To be clear, MBI, still rated AA by Standard & Poor’s, and Aa2 by Moody’s, is issuing a hybrid (fixed for five years, then floats) at a yield of 14%, which is consistent with a company at risk of bankruptcy. Note that this deal got off only after investors forced a repricing (hat tip Steve […]
Read more...We are glad to be in such august company as Willem Buiter’s, professor at the London School of Economics who has also held a number of positions with various monetary authorities. Early this week, former Treasure Secretary Larry Summers, in the Financial Times, argued that the US needed a fiscal stimulus to ward off a […]
Read more...Yesterday, the Wall Street Journal reported that Merrill and Citigroup were looking for more funding to compensate for pending writedowns. The Journal said Merrill was seeking $3-$4 billion, Ciit $10 billion, and the losses the firms could take on mortgage-related debt could be as high as $25 billion. That number already appears to be out […]
Read more...Mathematician proposes another way of divvying up the US House Nature. While gerrymandering is a proud US tradition, mathematician Paul Edelman argues that current districting is so far out of line with the “one person, one vote” standard as to invite lawsuits. Bank May Buy Troubled Giant in Home Loans. New York Times. There’s plenty […]
Read more...Forgive us, we are going to be a bit terse tonight. Turns out we got a wee case of food poisoning (likely culprit: shellfish). On the mend, but also behind schedule on various fronts. Bloomberg reports that China’s trade deficit has hit an all time high of $262.7 billion. So much for the idea that […]
Read more...Forgive comparatively terse comments tonight. The Wall Street Journal reports that Citi and Merrill could have additional losses of up to $25 billion between them and are scrambling to secure foreign funding commitments of $3-$4 billion at Merrill and up to $10 billion at Citi While the article doesn’t say so clearly, the goal is […]
Read more...Forgive me, but we are going to be a bit lean on posts tonight. I had too much to drink with someone who is terribly plugged in (security clearances AND knows tons of people in academia and the officialdom personally, both here and overseas). Unfortunately, I can’t use many of the specifics he conveyed, but […]
Read more...Hhhm, wonder whether more influential people said privately what we said publicly, that Berkshire’s move into muni bond insurance was a punch in the gut to already reeling bond guarantors. They desperately need more capital if they are to maintain their ratings, which is essential to their business model, but who in his right mind […]
Read more...There are three good and overlapping state of global finance pieces tonight; they all have worthy ideas and I’ll integrate them as best I can. The first is a post by Thomas Palley, “The Subprime – Trade Deficit Connection,” which is a companion piece to th Financial Times article by Stephen Roach yesterday. Roach depicted […]
Read more...An interesting post at VoxEU by Yoonsoo Lee at Cleveland’s Fed and Toshihiko Mukoyama, economics professor at the University of Virginia, looks into the question of whether the the Schumpeter theory of “creative destruction,” that recessions are good because they clear out the excesses of boom phases, holds water. Their research is far from exhaustive. […]
Read more...I for one enjoy it when those well versed in Wall Street lingo and logic go to the trouble of using it to demonstrate that the market for what passes for talent in the securities industry is very inefficient. And the Financial Times is more willing to challenge how the Masters of the Universe are […]
Read more...The New York Times has an approving story, and the Financial Times a more neutral one, on the fact that New York state superintendent of insurance Eric Dinallo called Berkshire Hathaway’s insurance chief, Ajit Jain, and urged him to enter the municipal bond guarantee business. The license was issued in record time, a bit more […]
Read more...Hhhm, questions seem prevalent tonight: Why Do I Follow M3? David Merkel, The Aleph Blog What Can a City Do? Elizabeth Warren, Credit Slips. Should cities install a Foreclosure Investigator? Optimistic or Pessimistic? Financial Armageddon. On the seemingly but maybe not so pessimistic call by Fannie Mae chief Daniel Mudd. Et vos, Bruti? The PM […]
Read more...Ooof, things have gone from bad to ugly. Bloomberg reports that the stocks of mortgage insurers MBIA and Ambac plummeted due to an earnings estimate cut by Morgan Stanley and talk of a Countrywide bankruptcy. It goes without saying that these developments imperil the fundraisings the insurers have been told by the ratings agencies they […]
Read more...I wish I had written this piece by Stephen Roach, formerly one of Morgan Stanley’s economists (and noted bear), now head of Morgan Stanley Asia. Roach does an elegant job of drawing connections between some issues that other commentators have treated separately. Roach sees the oft-decried global imbalances (shorthand for countries like China, Japan and […]
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