Blackstone’s pending $6.4 billion acquisition of Alliance Data Systems, a major credit card processor, may become an unexpected victim of the credit crunch. The deal is foundering not for the usual reasons, such as difficulty in raising debt financing or a change in business conditions leading the buyer to try to renegotiate the deal. In […]
Read more...Phones tapped at the rate of 1,000 a day Telegraph A helpful suggestion for the Fed Willem Buiter Japan’s Long-Awaited Inflation Saps Spending, Growth Bloomberg. Be careful what you wish for. Further revelations dent SocGen’s reputation Financial Times. Eurex, a derivatives exchange, warned the bank about Kerviel last year. Dunno about you, but I could […]
Read more...A Bloomberg story today points out that the snowballing credit market crisis is an indictment of the use of quantitative measures of risk, particularly one of the longer established and still widely used approaches, value at risk. VAR uses historical trading patterns to determine the probability of loss to a certain percentage of certainty. Firms […]
Read more...There has been a fair bit of discussion of the so-called Minsky Moment, when an economy that has build a house of cards of speculation and over-leveraged “Ponzi units” (creditor that could never make good on their commitments, and are viable only by finding new suckers to give them new debt to pay old lenders) […]
Read more...Why have the rating agencies failed to deliver on actions they promised to take? Remember the announcements that helped feed into the overseas market rout last Monday? This story ran January 16 on Bloomberg: Standard & Poor’s will start a new examination of bond insurers, one month after affirming the companies’ AAA ratings, because losses […]
Read more...A simply great piece, “The Autumn of the Multitaskers” by Walter Kirn in the Atlantic. As someone who nearly died while multitasking, Kirm is particularly well positioned to discuss the considerable downside and dubious benefits of our modern way of attempting to process inputs. It’s an informative and often funny read. A few representative paragraphs: […]
Read more...We’ve discussed before how credit default swaps, which is in essence insurance against the default of particular issuer or index, poses risks to the financial system via counterparty failure. The notional amount of CDS is $45 trillion, but much of that is believed to be fully or nearly fully hedged via offsetting positions. The problem […]
Read more...Disclosure (or apparent disclousues, who knows if we will ever learn the true story) of how equity derivatives trader Jerome Kerviel caused the biggest trading loss in banking history continues to dribble out. Today, Bloomberg in “Societe Generale Says Trader Built Up Positions of EU50 Billion,” gives more detail on how the trader caused so […]
Read more...I try to avoid being too dependent on a single news outlet on any particular day, but it is Sunday, and the New York Times happens to have a higher hit rate than usual on relevant pieces. Reader Independent Accountant chided me for not pointing to the artilce below by the reliable and thoughtful James […]
Read more...Here we go again. We have another Ben Stein column, “Can Their Wish Be the Market’s Command?” which says, I kid you not, that we have a bear because a whole bunch of traders got together and made it so. Since undue contemplation of Ben Stein logic is bad for anyone’s mental health, I will […]
Read more...In today’s New York Times, Yale economist and author of Irrational Exuberance Robert Shiller says, in effect, that the problems in the financial system are large enough to call for large scale, possibly even radical remedies. Shiller admits to not having a notion of what those measures should be. He does call for some changes […]
Read more...Another day, another sovereign investment fund check to an investment bank. How the mighty are fallen. The story in the Telegraph makes clear the proposed Qatar Investment Authority acquisition of 5% of Credit Suisse, worth roughly $3 billiion, is not a done deal but seems likely to go through. And the article goes to some […]
Read more...No Longer Civil Bank Lawyer’s Blog. Criminal prosecutions of mortgage fraudsters have begun. Too bad it’s always the small fry that take the fall. BIS warns against fragmented regulation Financial Times. Not a new observation (see Financial Armageddon as an example), but this story gives a concise recap. Microchips Everywhere: a Future Vision Associated Press. […]
Read more...Thomas Palley posts only occasionally, but just about everything he writes is first rate, and today’s offering is no exception. Palley argues one of our favorite views, that the Federal Reserve interest rate cuts have had more to do with trying to prop up asset values than with stimulating growth. He points out that this […]
Read more...The Financial Times reports that commercial real estate sales in the US have fallen dramatically, due to uncertainty about financing, vacancy, and defaults. It isn’t yet clear what the price impact will be once sales pick up again, although experts believe that the decline will be less than that of the housing market. From the […]
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