Experts hack power grid in no time NetworkWorld Britain could be hardest hit by financial crisis,says IMF Telegraph US mortgages action given backing Financial Times. Perhaps I should be taking this more seriously (and providing more commentary), but given the Bush Administration’s disapproval, I am not convinced this will get done before the election. Plus […]
Read more...As Bloomberg reports. Goldman lost money on more trading days in the first quarter than Lehman or Morgan Stanley, although its winning days outnumbered its losers by more than four times. Thus, the fact that Goldman outdid its rivals on this peculiar metric is a sign of undue caution on the part of its competitors, […]
Read more...John Plender in the Financial Times offers a hit list of what he views as the obvious priorities for financial services reform and assesses the odds of them being implemented. It’s a useful exercise, but also a sobering reminder of how difficult it is to effect change in an industry that has proven to be […]
Read more...Thomas Lee, one of the greybeards of the private equity business, predicted the absence of very large acquisitions for at the next year due to the deep freeze in the securtization market. The top tier of deals depended on funding via collateralized loan obligations, which Lee does not see returning any time soon. From MarketWatch: […]
Read more...Reader William Kidder, who has been in the interest rates business since 1966 and managed a recognized government bond dealer in the 1970’s (some regard him as the father of the matched book) offered a proposal on how to clean up some of the problematic practices that have led to our credit crunch. Kidder admits […]
Read more...Whenever Greg Ip, the Wall Street Journal reporter whose beat includes the Fed, writes a piece about the central bank, one has to wonder whether the story was a plant. This isn’t to denigrate Ip’s coverage; it’s the reality of the quid pro quo of access journalism. His page one story today, “Fed Weighs Options […]
Read more...Afghanistan swaps heroin for wheat Telegraph When fewer illiquid assets will be shoved in the drawer John Dizard, Financial Times Reggie Middleton on the Street’s Riskiest Bank – Update Reggie Middleton. A detailed discussion of why Morgan Stanley is vulnerable. Pull back from the US, Deutsche urged Financial Times A Deficit of Leadership Joseph Stiglitz, […]
Read more...Former Fed chairman Paul Volcker, speaking at the Economic Club of New York, took issue with the central bank’s controversial loan to JP Morgan to help it effect an acquisition of Bear Sterns. For Volcker, who has steered clear of saying much about current Fed policies, these comments are a coded rebuke. Things have gotten […]
Read more...The IMF issued a stark forecast in its Global Financial Stability report of the damage resulting from the credit crisis, an eye-popping $945 billion. Note that unlike John Hatzius of Goldman’s $2 trillion estimate, this total does not include knock-on economic effects of reduced lending. In addition, the IMF also cited permissive regulation as one […]
Read more...Institutional Risk Analytics featured an interview with Joshua Rosner (hat tip reader bill) which focused on the outlook for the credit markets. We have a great deal of respect for Rosner; among other things, he co-authored a terrific paper, “Where Did the Risk Go? How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt […]
Read more...A crisp, lively piece by Kenneth Rogoff on the prospects for the US dollar does a nice job of synthesizing many of the relevant issues. Rogoff says quite bluntly that the US has gotten away with simply dreadful policies for a very long time, and even though the dollar hegemony is coming under considerable strain, […]
Read more...Two good pieces yesterday on the Bear bailout hearings last week, one by John Hussman (hat tip reader Stephen), the other by Institutional Risk Analytics (hat tip reader bill). The posts focus on very different aspects of the Bear failure and bailout, so they make for good companion pieces. One bit Hussman argues, and I […]
Read more...The problem with offering deals that involve optionality is that the option will inevitably be exercised only when it is favorable for the user, which as things often work out, can wind up being at a time which is not so hot for the option provider. And in the case of bank standby lines of […]
Read more...Readers sent me some very good links for today (thanks!) some of which are featured below: Wall Street Wants Student Debt as Collateral for Fed Bloomberg (hat tip reader sk). Once you demonstrate you’ll lend against unwanted collateral, there’s no end to the requests, although as sk pointed out, this type of loan has favorable […]
Read more...Reader eTrader alerted us to an important but under-reported development today, namely, that FAS 140 has been provisionally modified so as to kill SIVs. While this structure was effectively dead as of now, there remained the possibility of it being reconstituted in the future. As FT Alphaville reports, the problem with SIVs is that they […]
Read more...