Now that Greenspan has thrown in the towel, the free market ideologues have lost one of their most loyal advocates. From Bloomberg: Former Federal Reserve Chairman Alan Greenspan called for tighter regulation of financial companies, distancing himself from the free-market culture that he helped to create. Firms that bundle loans into securities for sale should […]
Read more...The New York Times is publishing a series on the financial crisis, “The Reckoning,” and today’s installment is “Struggling to Keep Up as the Crisis Raced On.” While this is a useful recap, there are some tidbits that merit commentary, such as: “Ben said, ‘Will you go to Congress with me?’ ” said Mr. Paulson, […]
Read more...Most eyes were on the plunging equity markets today, and the rating agencies must be plenty glad for the air cover. The House Oversight Committee unearthed some real dirt today. From CNBC (hat tip reader Michael): In a hearing today before the House Oversight Committee, the credit rating agencies are being portrayed as profit-hungry institutions […]
Read more...This blog noted in May, thanks to comments from Chris Whalen of Institutional Risk Analytics, that the well publicized losses at large banks were soon to be followed by significant writedowns at mid and smaller sized banks. Whalen saw the wheels starting to come off in the June-July timeframe, meaning they would show up in […]
Read more...Wow. I am going from memory, but I am pretty certain that this is the mother of all quarterly financial services losses. And remember, Wachovia is merely a pretty big US bank, not a global capital markets behemoth like UBS, Deutschebank, or Citi. From the Wall Street Journal: Wachovia Corp. swung to a large third-quarter […]
Read more...Overnight Libor showed marked improvement, but with the big worry has not been availability of funding overnight, but the willingness of banks to lend to each other at longer tenors, particularly thirty to ninety days, and the ability of corporations to sell commercial paper at those maturities. Libor continues to improve, but the gains overnight […]
Read more...Wikipedia and the Meaning of Truth Simson L. Garfinkel MIT Technology Review Church ‘stripped of its status within 50 years Times Online Palin a Bigger Issue for McCain than Bush? EconomPic Data Scaling Back Medications as Economy Grows Sour New York Times Banana Republic Britain FTAlphaville. The UK joins our club! Tanta said, “We are […]
Read more...We mentioned earlier, focusing on a comment made in Brad Setser’s post “Where is My Swap Line?” that emerging economies had not internalized the lessons of the 1997 Asian crisis as much as was widely believed. Their central banks if anything overreacted, keeping their currencies cheap against the dollar and amassing large foreign currency reserves […]
Read more...A wide range of commentators, including your humble blogger, have worried about the clearly untenable system known as global imbalances, or more formally, Bretton Woods 2. That was the tacit arrangement under which the US ran significant current account deficits which were financed by large purchases of Treasuries and more recently, Agency securities by foreign […]
Read more...Even though the dollar seems destined for a considerable fall (depreciating the currency is part of the “reflate” remedy that Bernanke is putting into action), it is all too easy to forget John Maynard Kenyes’ dictum, “The market can stay irrational longer than you can stay solvent.” But in this case, the lesson may be […]
Read more...Many investors assume that energy use is a relentless upward march as populations grow and consumers acquire more gadgets. But oil consumption has contracted meaningfully in the past, most notably in the first oil shock, when demand fell from roughly 67 million barrels per day to 59. And recall that the oil price shock was […]
Read more...The financial media has, for the last month, regularly mentioned poor performance and high redemptions at individual hedge funds, and stories that a lot of players had taken significant losses. While those reports sound entirely plausible, they are nevertheless anecdotal. Bloomberg tells us that a hedge fund indexes, which track performance systematically, are confirming the […]
Read more...The Fed is throwing a massive lifeline to money market funds AFTER the crisis has passed and investors are entering the pool again on their own. Consider today’s story from the Financial Times: The US Federal Reserve on Tuesday said it would finance up to $540bn (€410bn) in purchases of short-term debt from money market […]
Read more...Bloomberg reports that the most closely watched measure of bank willingness to lend to each other, Libor, showed yet another decline today, a signal that money markets are continuing to mend. The article further noted that today’s is the best since the Lehman failure. That is tantamount to saying the patient is the best he’s […]
Read more...Airliner had near miss with UFO BBC. I suspect there is some sort of technical system that could relate frequency of stories about the paranormal with market movements. Regardless, I am intrigued to see this sort of thing on the BBC. And the number of intelligent civilisations in our galaxy is… Physics arXiv Experimental Failure…?!?! […]
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