Martin Wolf takes a discursive route to make a fairly straightforward observation: no matter how the US deals with its debt hangover, the consequences are likely to be contractionary. But a rapid move to a sustainable savings rate (6%? 10%?) would produce tremendous dislocations. Hence, the public sector will throw sand in the gears, which […]
Read more...Bloomberg tells us that the IMF has lowered its global growth outlook due to the severity of the financial crisis, yet for those of us living in advanced economies, the discounted level of 3.7% still sounds pretty robust. I did go to the IMF website to see how the forecasts changed for the first versus […]
Read more...World views US ‘more positively’ BBC. Don’t get too excited, this is improvement from a very low level. Octopus sex more sophisticated than arm-wrestling PhysOrg Britain faces up to the prospect of house prices American-style Financial Times Hope over Tasmanian Devil cancer BBC Deutsche Telekom/T-Mobile demands Engadget Mobile discontinue using the color magenta Endgadget Opening […]
Read more...According to the New York Times, Congress is suddenly keen to get a homeowner bailout program in place, and made a rare bipartisan show of a joint news conference, with the hope of tabling the bill as soon as noon Wednesday. Key elements: At a minimum, the bipartisan package was expected to include up to […]
Read more...A Financial Times story reports that the Financial Stability Forum, which is tasked with finding remedies to our credit crisis, is circulating a paper which suggests some radical possible solutions. The fact that these measures are under consideration says that the authorities do not expect a resolution any time soon. One paragraph caught my eye: […]
Read more...Bloomberg reports that stock hedge funds carried unprecedented levels of cash in the first quarter, which is usually considered to be a highly bullish sign. However, note that their cash levels fell by 28% from January to February due to deleveraging (which may not have been entirely voluntary given new tough-mindedness on behalf of prime […]
Read more...It’s remarkable how otherwise sophisticated individuals want to believe in magic bullets. If they get a horrific illness, surely there must be a treatment somewhere that will restore them to health. Similarly, some investors know how to tease superior returns on a consistent basis out of highly efficient markets. Now I am willing to accept […]
Read more...Avinash D. Persaud gave a speech to the Committee of European Securities Regulators (posted at Willem Buiter’s blog) that argues that banks’ risk models and regulation based on market based pricing were bound to fail. That’s a very bold claim, yet Persaud appears to have the goods. If any of you have worked with models, […]
Read more...The word was out earlier today that UBS was going to take a stunning first quarter writedown of $18 billion (the total turned out to be $19 billion), far and away the largest credit crunch writedown to date. But for my money, the attention-getting number is the quarter’s net loss in relation to equity: $12 […]
Read more...A reader sent me the link to this week’s Institutional Risk Analystics, and I am posting despite the fact that at points it undermines its own credibility. Most of the article, “Novated Bears & the Education of Ben Bernanke,” is a combination of trader gossip about the fall of Bear Stearns, some of it quite […]
Read more...War heroine ‘not classed leader’ BBC Top 10 April Fools’ Pranks for Nerds Wired. Forewarned is forearmed. U.K. Banks Predict `Prolonged’ Downturn, CBI Says Bloomberg (hat tip reader Abdul) Who Will Be Next Bear? Bennet Sedacca, Minyanville I Find Myself Unable to Disagree… Brad De Long Some US Homes Worth Less Than Their Copper Huffiington […]
Read more...Reader Scott passed along this article from the Telegraph. Note that earlier this year, a colleague with high-level connections at the Treasury and Fed said that they were looking at a partial nationalization of US banks. The reasoning was that even if they were technically solvent, they would be sufficiently impaired, between writedowns and carrying […]
Read more...Bill Gross argues that tougher regulation of investment banks, particularly regarding leverage, will lower their profits. While his forecast is intuitively correct, it will also increase the propensity of professionals in non-capital-using businesses, like M&A amd fund management, to form boutiques or operate in pure-play firms subject to less oversight. From Bloomberg: Goldman Sachs Group […]
Read more...Two articles in the Financial Times, one a discussion of the implications of Japan’s crash for US policy, the other the latest in a series of comments on the credit crisis by Larry Summers, take different views of the best remedies for our economic woes. Unfortunately, the Japanese prescription seems likely to be necessary, yet […]
Read more...A very long time ago (roughly 1985), a colleague handed me a short Brooking paper by Robert Vishny, Josef Lakonishok, and Andrei Shleifer. By then it was a couple of years old. I’ve not been able to find it online, but my recollection of it is pretty good. It was the first time these well-respected […]
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