Monthly Archives: October 2008

Bankruptcies and Plant Closings Rising in China

We featured reports earlier this year on plant closings in China, and the suffering in manufacturing areas is becoming more acute as the global downturn cuts into Chinese exports. Reader Michael sent us this report on China’s toymakers, but it also stresses that China may be more vulnerable to a global financial shock than advanced […]

Read more...

A Page From Japan’s Playbook? Bernanke Proposes "Floor" Under MBS Market

One of the widely criticized features of Japan’s approach to its post-bubble crisis was that its regulators tried for some time to avoid the recognition of bank losses. In a deflationary environment, it was not clear how this would lead to a better ending, since with a flagging economy and no inflation to reduce the […]

Read more...

Links 10/31/08

Polar warming ’caused by humans’ BBC Calif. to cut water deliveries to cities, farms AP Drinking alcohol occasionally when pregnant ‘does no harm’ Times Online. Euro wines carry dangerous amounts of heavy metals Wine Economics Sherlock of rock Dalhousie University News Blame the party, not the campaign James Carville, Financial Times. Comes perilously close to […]

Read more...

Mirabile Dictu! Wall Street May Start to Rein in Compensation

Hauling executives from the private sector before Congress and lambasting them about pay has had zero impact on top level compensation. However, now that the banking industry is a ward of the state and the Democrats might not just win the Presidency but also could get a filibuster-proof majority in the Senate, the banking industry […]

Read more...

New Mortgage Recue Proposal to Kick Can Down the Road a Few Years

Before we debate the merits (more accurately, the lack thereof) of the latest trial balloon of a plan being floated to rescue overextended mortgage borrowers, we need to consider a few not sufficiently discussed facts: 1. The problem is that banks are not making loan modifications as they did in the past. That is turn […]

Read more...

SF Fed’s Yellen Troubled by Economic Data, Pushes Mortgage Aid

San Francisco Fed president Janet Yellen is concerned about recent economic data and recommends more action to save homeowners from foreclosure. From Bloomberg (hat tip reader Dwight): Federal Reserve Bank of San Francisco President Janet Yellen said recent data on the U.S. economy is “deeply worrisome” and the government should consider new ways to help […]

Read more...

Links 10/30/08

Sabretooth tigers hunted in packs BBC Harvard’s Charlie Neeson raises Constitutional questions in RIAA litigation ZDNet Disgruntled call centre worker ‘froze customer’s bank account in revenge prank’ Telegraph I have had my victories. Just not tonight … Christopher Buckley, Financial Times ‘We’re not going to win this war’ Asia Times A.I.G. Has Used Billions From […]

Read more...

Cuomo Prepares to Embarrass Banks Over Top Level Pay

Banks have proven to be remarkably immune to condemnation over senior level pay. CEOs and top level producers seem to have an undimmed sense of entitlement, even though the nine banks receiving the first Treasury handouts equity purchases earned a collective $305 billion from 2004 to mid 2007, followed by $323 billion in writedowns. But […]

Read more...

"Fears mount in Japan over complex yen products"

This Times Online story is frustratingly vague about the exact nature of these complicated and risky foreign exchange products sold to Japanese retail investors. While the size of the problem ($90 billion) may seem not all that bad in comparison, say, to subprime exposures, recall that these trades are likely to be unwound in a […]

Read more...

Is the "Commodities as Anti-Dollar" Trade Back?

Commodities had a nice day Wednesday, with oil in particular spiking up. Although the trigger appeared to be the Fed rate cut, one has to wonder at the seemingly disproportionate price reaction, particularly given deteriorating fundamentals and hence falling demand. One reason for the sudden enthusiasm for commodities is that, as in the frenzied days […]

Read more...

JP Morgan Under Criminal Investigation for Jefferson County, Other Swaps

The agonies of Jefferson County, Alabama, which got itself into a too-clever-by-half funding arrangement that put the county on the verge of bankruptcy, have faded from the public eye. However, the type of transaction that caused so much woe, a swaption to supposedly lower financing costs, has been the subject of SEC and Justice Department […]

Read more...

Fed Establishes New IMF Facility. Dollar Swap Lines with Brazil, South Korea, Mexico, and Singapore

As Senator Everett Dirksen famously said, “A billion here, a billion there, and pretty soon you are talking real money.” Today, the Fed provided Brazil, South Korea, Mexico, and Singapore with dollar swap lines of $30 billion each (hat tip readers Robertm, Dwight). From the Fed’s press release: Today, the Federal Reserve, the Banco Central […]

Read more...