Today we offer two contrasting takes on the commodities market, although they are also looking at very different issues. The post immediately prior to this one, on Martin Wolf’s worries about the impact of commodities price rises, contrasts with Ambrose Evans-Pritchard’s view that in many commodities markets, the recent price spikes are driven more by […]
Read more...Martin Wolf of the Financial Tmes focuses on the question of whether we are repeating the mistakes made in the 1970s, of entering a period of inflation due to overly accommodative monetary policy. Although he hesitates to reach a firm conclusion, he sees more evidence that commodities price rises are a function more of fundamental […]
Read more...As the economy weakens, some of the authoritative media outlets are beginning to question some government statistical releases. We noted over the weekend (“Surprise! It’s Rough Out There in the Job Market“) that a New York Times seemed caught aback by weakness in the labor market. It had, like most of the media, focused on […]
Read more...The bond insurers increasingly remind me of creatures that are a fixture of horror movies, the sort that occupy a special niche between alive and dead. Inevitably, they pose a danger to humans and prove vexingly difficult to kill. Today, the equity markets, which were in a nasty funk, chippered up and regained most of […]
Read more...Binary ‘deathstar’ has Earth in its sights Cosmos Barr and Tyson’s SAFE loan plan: unsafe at any speed Willem Buiter. “The Barr-Tyson proposal has absolutely nothing to recommend it. It will no doubt be very popular.” WaMu Board Shields Executives’ Bonuses Wall Street Journal. This sort of behavior explains why the financial services industry is […]
Read more...The Financial Times reports that the investment banking industry is considering implementing guidelines regarding compensation to ward off further criticism. However, in reality, legislators and regulators are highly unlikely to impose any kind of standards. The worst the industry faces is being hauled before Congress and called bad names for ten minutes. The absence of […]
Read more...Commodity prices are falling sharply after many indexes hit new records yesterday. The cause was the belated realization that growth will be falling, easing demand for raw materials. Most observers believe the long-term outlook for commodity prices is strong, but the market looked badly overbought of late. From Bloomberg: Commodities plunged the most in almost […]
Read more...The movement in Treasury Inflation Protected Securities is a sign of investor desperation to find any shelter from inflation. And TIPS are only a partial inflation hedge. Their yield adjustment keys off the consumer price index, which due to modification to the index (to contain CPI adjusted Federal benefits) lags broader measures of inflation. From […]
Read more...John Dizard in “Disquiet on the western front of the credit world,” discusses the politics of the credit crisis, depicting two opposed absolutist camps: those who’d have everyone take their lumps now, no matter how bad they turn out to be, versus those who think preventing a nasty recession is all-important, even if it means […]
Read more...Willem Buiter reads two reports issued on the Northern Rock meltdown, and in his Olympian style, finds them wanting. While Northern Rock was a British crisis, its character was similar to those faced by a host of US and European institutions. The Rock held long-dated assets that it funded in short-term markets, a routine banking […]
Read more...A Viral Attack against Brain Tumors MIT Technology Review Iranian to pay 124,000-rose dowry BBC The World According to Americans Spencer, Angry Bear Relief for Homeowners Is Given to a Relative Few New York Times Mortgage Fallout Exposes Holes in New Bank-Risk Rules Wall Street Journal. This piece is noteworthy because it is so clueless. […]
Read more...According to the Financial Times, number two bond insurer Ambac has decided not to split its operations into a muni insurance business and a structured finance business. Note that we said on February 19 that we didn’t see how Ambac could possibly raise the $3 billion it sought ($2.5 billion in equity and $500 million […]
Read more...The deleveraging continues. MarketWatch reports that investment banks are reducing loans to customers, in particular their heretofore lucrative prime brokerage business, which is lending against hedge fund positions. Now Wall Street itself is less able than before to extend credit. With their equity bases under stress and exposed to further hits, securities firms are reducing […]
Read more...MBIA is revealing itself to be even more of a garbage barge than many cynics thought. On February 25, in a statement which went largely unnoticed, new MBIA CEO Jay Brown had “questions” about the 2007 preliminary financial results announced by the previous regime, and hadn’t signed off on the financial statements. That’s a big […]
Read more...In “States and Cities Start Rebelling on Bond Ratings,” the New York Times attempts to make the case that municipalities can lead a revolt against Wall Street: Does Wall Street underrate Main Street? A growing number of states and cities say yes. If they are right, billions of taxpayers’ dollars — money that could be […]
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