Now that the horse has left the barn and is in the next county as far as the damage of overly lax financial industry regulations is concerned, a lot of people are in favor of having tougher rules. Even Tyler Cowen, who hews to the conservative side of the political spectrum, cites lax supervision as […]
Read more...African chimps decline ‘alarming‘ BBC Friday Research Fix: Playboy Playmates and Economic Conditions Paul Kedrosky Response to 9/11 was ‘huge overreaction’ – ex-MI5 chief Guardian. Guaranteed this story will get no play in the US. Fighting The Last Depression While Ushering In The Next One John Carey, Clusterstock Foreign central banks seek safety; the Fed, […]
Read more...This comes from Adam Levitin at Credit Slips: There are lots and lots of differences in the financial institutions situation of the Depression and today. And yet there are some remarkable parallels in the problems and government responses. We shouldn’t overread parallels as predictive matters. But some of them are pretty astounding: Banks in the […]
Read more...What is remarkable about this forecast for deflation is that, unlike the US, which just posted flat consumer prices in September, the UK’s recent inflation reports have still been in strong positive territory. Just as its housing market went into a sudden downdraft, Britain’s retail prices are projected to go sharply into reverse. From the […]
Read more...Even though much has been made of itty bitty falls in Libor from very elevated levels, leaving Libor still at very elevated levels, we have a sign that the massive efforts of commercial banks to lubricate the money markets is finally having an effect. 30 day commercial paper rates eased meaningfully, although they still remain […]
Read more...AIG is becoming a recidivist petitioner for government largesse. First it was $85 billion, then another $38 billion, and now the giant insurer also wants access to the Fed’s commercial paper facility. From Bloomberg (hat tip reader Steve): American International Group, the insurer that agreed to a government takeover in exchange for a federal loan, […]
Read more...Why Darwin Would Have Loved Botox Discover Magazine (hat tip reader Megan) Report says Arctic temperatures at record highs PhysOrg Four Hundred Billion Dollars for a loaf of bread in Zimbabwe Baraz China Mulls Letting Four Brokers Try Margin Trading Bloomberg. Why is governments’ default answer to problems these days “Break glass and apply leverage”? […]
Read more...As we have noted often, in tightly coupled systems like our modern financial regime, efforts to contain risk typically make matters worse. As Richard Bookstaber explained in his Demon of Our Own Design, there are two reasons for this phenomenon. First is that processes move through a series of steps that cannot be interrupted, so […]
Read more...How did I miss this PM news item? It appears not to have gotten the attention it deserves. The list of aspirants to gorge themselves at the government feeding trough gets larger with every passing day. The latest addition is the bond insurers. As far as I am concerned, they are hugely undeserving. The world […]
Read more...More cheery news on the credit crunch front. Readers may recall that AIG entered into what was initially an $85 billion and was later increased by $38 billion with no further strings attached. The terms of the initial loan are pretty punitive, with the government loan having a two year term, a high coupon, and […]
Read more...One of the trades that looked like a no-brainer was betting on continued appreciation of the Chinese renminbi. In fact, so strong was the confidence in this outlook that China suffered from large-scale hot currency inflows (as recounted ably by Brad Setser) despite the official obstacles. A top investment bank in China is now forecasting […]
Read more...Ed Harrison of Credit Writedowns alerted us to the impact on collateralized debt obligations, which have been crowded out of the headlines as a source of worry by other credit market train wrecks, like the failure of Libor to show much movement despite heroic central bank interventions. Note that the Iceland-related damage applies to a […]
Read more...The Financial Times reports that the freeze on depositor withdrawals at Russian bank Globex is leading to high levels of withdrawals at other Russian banks, which doesn’t qualify as being a run…..yet. From the Financial Times (hat tip reader Michael): Globex on Wednesday banned depositors from withdrawing their money as confidence in the Russian banking […]
Read more...It is nasty out there. From Bloomberg: The benchmark index for U.S. stock options reached 80 for the first time in its 18-year history, driven higher by equities extending the biggest slide since 1987 on concern the economy will continue deteriorating. The VIX, as the Chicago Board Options Exchange Volatility Index is known, increased 15 […]
Read more...The collapse in the Baltic Dry Index continues. As we have noted before, the inability of cargo shippers to secure letters of credit (and the unwillingness of banks to accept L/Cs from other banks) is play a significant role in the plunge in trade transport. From the Financial Times: The cost of shipping bulk commodities […]
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