“If gold is ‘past its day’, what of toxic derivatives and today’s deluge of US Treasury bonds…?” Just like poor Pip Dickens’ Great Expectations, central banks keep inheriting unwelcome bequests.

Today’s “legacy assets” are toxic derivatives; a decade ago it was gold reserves. Both are proving hard to shrug off, but for very different reasons. Both legacies also come thanks to previous central-bank history; the fossils remain only too livid today.

And 10 years from now, if not sooner, just how welcome will the current central bank must-have become – freshly printed government debt, bought with money that doesn’t exist until the central bank wills it?

Seeking first to defend against inflation and war, the West’s central banks built up huge reserves of the ultimate hard money –gold bullion– during the early-to-mid 20th century. Long before the turn of the millennium, however, these hoards grew to look quaint and expensive. Unyielding and relatively

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While we remain negative over all, we would note our outlook has begun to improve a bit around the edges given the comparatively limited downside potential remaining for certain entities.

The financial markets and financial stocks in particular have experienced a significant percentage-point lift following the pending modification to the mark-to-market accounting rules (an artificial adjustment to capital) and the announcement for the Public Private Investment Partnership (PPIP) -- though we would point out that there is nothing of note to what was proposed approximately two months ago, we will soon find out if the issues with the securities in question were based on the buyers or sellers being out of whack, or a question of valuation or solvency.

Since the Troubled-Asset Relief Program (TARP) is effectively out of money -- more than $665 billion out of $700 billion has already been used -- we would currently expect nearly $2.0 trillion needed

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Highlighted stocks include Huntington Bancshares Inc. (HBAN), MGIC Investment Corporation (MTG) and MBIA Inc. (MBI). While we remain negative over all, we would note our outlook has begun to improve a bit around the edges given the comparatively limited downside potential remaining for certain entities.The financial markets and financial stocks in particular have experienced a significant percentage-point lift following the pending modification to the mark-to-market accounting rules (an artificial adjustment to capital) and the announcement for the Public Private Investment Partnership (PPIP) -- though we would point out that there is nothing of note to what was proposed approximately two months ago, we will soon find out if the issues with the securities in question were based on the buyers or sellers being out of whack, or a question of valuation or solvency.Since the Troubled-Asset Relief Program (TARP) is effectively ...