near financial stocks just three months ago, even though they were nearly 40% cheaper.

“It’s easy to raise capital now,” one executive at a bank that recently raised capital through a public stock offering said Tuesday. Investors are “happy to gobble it up.”

I dunno.  I continue to think that there are a lot of trouble signs for the economy, with further shocks still to come.  If I had to pick the most likely one, I’d say Eastern Europe, but really, there are a dozen candidates.  Overall, I’m with the unnamed “executive at a New York bank” who thinks investors are chasing after any tidbit of good news even though the financial system remains fragile.  “A bucket of cold water will be thrown in people’s faces,” he says.

Still, there sure are a lot of people who disagree and are willing to put their money where their mouths are.  I hope they’re right but I fear they’re wrong.  There are just too many imbalances left in the global economy, too many writedowns yet to come, and no obvious place for sustained consumer demand to come from.  Caveat emptor.

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

payment methods

We've never been very good at being conservative.

And usually, that serves us well in doing the ambitious, hard-hitting journalism that you turn to Mother Jones for. But it also means we can't afford to come up short when it comes to scratching together the funds it takes to keep our team firing on all cylinders, and the truth is, we finished our budgeting cycle on June 30 about $100,000 short of our online goal.

This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate