Two related stories from Bloomberg. First, on the bearish calls by Joseph Granville and Robert Stovall. Note that each has made some spectacularly correct and equally wrong calls: Granville, born in 1923, remembers his banker father’s bad moods following the stock-market crash of 1929. The younger Granville began his career at defunct brokerage E.F. Hutton […]
Read more...I don’t see a story yet on Bloomberg, but commodity prices, even gold, have fallen despite the dollar’s fall. There is a story about oil falling $6 a barrel (!) but not about the commodity price decline generally. There has been only slight recovery of the dollar relative to the yen (97.2) so this was […]
Read more...The title of this article (provided by the page editors of the Telegraph) is a tad more sensationalistic than it need to be, but the basic observation holds: the Fed has gone so far in debasing the dollar that it is starting to see serious pushback from foreign investors. This is a serious matter. The […]
Read more...Two readers wrote to me concerning phenomena we’ve mentioned upon occasion in the expanding credit crunch, and it seemed a good opportunity to discuss them longer form. There are two separate, but related threads: we are now seeing a lot of “every man for himself” behavior (liquidity hoarding is one of many examples) that seem […]
Read more...This is priceless. Being an objectivist means never having to take responsibility for your actions. Greenspan has now decided to pin the financial market crisis on models. Gee, it was your Fed, Mr. Greenspan, that endorsed letting regulated entities decide how to mark and manage their derivative and structured product risks without anyone at the […]
Read more...Bleak picture of Iraq conditions BBC Should the Fed Save Wall Street Firms? Economics Blog, Wall Street Journal Bad News for Bear Shareholders is Good News for the Markets Felix Salmon Big Apple Softening Michael Panzner Fuld’s `Never Again’ Mantra Makes Lehman Hard to Beat Bloomberg. The Journal was also talking up the “Lehman is […]
Read more...Long-term supply worries, and the poor prospects for the dollar have pushed long-term oil supply contract north of $100 a barrel. This is a negative development for airlines and utilities, who buy oil under long term contracts. Although the Financial Times does not give the whole profile of futures prices, it appears some interim prices […]
Read more...The Fed opened the window to broker dealers. This is a shocker, a sign of the Fed’s desperation. Recall that one of the reasons the Fed was able to assure us it wasn’t taking too much risk in its Term Auction Facility was that it said the institutions involved were sound. It doesn’t supervise broker-dealer […]
Read more...Go out to the gym and big news happens. But hopefully this announcement will stop or at least slow the run on Bear. JP Morgan’s price of $2 a share represents a price of $270 million, or 1/4 the estimated value of Bear’s headquarters building. The discount reflects JPM’s leverage but also the perception that […]
Read more...The Wall Street Journal reports that JP Morgan is trying to solidify a deal for Bear before the Asian markets open: Terms of the deal were still being hammered out Sunday afternoon. Reflecting the dire situation at Bear, the company is likely to fetch considerably less on a per-share basis than its stock price of […]
Read more...Given the weekend, there was not much in the way of news on the Bear Stearns front, save further clarification of how perilous its state is. From CNBC: Department heads at Bear Stearns met with officials at J.C. Flowers and JPMorgan Chase Saturday afternoon to give an overview of their business divisions, including headcount and […]
Read more...That statement comes from Carmen Reinhart, who co-authored a paper with fellow Serious Economist Kenneth Rogoff which I had told readers earlier that they must read immediately: “Is the 2007 US Sub-Prime Financial Crisis so Different? An International Historical Comparison.” The Reinhart/Rogoff paper is elegant; it identifies 18 postwar banking crises in advanced economies and […]
Read more...This article by Jeff Randall in the Telegraph does a nice job of looking at the causes of our credit mess and articulating implications. And he quotes my hero Paul Volcker (do you know that he stayed at the Fed fixing the economy even though his wife was very sick and he was having trouble […]
Read more...Put young children on DNA list, urge police Guardian. No matter how bad you think our loss of civil liberties is here (and I do not mean to understate how serious a matter it is in the US), it’s worse in the UK. “Primary school children should be eligible for the DNA database if they […]
Read more...Steve Waldman is on a roll. He has an excellent piece today arguing that despite contemporary notions otherwise, capitalism and character (meaning moral fiber) have not and need not be contradictory. Although Waldman makes a good case, the barriers to the return of character in commerce are more profound than he lets on. A colleague […]
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