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Links and Quick Takes 9/29/08

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Private equity boss kills himself Times Online

Analyzing The Bailout: What’s In It, Anyway? Clusterstock. A good, pointed summary.

The NYT Wants the Government to Support the Price of Pets.com Dean Baker.

Lehman’s Demise Triggered Cash Crunch Around Globe Wall Street Journal. A weird piece. It focuses mostly on the history of Lehman’s unraveling, and has some errors (for instance, it assumes that setting up a credit default swaps exchange would have led to better knowledge of Lehman exposures. Not true. Only newly-written CDS could be exchange-traded; the ones outstanding, for a host of reasons, can’t be). But it does reveal the government completely ignored the impact of a Lehman bankruptcy on the commercial paper market (BTW, you can find this story via Google News)

AIG looks to sell 15 units to secure position Financial Times

And now the Great Depression Barry Eichengreen, VoxEU. Says unemployment could reach double digit levels.

The 3 A.M. Call Paul Krugman

JPMorgan Re Interest on Reserves John Jansen

A bad day for Benelux banking – a great day for Europe Willem Buiter, This is even more important than Buiter makes it out to be. An assumption was that the ECB would be unable to address a major bank failure, and that would make the euro a non-starter as a reserve currency. Although the ECB was not the vehicle for addressing the crisis, it played an important coordinating role and more important, the EU has passed a crucial test. Another nail in the dollar’s coffin.

It is (almost) official: the quiet bailout is roughly equal in size to the US current account deficit Brad Setser

Treasury Would Emerge With Vast New Power New York Times. Key section:

Rarely if ever has one man had such broad authority to spend government money as he sees fit, with no rules requiring him to seek out the lowest possible price for assets being purchased.

And that one man could be Phil Gramm…..

Cheery thought of the day:

Stephen Roach, chairman of Morgan Stanley Asia, said: “The asset bubble binge is over and that means a multi-year adjustment for the US economy as the excesses are unwound. The US will have its version of Japan’s lost decade.”

Antidote du jour:

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7 comments

  1. Lee

    You’re (not your, you illiterate) just think you’re (there it is again) anonymous but, really, you know who you are.

  2. dearieme

    “The US will have its version of Japan’s lost decade”: that’s the upside. If President Obama makes as many mistakes as FDR did, the downside is a lot worse. (But he does give the impression of being made of better stuff.)

  3. doc holiday

    This is obviously a metaphor that alludes to MacBeth:

    SCENE I. An open place.
    [Thunder and lightning. Enter three Witches.]
    FIRST WITCH (Bush).
    When shall we three meet again
    In thunder, lightning, or in rain?
    SECOND WITCH (Paulson).
    When the hurlyburly’s done,
    When the battle’s lost and won.
    THIRD WITCH (Bernanke).
    That will be ere the set of sun.
    FIRST WITCH.
    Where the place?
    SECOND WITCH.
    Upon the heath.
    THIRD WITCH.
    There to meet with Macbeth.
    FIRST WITCH.
    I come, Graymalkin!
    SECOND WITCH.
    Paddock calls.
    THIRD WITCH.
    Anon.
    ALL
    Fair is foul, and foul is fair:
    Hover through the fog and filthy air.
    [Witches vanish.]

    http://en.wikisource.org/wiki/The_Tragedy_of_Macbeth/Act_I

  4. bondinvestor

    yves,

    i thought the most interesting thing about the WSJ recap of the cash crunch LEH created is the fact that ‘someone in the Sep 12 meeting at the NY Fed’ said in print that Geithner was against allowing Lehman to fail.

    now, also observe that over the weekend an article appeared in which former AIG employees said that they were a $20B counterparty to GS. this article, in my opinion, was intended to sow the seeds of doubt among the washington cognescenti about the integrity of paulson/treasury’s approach to the crisis.

    it appears to me that some of the principle actors in this drama are beginning to distance themselves from the decisions that have been made on the proper course of action to date.

    that suggests to me that insiders think things are going to get much worse.

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