Monthly Archives: November 2007

Florida Scrambling to Pay Teachers Due to Fund Freeze

The debacle in Florida, namely a $27 billion short-tern investment fund being frozen after the revelation it held $700 million of defaulted debt (today reported as $900 million) led to $12 billion in withdrawals, is producing a cash crisis at the government entities that hadn’t gotten their money back. Aside from the troubles this impairment […]

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Latest Central Bank Actions Fail to Calm Money Markets

Bloomberg reports that despite the latest balm to the credit markets, that of offers of emergency funds that would tide banks over the typical end-of-year reduction in liquidity, Libor has nevertheless increased to the highest level since 2001. The problem, of course, is the the reason funding is tight is that banks are worried about […]

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Counterparty Risk Problems With Credit Default Swaps?

I am sticking my neck out a bit on this post, since the credit default swaps market doesn’t garner much coverage, so any readers who are involved in this busines are encouraged to comment. Yes, there are frequent references to what changes in CDS prices mean about the credit-worthiness of particularly names, but there is […]

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Paulson Promoting Rescue Program for Subprimes

Do we see a pattern here? The much-covered, little-loved SIV rescue program (formally known as the Master Liquidity Enhancement Conduit and informally called the Entity or Super SIV) was announced prematurely, didn’t clearly solve the problem it was meant to address, involved a lot of failing around to try to resolve irreconcilable interests (those of […]

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On Fictitious Government Statistics (4.9% GDP Growth Edition)

Today’s GDP release showed third quarter growth at 4.9%. That number was such a howler that it promptly elicited the contempt it deserved. From Barry Ritholtz, in “GDP=4.9% (also, I have a bridge for sale in Brooklyn)“ This 4.9% number is one of the more “fanciful” government releases you will see in your lifetime, (outside […]

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Florida Halts Withdrawals From Investment Pool

Yesterday, Bloomberg reported that a state-run investment fund in Florida witnessed $8 billion of redemptions out of a total fund size of $27 billion because its investors learned the fund held $700 million of defaulted paper. The fund froze the remaining fund assets today. Apparently withdrawals continued yesterday after the Bloomberg story was released, since […]

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Commercial Credit Dropping at Fastest Rate Since 1973

The New York Times is having a good week. Today, in “Lenders’ Belt-Tightening Stifles Growth in Economy,” Peter Goodman examines the recent sharp fall in credit extension to commercial enterprises, particularly small businesses. It’s a solid piece of reporting, and reading it, one wonders why the Federal Reserve’s Vice Chairman Donald Kohn didn’t allude to […]

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"Is the sky falling on both Wall Street and Main Street?"

In the interest of (occasionally) balanced reporting, I thought to include this post from Willem Buiter, currently a Professor of European Political Economy at the London School of Economics, blogging at the Financial Times, on whether the credit crunch will damage the real economy. This piece makes for an interesting contrast to the New York […]

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Some Good News for White Collar Workers (Offshoring Edition)

Offhshoring, the practice of companies sending work overseas (whether to their own operations located in other countries or to foreign outsourcing companies) has become the new worry of the white collar class. The business media regularly reports on software development, legal research, and Wall Street grunt work being sent to India. And it seems that […]

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Links!

I normally don’t do links (not that I don’t see way way more good stuff than I can possibly use, I just never seem to have the time to tag and organize them) but a few tonight were choice: Did I Just See a Dead Cat Bounce? Information Arbitrage FDIC: Provisions for Loan Losses Failing […]

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Florida Fund Suffers $8 Billion Withdrawals Due to Defaulted Debt

Public funds often make for great stuffees, as this story from Bloomberg (hat tip Ann Beaulieu) recounts. In brief: the Florida State Board of Administration runs roughly $42 billion of short-term investments on behalf of various government entities, including a “short term investment pool” of roughly $27 billion, as well as the state’s $137 billion […]

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"The Commercial Real Estate Market is Imploding"

The rating agency Fitch for some time has warned of lax lending practices in the commercial real estate market. Bloomberg reports today that prices of derivatives protecting investors against default of the highest-rated commercial real estate securities have appreciated sharply in the last month, signaling the expectation of defaults ” rising to the highest level […]

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