Investors are so nervous that they are willing to take almost nothing in nominal terms, which is tantamount to a meaningful negative real return, to sit in the safety of three-month T-bills, which are now a mere 0.56%. One explanation is the large number of fails in the repo market, which as Alea reports, is […]
Read more...How Apple Got Everything Right By Doing Everything Wrong Wired How Leander Kahney Got Everything Wrong by Being an Irredeemable Jackass John Gruber. A shellacking of the Apple article above. Doesn’t Everyone Know that It’s Not a Subprime Problem? Dean Baker The Difference Between Investment Banks, Hedge Funds, Credit Card Borrowers and Microcredit: “The Poor […]
Read more...A professional investor alerted me to a not-widely-noted element of the Fed’s new discount window clone for primary dealers, the so-called Primary Dealers’ Credit Facility (I am going to lose track of the acronyms given the speed with which the Fed is coming up with new ways to socialize losses). This overview is from the […]
Read more...Citigroup has declared a very bad scenario first forecast by analysts Stefan-Michael Staimann and Susanne Knips of Dresdner Kleinwort in February 2007, “The Great Unwind,” to be in progress. To their credit, they made this bold call months before the credit contraction began. They viewed it as an inevitable outcome of the hedge fund boom: […]
Read more...A colleague I’ve cited occasionally who has extensive contacts at the Treasury and pretty good ones at the Fed has been muttering for some time that European banks are in every bit as bad shape as US banks and he has been waiting for that shoe to drop. He also sees that as intermediate good […]
Read more...A bit of good news on the generally gloomy credit markets front: banks have managed to unload some of the LBO loans they have held on their balance sheets. Admittedly, however, they still have great deal more to place, nearly $130 billion of buyout debt. However, they have had to offer large discounts. Recent reports […]
Read more...Martin Wolf comes perilously close to declaring hedge funds a scam in his article today, “Why today’s hedge fund industry may not survive.” However, in a departure for the normally clearthinking Wolf, the article conflates issues that would have benefitted from being discussed separately. First, he seems shocked, shocked that investment managers can make a […]
Read more...The Wall Street Journal reports that primary dealers have been loath to use their new-found access to the discount window (technically, it’s a “temporary clone of the discount window”), despite the favorable rates on offer. Why? For commercial banks, the assumption is that only the distressed would go to the Fed for dough (the discount […]
Read more...Jeff Frankel has a good set of posts on commodities, both appearing on his blog and on Brad Setser’s (as guest blogger entries). We are featuring them together here. The first section (which was a separate post) argues that “world growth no longer explains soaring commodity prices“; the second argues that interest rates are now […]
Read more...Whistleblower exposes insider trading program at JP Morgan Wikileaks. The tone is overwrought, but this does indeed not look pretty. Logo Can Make You ‘Think Different’ PhysOrg. An illustration of how easily our mental processes can be manipulated. Sovereign Funds: The writing on the wall… Jeff Frankel (guest blogging at RGE Monitor) Volcker: Fed’s ‘Extreme’ […]
Read more...People never learn, as John Dizard reminds us via “Forget the past and you make the same mistakes again” in the Financial Times. Quite a few policy makers have talked up plans to use Fannie Mae and Freddie Mac as central agents in salvaging the US housing market, typically by refinancing stressed borrowers. The markets […]
Read more...Mohamed El-Erian, former head of Harvard Management Company, now co-head of the biggest bond investment firm, Pimco, has been a reliable source of insight into the operations of financial markets and the implications of policy measures. Well, at least until today. In a comment in the Financial Times that shows him to be wearing an […]
Read more...When we’ve said the greenback could lose its reserve currency status to the euro, the idea has often been met with derision. Yet we see evidence that international commercial transactions are moving away from dollar-based invoicing, a sign that the tectonic plates are shifting. In a post at VoxEU, Jeff Frankel, a Serious Economist (and […]
Read more...David Roche, who heads Independent Strategy, a London-based investment consultancy, argues today in the Financial Times tha the bull run in commodities is soon to come to an end. A big factor in the outlook for commodities is whether you believe our credit crisis will lead to inflation or deflation. Bernanke’s aggressive rate cuts and […]
Read more...From Animal Farm To Animal House Sudden Debt Bear Stearns and Carlyle Debacles Are a “Modern-Day Greek Tragedy” Loretta Napoleoni, Huffington Post Bear Stearns tremors – now affecting candle-sticks FT Alphaville (hat tip Felix Salmon) Bear Stearns Merger Agreement M&A Law Prof Blog. I stand corrected on how far they could get re nailing out […]
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