A colorful and informative article by John Dizard in the Financial Times on how emerging markets may not have dodged foreign currency exposure risk despite their central banks having very large foreign exchange reserves. It turns out their banks and major companies weren’t so prudent. Dizard raises a second issue here, one that was discussed […]
Read more...Big caveat: even though we have very strong opinions, we do not give investment advice. What we provide (aside from commentary) might be regarded as investment hazard warnings. You may nevertheless decide to go ahead after reading what we offer, but we hope you will proceed with caution. One thing most investors fail to realize […]
Read more...The blow to many Americans’ net worth via diminished home values and shrunken retirement accounts has lead to a new found insecurity and conservatism. Not only have consumers reined in spending, but they are reported to be suddenly worried about the debt levels and financial buffers. This change in sentiment is aided and abetted by […]
Read more...One of the reasons I am a fan of Willem Buiter is that he is bracingly candid about his likes and dislikes. And we happen to share a major dislike, namely, the conduct and policies of Henry Paulson. Buiter lambasts Paulson’s gift capital provided to nine large US banks. What is striking is that Buiter […]
Read more...While all eyes have been fixed on the interbank market, and the plunge in the Baltic Dry Index has also garnered some attention, the sudden decay in the loan market (meaning for the most part leveraged loans, the sort used to finance LBOs) has gotten far less commentary. Yet this will wreak havoc on bank […]
Read more...What a difference six months makes. When we questioned the thesis that the oil price runup earlier in the year was due solely to supply and demand, we got a fair number of hostile comments (see here and here for some of many examples). And now the view that oil will keep falling has also […]
Read more...Another symptom of equity-market distress. And the New York Times also provides an interesting discussion of the behavioral implications of corporate officers borrowing against their holdings: When executives own big stakes in the companies they run, investors can rest a little more easily at night, knowing those managers have the shareholders’ best interests at heart. […]
Read more...The people I know in IT (even though they are in New York. they are doing bleeding-edge work) all professed that they were not affected by the stomach-churning market gyrations of the last six weeks: clients were moving ahead with projects underway, prospects still were keen to meet, contracts were being signed. However, if you […]
Read more...Indian tigers: ‘Protection measures aren’t strong enough’ Guardian High summits ‘could harm brain’ BBC. They don’t mean the geopolitical kind. Publish and be wrong Economist. “One group of researchers thinks headline-grabbing scientific reports are the most likely to turn out to be wrong.” And this is the stuff in peer-reviewed journals, mind you. Obama Assembles […]
Read more...China’s third quarter growth slowed to 9%, a faster deceleration than most experts forecast. Conventional wisdom has held that China’s expansion would fall as low as 8%, which would feel like a recession internally. However, with growth having already falle to 9% before the credit crisis hit the worst of its latest acute phase, and […]
Read more...We just finished participating in the taping of the SBS (Special Broadcast System) TV show “Insight” which will air Tuesday October 21st at 7:30 PM. The subject was the role of greed in the financial crisis, which is a hot topic down under. By way of background, SBS is one of five “free to air” […]
Read more...Passports will be needed to buy mobile phones Times Online Peggy Noonan Tells the Truth About Sarah Palin Brad DeLong We’ll Rescue You on Four Conditions Gretchen Morgenson, New York Times. A workman-like piece on the executive comp restrictions in the bank bailout plan. Retailers fear worst Christmas for a generation Independent Where is my […]
Read more...Steve Waldman has a longish and very useful post “I sing the praises of financial innovation” in which he seeks to identify some good and bad financial innovation (I very much support Martin Meyer’s observation that, for the most part, what is called financail innovation is finding new technology that makes legal what was illegal […]
Read more...Hedge funds continue to create considerable dislocation as they dump positions to meet redemption requirements. For instnace, a major downdraft in gold this week occurred in a very short time frame and is almost certain to have resulted from an investor selling some large holdings. With even larger redemptions expected this quarter, all sorts of […]
Read more...South Korea announced a series of drastic measures intended to halt a run on its currency. From Bloomberg: South Korea will guarantee as much as $100 billion in bank debts and supply lenders with dollars to stabilize the financial markets. The government will also provide tax benefits for long-term equity and bond investors, while the […]
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