Following Meredith Whitney

Feb. 19, 2009: Awesome Awesome: Ms. Whitney's New Company

Meredith's life passion is two-fold: 1)She loves to do research, and 2)She wants to use her knowledge of economics to help guide America (and the world) out of our current financial tsunami and back to calmer waters.

And she's reached a point where she can fulfill these dreams.

Whitney announced to Fortune Magazine's Katie Benner that she will be leaving Oppenheimer & Co. to start her own firm, Meredith Whitney Advisory Group LLC. (http://www.meredithwhitneyllc.com/index.htm)

And with no outside financing! Whitney is financing this venture herself because she wants to be completely free to say and do what her research and knowledge dictate - not what an investor might want to hear.

This most 21st century woman is also reaching back to more literary days, as she hosts salons. Yes, salons! She invites people to come to her home to exchange ideas.

"The time was right," Ms. Whitney says, adding that she is fortunate to be able to "help find solutions to this madness."

Feb. 4, 2009: America's Banks Are Still in Turmoil

Are you tempted to buy bank stocks because of their incredibly low prices? Ms. Whitney said on Bloomberg television that the American banking industry is still in the process of re-structuring and recovering. "Investors should not even consider owning banks [stock] at this point...".

Jan. 22, 2009: We Need to Treat the Taxpayer With More Respect

As Citi assets keep falling, there is talk "on the street" of possible nationalization of that group. Meredith was interviewed live on CNBC today by Maria Bartiromo, and she said she "hopes Citi will not be nationalized" because that will create more burden for the American taxpayer.

Jan. 22, 2009: No "Bottom" in Sight

"...it appears as if US banks are setting out to make some of the same mistakes of the past 18 months all over again," Ms. Whitney wrote in an editorial column in the Financial Times .*

* Source: Reuters

Jan. 19, 2009: Citigroup Is Still Dragging Us Down

The future of Citi, traded on the New York Stock Exchange with the symbol C , continues to worsen. Since Citi is one of the major U.S. financial groups, its future will have an impact on our economy, and analysts are watching it carefully.

Meredith Whitney was the first financial professional to blow the whistle on Citi - that was back on Oct. 31, 2007. Ms. Whitney says even now, that their credit continues to deteriorate.

"Citigroup's core problem is that it simply doesn't make money in any of its businesses except Smith Barney, which it is in the process of selling," Whitney wrote.*

What does this mean for us? Citi continues to be a huge factor in dragging down the economy as a whole.

Source: StreetInsider.com

Jan. 7, 2009: U.S. Banks Are Still in Trouble

According to Ms. Whitney's so-far impeccable analysis, top banks that recently received government rescue money (TARP funds, or Troubled Asset Relief Program funds) are still financially stressed. According to a report in Reuters, Whitney believes that the TARP funds have turned out to be a small drop in the bucket, compared to what the banks will ultimately need to become healthy. The major cause of this continued money drain? According to Jim Kim of FierceFinance.com, "The issues are rising loan loss reserves...".
(If you're planning to purchase a home, check out our page on financial self-defense strategies.)

December 23, 2008: A Downshift in Consumer Spending Creates a New Financial Era

According to TheGuruInvestor.com, Ms. Whitney said, "We believe we are now entering a new era in the financial landscape that will be characterized by expanded forced consumer deleveraging, with a pronounced downshift in consumer spending."

December 19, 2008: More Rule Changes on Credit Cards

The lowering of credit card limits means that consumer liquidity may decline as much as 45-percent during this "crunch" time.

But now, in addition, some consumers - regardless of credit history - are getting their credit cards cancelled, and others are getting their interest rates hiked. "Pulling credit at a time when job losses are increasing by over 50 percent year on year in most key states is a dangerous and unprecedented combination," Ms. Whitney said.*

(Click to our article on financial self-defense strategies.)

* Source: Reuters

December 12, 2008: Predictions for 2009

Fortune Magazine  just ran an article called 8 Really Really Scary Predictions*, in which Ms. Whitney said that most people are not aware of just how much impact the lack of consumer spending will have on the overall economy.

The good news: Banks will start to do better toward the end of 2009, and some new, smaller banks will be created, even as the big banks continue to consolidate.

"If 2008 was characterized by the market impacting the economy," Whitney says, "then 2009 will be about the economy impacting the market. It's already started." What does that mean? It means the economy in general will get worse in 2009 - and that, in turn, will affect the stock market.

*Source: Money.CNN.com

December 11, 2008: The housing market has not yet hit bottom.

What does this mean? It means that housing prices may still fall another 20 to 35%.* This is on average - some areas in the U.S. have a more critical problem than others.

*Source: MarketJEDI at Traders Perspective

December 8, 2008: Our credit card limits may be lowered.

Meredith Whitney said last week that she expects to see the credit card companies cutting back substantially on individuals' lines of credit. That means that you or I may get notice at some point, that the credit limits on our cards have been lowered.

Second to jobs, many Americans depend on their personal and business credit cards to make ends meet. So what Whitney is saying is, we need to start being very careful with our spending. Re-think our spending habits, and avoid impulse purchases, which are so easy to make when credit cards are in our handbags.

Credit to consumers through home equity loans may also be cut back in the months to come.

Source: Dollars & Sense (http://www.dollarsandsense.org/blog/2008/12/meredith-whitney-2-trn-credit-lines-to.html)