I somehow missed this Bloomberg story last week, but it’s sufficiently important that I thought I should call it to your attention. Investors have decided that they are sick of being chumps and are now demanding newly-high financial concessions to change the terms of takeover-related debt. Bloomberg attributes the tough-mindedness to the losses investors have […]
Read more...The origins of the phrase “Let them eat cake” are uncertain, but it is generally attributed to Marie Antoinette, and at the time, her proposal wasn’t as loopy as it sounds now. The French peasantry was hungry due to high bread prices resulting from a flour shortage. The queen urged the poor instead to eat […]
Read more...jck at Alea pointed to this deceptively important Reuters story, “Ability to track risk has shrunk ‘forever’ -Moody’s,” which says that financial innovation has created information asymmetries that make it impossible for participants to understand their exposures fully. That position may cynically be seen as a defense of the rating agencies’ poor performance, but the […]
Read more...Merrill Lynch Says U.S. In Recession Boom2Bust Japan Ghosts of Bubbles Past Haunt U.S. in 2008: William Pesek Bloomberg (hat tip Financial Armageddon) Fitch: CMBS Worries Overstated Housing Wire. This is a very interesting bit of information, since Fitch was early to sound the alert about commercial real estate (back in April 2007, to be […]
Read more...The Wall Street Journal broke the story that Bear Stearns’ 74 year old chairman James Cayne has told board members he will give up his CEO role but stay on as chairman. 57-year old president and investment banker Alan Schwartz is expected to assume the CEO post. I complained back in November that the Wall […]
Read more...Rating agency Moody’s forecasts that the economic slowdown will start to show up in markedly higher junk bond defaults. Note that, thanks to LBOs, nearly half the corporate issues outstanding are now rated junk. That means a normal cyclical deterioration in weaker credits will affect a larger proportion of corporations than in the past. From […]
Read more...I saw this piece by Wolfang Munchau, “The credit revolution looks to the long-term,” last night, and every time I’ve thought about what to say about it, I’ve gotten unusually foggy headed (of course, some readers may contend that I am always foggy headed and am merely having an atypical spell of self-awareness). I think […]
Read more...Note this dramatic headline isn’t quite as dramatic as it appears. The ten-fold increase in $200 one year Nymex WTI oil options is in open interest, meaning the number of contracts outstanding, not their price (their price increased a mere 36% in a month). And the reason for their popularity? A seriously out-of-the-money option is […]
Read more...Ray Dalio, founder and chief investment officer of Bridgewater Associates, is no doubt far from alone in being someone whose opinion is solicited by the Fed. Nevertheless, in an interview in today’s Financial Times, he takes a position diametrically opposed to conventional wisdom. He argues that the remedy for our current economic, particularly credit, woes, […]
Read more...Scientists Use Sunlight to Make Fuel From CO2 Wired. A new technology courtesy your tax dollars at work (Sandia National Labs), but 15 to 20 years away from being commercial. Pension funds in threat over private equity fees Financial Times. Pension funds are telling private equity firm they will not tolerate attempts to raise fees […]
Read more...Even though interbank rates have come down, in all likelihood due to the operation of the Fed’s Term Auction Facility, Treasury prices indicate that investors are still worried about credit and counterparty risk. This may in part be a reaction to the losses suffered by enhanced cash funds and money market funds (although the latter […]
Read more...In the Financial Times, former Treasury Secretary Larry Summers calls for the implementation of a fiscal stimulus package in the US in the first half of 2008. He argues that the question is not whether to prop up the economy, but how, that is, whether via monetary or budgetary actions. His view is that a […]
Read more...Chinese consumer spending is down China Financial Markets A Bullish Call Barrons. Happened to come across this December 16 article, which should serve as a warning to take forecasts of any kind with a handful of salt. Asymmetrical Unwind of the Credit Bubble Mish’s Global Economic Trend Analysis Peter Barnes’ cap-and-dividend plan is fatally incomplete […]
Read more...Why is it that no one in America seems able to say what Willem Buiter, a professor at the London School of Economics, sets forth at his blog at the Financial Times, namely, that we Americans are far too timid in dealing with right wing extremists? Does being liberal in America mean you can’t point […]
Read more...While this post from the reliable blog Credit Slips is mainly a long anecdote, it nevertheless contains an important message; benefit payments, which under the law are supposed to be protected from garnishment, on a practical level are not. Banks are supine when creditors show up with the appropriate paperwork. And as this example shows, […]
Read more...