The Fed raises the amount on offer for the TAF from $30 billion to $50 billion, bringing the size of the facility to $100 billion. The stock market took cheer briefly, but as of this writing, the Dow has retreated back into negative territory. From Bloomberg: The Federal Reserve plans to increase its loans to […]
Read more...Let’s see if the credit markets take this warning seriously. From Bloomberg: Federal Reserve Bank of Dallas President Richard W. Fisher said investors shouldn’t assume the Fed will keep up the recent pace of interest-rate cuts. “We reacted with very deliberate actions” in January, said Fisher in an interview with Bloomberg Television in Paris. “That […]
Read more...Gillian Tett in the Financial Times points out a nasty conundrum. For the credit markets to get back to some semblance of normalcy, prices of instruments have to fall their clearing price. Only a very few will buy before a bottom has clearly been reached. But reaching liquidation prices will entice the capital that has […]
Read more...No, this isn’t a confessional by Jerome Kerviel. Instead, it’s a few excerpts of a very good paper by the Senior Supervisors Group (regulators from France, Germany, Switzerland, Britain and the United States) who went poking around 11 major financial institutions to find out how they botched their risk management so badly last year. The […]
Read more...An article in Bloomberg, “Credit Swaps Thwart Fed’s Ease as Debt Costs Surge ,” focuses on a noteworthy phenomenon, but does a lousy job of explaining it. I’m posting it nevertheless in the hopes that a reader in the relevant markets might shed some light. The story tells us that corporate borrowers, even AAA ones […]
Read more...Emotion + “Radical Neuroscience” = Alpha All About Alpha Emotion allegedly plays a role in trading success. 1.54, 105, 1.45 — deleveraging continues … Brad Setser. Setser argues, among other things, that foreign central banks should shift out of Treasuries into agencies. Good idea, but it will never happen. ‘Dr. Doom’ Gloomy On U.S. Economy […]
Read more...The retreat from the mortgage market continues. Not surprisingly, no one wants to lend to high-risk borrowers that are now having trouble paying. Notice also that Citi plans to sell a high proportion of its new mortgages to Fannie and Freddie. From the Financial Times: Citigroup is to shrink its $200bn-plus mortgage portfolio by a […]
Read more...The credit markets are casting a big vote of no confidence in the idea that the Federal government can rescue the housing market. As we noted before, spreads on agency securities have widened to extreme levels. This renders the Fed’s rate cuts largely ineffective, at least if the intent was to give relief to the […]
Read more...We have the specter of two CEOs, each heading a firm that is a leader in its businesses and a debt powerhouse, making close to polar opposite statements about the prospects for the credit markets. Lloyd Blankfein, Goldman’s chief, said today that the credit crisis was half to two thirds through its course. While there […]
Read more...This tidbit, under the suitably cautious heading, “Rumor Mongering,” appeared on Across the Curve. I’ve found that blog to be sensible, but like journalists, bloggers are only as good as their sources. From Across the Curve: I do not believe that I have posted many rumors on this site since i began on January 2. […]
Read more...I’m late to this item, but from what I can tell, it went relatively unnoticed upon despite its seeming importance. The Wall Street Journal’s Greg Ip, in “Fed Officials Downplay TIPS Inflation Signal,” makes the case that the Fed is whistling in the dark as far as inflation is concerned. He takes their optimism at […]
Read more...For Project Syndicate, Brad DeLong writes that the Friedman era may be over and gives some initial thought to what a new system (he doesn’t attach a name to it) might look like (hat tip Mark Thoma). I’m always amazed by the deference with which American economists, even those of a liberal persuasion, treat Friedman’s […]
Read more...Paul Volcker was right! The Mess That Greenspan Made. On his 2004 warning of a financial crisis. 9 Financial Signs Of A Cheating Spouse Huffington Post When it comes to emotions, Eastern and Western cultures see things very differently PhysOrg CITIC Confirms Talks With Bear For More Shares Of Worthless Stock DealBreaker Agency Mortgage-Backed Bond […]
Read more...Today’s announcement by Ambac, that it will raise $1.5 billion in equity and equity units, came as a shocker. It had been leaked more than a week ago that the bond insurer planned to raise a total of $3 billion, $2.5 billion of it in equity backstopped by the eight banks previously involved in bailout […]
Read more...The equity/credit market divergence continues. Bloomberg reports that money market rates in Europe are rising, suggesting increased pressure in the interbank funding market: Money-market rates for euros and pounds climbed to the highest since mid-January, signaling the global squeeze on short-term bank lending may be returning. The three-month London interbank offered rate, or Libor, for […]
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