Now it is hard to suggest that giant brokerage firm Merrill Lynch is being treated kindly by the press these days, given the deserved harsh scrutiny resulting from its staggering fourth quarter writeoffs. Nevetheless, we noted an oddity today. The Journal is running a story, “Springfield, Mass., Takes Aim at Merrill Over Subprime Losses,” that […]
Read more...Stop Thinking about Tomorrow: the DGA and NYT agree that the Internet isn’t Important Ken Houghton, Marginal Utlity The new (financial) world order Brad Setser. An enumeration of how everyone is racking up foreign currency reserves (besides the US and the UK, of course). And despite the new high profile of some sovereign wealth funds, […]
Read more...Boy, those agencies can move fast sometimes. Fitch downgraded bond insurer Ambac today from AAA to AA, which in turn meant any bonds who rating depended on an Ambac guarantee in turn needed to be downgraded. Fitch was ready and promptly announced a downgrade of 420 securities. One would assume that this comprises the sum […]
Read more...Generally speaking, unhappy investors seeking recourse for their broker’s alleged bad actions aren’t noteworthy unless the dollars at issue are large. A New Jersey family, the Mahers, had sold their business Maher Terminals LLC, the largest container operator at the Port of New York and New Jersey. UBS and Lehman were each given a portion […]
Read more...From Bloomberg: Ambac Financial Group Inc. became the first bond insurer to lose its AAA rating after Fitch Ratings downgraded the company. Ambac Assurance Corp.’s ranking was lowered two levels to AA and may be reduced further, New York-based Fitch said today in a statement. The downgrade “reflects the significant uncertainty with respect to the […]
Read more...Despite a sharply negative opening, the Nikkei is up as of this hour, so there is some hope that the frazzled nerves of Thursday might calm in the US too. The Financial Times and the Wall Street Journal both address one of the major causes of the mini-panic: a new focus on counterparty risk. The […]
Read more...A fine post by the thoughtful Jim Hamilton argues that listeners heard what they wanted to hear in Bernanke’s Congressional testimony Thursday, namely, that the good doctor ordered up a bit of fiscal tonic. He notes that the Fed chief in fact set forth cons as well as pros of budgetary measures. Hamilton raises two […]
Read more...Michael Lewis, of Liar’s Poker fame, gives an elegant explanation of why Goldman got its subprime position right when everyone else on the Street was disastrously wrong. And I mean elegant in the mathematical sense: it fits known facts and has few moving parts. As Lewis tells it, Goldman did not use the largely impotent […]
Read more...Don’t Cry for Me, America Paul Krugman, New York Times Bionic eyes: Contact lenses with circuits, lights a possible platform for superhuman vision Uweek. Coming to an opthamologist near you (in about 20 years), vision with embedded displays, just like the Terminator had. Anthropological insights into banking behaviour Gillian Tett, Financial Times Bow-Wow! Duke of […]
Read more...While the amount at issue isn’t large by global finance standards, the fact that one of the UK’s biggest property funds had to stop withdrawals is not a good sign about the damage that falls in real estate prices are inflicting on investors’ psychology and balance sheets. The Guardian and the Financial Times reported on […]
Read more...Bloomberg reports that the stock prices of bond insurers MBIA and Ambac tanked today and the prices required for their credit default swaps soared on news that Standard & Poor’s and Moody’s were again reviewing their AAA ratings (in S&P’s case, based on new, more negative information about subprime defaults; Moody’s said in response to […]
Read more...While the market iss spooked today by Merrill’s $16.7 billion writedown announdement (Dow down 189 as of this writing), which had been anticipated to a considerable degree in the media, grim news on other fronts certainly doesn’t help either. An aside: the story on Merrill says that the Wall Street writedowns related to subprime were […]
Read more...Peter Dorman at Econospeak provides an awesome little post, “Nonsense on Imported Stilts,” that eviscerates some conventional and widely used assumptions in trade economics: Econ bloggers have really missed the point about Landsburg’s free trade screed. The estimable Dani notwithstanding, the issue isn’t ultimately ethics or even procedural fairness. The problem is that doctrinaire economists […]
Read more...Mohamed El-Erian, in “A route back to potency for central banks,” in today’s Financial Times, gives a short but persuasive analysis of what ails central banks today and what they need to do to strengthen their role. El-Erian is insightful and his opinions often carry some weight, by virtue of being both a Serious Economist […]
Read more...I must confess to a prejudice. Ever since China became more open to commerce with the rest of the world, I have not understood the enthusiasm for investing in China, that is, the foreign direct investing, assets-on-the-ground type. Having worked with the Japanese, and knowing how hostile they are to any meaningful foreign role in […]
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