Links 5/16/08

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Global food prices fall in April BBC. A robin does not make a spring; this is the first decline in 15 months. But any reversion is good news.

Taking your laptop into the US? Be sure to hide all your data first Guardian

Recession Proof: Not Tax Preparation Services Bill Conerly

Merrill Lynch, Morgan Stanley Issue Recession Warnings Boom2Bust. The quotes are juicy: “I still maintain the business cycle is bigger than the government….No asset class security is priced today for a recession scenario.”

Paint Lipstick on this Pig Russ Winter. Freddie’s Level 3 assets are now 23% of its balance sheet… me.

US-Saudi oil axis faces day of truth Telegraph

The devastating earthquake is also bad for monetary policy Michael Pettis

Antidote du jour:

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  1. Anonymous

    That is the cutest picture I have seen in some time. Where do you get these pictures? Thanks.

  2. Richard Kline

    No cynicism survives contact with that image; it’s a keeper fer sure.

    ” . . . [N]o asset class security is priced for a recession.” Amen to that: the falling body of our economy is hung up on a ledge ‘s all. I look at equities _rising_ into a recession with huge unrealized losses coming in-channel, and while I know this is a bear market run, the folly of it all makes the blood rush from the brain.

  3. Anonymous

    In the “lipstick on a pig” article they mention “Freddie Mac increased its Level 3 assets under FAS 157 to $156.7 billion, or 23 percent of its assets, from $31.9 billion as of December.”

    What’s a level 3 asset? Heck, what are levels 1 and 2? Is one “cash and cash equivalent”? Where do I find these fishy level 3 things on a balance sheet?

    And, Yes, the giraffe is very adorable.

  4. Yves Smith

    The giraffe came from a PowerPoint of very good nature pix that a friend e-mailed me. Readers also send me some very nice shots (some have been their own, but mainly ones found on the Web).

    Re Level 1, 2, 3. Level One assets trade in active markets so you just need to get a price. Think stocks, currencies, Treasuries, commodities as examples. Level 2 don’t trade actively but can be priced readily in relationship to assets that trade actively. Corporate bonds are like that. Issues are specific (a GM bond that matures in ’12 is different than the issue that matures in, say, ’15). but they can be priced reliably based on parameters (coupon, maturity, duration, rating, etc).

    Level 3 is priced without reference to observable inputs, or a rather distance relationship to them. It is called “mark to model” or less charitably, “mark to make believe”.

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