The US is considering more drastic measures to shore up the banking system, namely guaranteeing bank debt and removing the ceiling on deposit guarantees. The idea of insuring bank debt may seem odd, given that writers like John Hussman have urged that bank bondholders, who knew the risks of investing and enjoyed the higher yields, […]
Read more...Now I am really going to rant. What is going on here? The financial system is on the verge of a meltdown, we have the Lehman credit default swaps settlement tomorrow, which is a huge test that has investors on Defcon One. Markets are as unhinged as they can be and still be functioning around […]
Read more...I have been more than a tad concerned about near-paralysis in the money markets and imploding equity prices. But this e-mail, from a well connected international investor not prone to alarm or (normally) the use of capital letters says that the banking crisis is staring to bring international shipping to a halt. By way of […]
Read more...Nouriel Roubini has been almost freakishly accurate in calling the progression of the credit crisis, with his only major failings being predicting its onset on the early side and his fondness for an apocalyptic writing style, which now seems fully justified. Even by the standards of his alarming missives, his latest is truly troubling. Roubini […]
Read more...The Nikkei went into free fall after the open, down over 900 points, and as of this writing has staged a minor recovery to a mere 780 points down and is now down 880 from yesterday’s close. Singapore is down 7%, Australia 6%. The yen is at 99 to the dollar, and gold is at […]
Read more...We were glad to be back again on BloggingHeads this week, this time with Daniel Gross. This one was more oriented toward the a generalist audience than our chat last week with Megan McArdle. Below is a clip: You can find the entire conversation here.
Read more...From the Wall Street Journal: A deal between Citigroup Inc. and Wells Fargo & Co. to give both banks part of Wachovia Corp. fell apart Thursday, but Citi said it wouldn’t try to block merger between the other two. Wachovia shares jumped 15% to $4.13 in late trading, as Citi climbed 1.2% to $13.09 and […]
Read more...On the one hand, I was mystified that the stock market was up in the morning session given that the money market seize up was not at all improved and several key measures had worsened overnight. I was wiling to accept the view that we might have an oversold bounce and saw several bloggers indicate […]
Read more...BBC reports that the IMF is reactivating some of the emergency mechanisms used during the 1997 Asian crisis to help support countries suffering from capital flight. The story is a bit thin on particulars; we’ll provide an update should they surface later today. From the BBC (hat tip reader Saboor): The International Monetary Fund (IMF) […]
Read more...Banks stuck with unsold inventory of LBO loans have maintained a fair degree of market discipline, attempting to offload the paper at favorable prices and engaging in financing the sales rather than taking bigger haircuts so as to avoid further writedowns of still-unsold paper. The sale of LBO paper held by Iceland’s failed banks and […]
Read more...First it was banks and securities firms, and now the focus of worry has widened to include insurance companies. Reader John referred us to a Reuters article that MetLife credit default swaps are now trading on an upfront basis, which means buyers of protection against the default of MetLife bonds must make an upfront payment […]
Read more...Over the last two weeks, we have said that central bank liquidity measures had become counterproductive. Throwing more liqiudity at banks made it more viable for them to depend on monetary authorities and not rely on private sources for funding, and in turn extend credit to them. One contributing factor not mentioned in many of […]
Read more...Dear readers, I have noticed an increase in the snarkiness of comments lately. Based on traffic stats, we have a lot of new readers. If you are one of them, please be advised that unlike many other bloggers, I regard the quality of reader input as a vital asset of this site. Indeed, some have […]
Read more...One has to wonder whether the FDIC’s giving a wink and a nod to Wells Fargo’s attempt to snatch Wachovia away from Citi will prove to have been too clever by half. The apparent motivation was the lower explicit cost to the taxpayer of the Wells deal (note Wells was going to take large tax […]
Read more...The other shoe, as in real economy symptoms of the credit crunch, are starting to show up. One that was widely anticipated was rising default rates in private equity loans. This last cycle was particularly overheated, with not only the predictable peak-of-cycle high prices, which therefore implies high debt levels to make the private equity […]
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