The powers that be say this eclipse, which reaches totality around 10:00 PM EST on February 20, will be dramatic. As NASA tell us: A lunar eclipse happens when the Moon passes through the shadow of Earth. You might expect the Moon to grow even more ashen than usual, but in fact it transforms into […]
Read more...Those of us who have an eye for trouble have been nattering about the credit default swaps market from time to time. This $46 trillion unregulated market has suddenly captured the imagination after AIG reported in an 8-K filing that it had certain weaknesses in its internal controls and that the value of its credit […]
Read more...Doug Noland at Prudent Bear provides a weekly Credit Bubble Bulletin which includes commentary after his extensive news digest. This week’s report was comprehensive and sobering. While his writing style tends toward the apocalyptic, his message is clear and persuasive: the credit market crisis is worsening, damaging more and more institutions and crippling more and […]
Read more...Last week, we featured a post by Thomas Palley, “Breaking the Neoclassical Mold in Economics,” which provoked quite a lively discussion as to what mainstream economics was and wasn’t, and the uses and limitations of neoclassical economics. Thus, I thought readers might find further grist for thought in this post from Robert Vinneau, who takes […]
Read more...Pushing on a string Paul Krugman, New York Times. Update: David Merkel retorts. My take is Krugman has used the wrong metric to make his point. The Fed has cut rates, but is unhappy that borrowing costs haven’t come down much because spreads have widened in for many credit instruments. LFKAJ* Update Tanta, Calculated Risk. […]
Read more...Be careful what you wish for. New York insurance superintendent Eric Dinallo seems to be getting what he wants. FGIC, the number four bond insurer, was downgraded six grades by Moody’s on Thursday, from Aaa to A3, which meant it has lost its AAA rating from all agencies, and Moody’s warned it could be downgraded […]
Read more...Brad Setser, in one of his thorough and informative posts, parses the December Treasury International Capital report and finds strengthening of a trend he noted in the August TIC report: that the dollar purchases that fund our current account deficit come almost entirely from central banks and other government purses, and not private sector buyers: […]
Read more...If this microfinance venture by Grameen Bank is as successful as I hope it will be, it will be an indictment of US banks who provide only very high priced products to the lower income and poor, and then justify it by claiming that they offer a useful service. They of course prey on the […]
Read more...We’ve long complained that you have to take a lot of the statistics put out by our government with a handful of salt, but even worse is simply deep-sixing information that makes it look bad. Outsourced to Think Progress: The U.S. economy is faltering. Family debt is on the rise, benefits are disappearing, the deficit […]
Read more...Cell Phone Use Linked To Increased Cancer Risk Information Week. But the absolute risk is not very high. “Like giving a drink to an alcoholic” New York Times. Bloomberg on the stimulus plan. Idle parenting means happy children Telegraph Goldman Sachs’ Friedman: 80 Cents is ‘The New Par’ Peter Lattman, Deal Journal, Wall Street Journal […]
Read more...Alistair Darling, the UK’s Chancellor, criticized bonus payouts as too often not warranted by performance and called on boards to exercise more restraint. The attack came as a surprise, but the proximate cause seems to lavish pay for those in the City while their companies and the country as a whole is not doing all […]
Read more...Credit market troubles have the potential to cause considerably more damage to bank balance sheets. A UBS analyst tallies the possible hits as $203 billion, with fallout from the deterioration of bond insurer guarantees as the biggest source of risk. From Bloomberg: The world’s banks “remain at risk” of up to $203 billion in additional […]
Read more...One of the not-sufficiently-acknowledged-in-the-MSM reasons for the current credit crisis is the sharp contraction of securitization, particularly of mortgages. Banks are balking at honoring LBO commitments because they can’t on-sell them as collateralized loan obligations, at least in the current environment. CDO new issues have pretty much halted, with only three deals this year (some […]
Read more...In a sign of how dramatic the reversals of fortune have been on Wall Street, hedge funds, until recently considered the riskiest players in the financial services industry, are now questioning how safe it is to leave cash and securities with their prime brokers, the securities firms that provide credit, brokerage, clearing, and sometimes fund […]
Read more...The endgame for the monolines is upon us. As reported in the Wall Street Journal and the Financial Times, New York governor Eliot Spitzer, in testimony before the House Financial Services committee, said that bond insurers needed to conclude deals to raise capital in five business days. Otherwise, they would be split into a municipal […]
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