So much for the idea that the bailout bill would produce a relief rally. Overseas equity markets are taking a beating. No word yet on how the credit markets are faring. Investors are finally waking up to the notion that it isn’t just the US financial system that is in trouble, but that pretty much […]
Read more...In light of the Fed’s decision to grant Goldman Sachs and Morgan Stanley banking licenses, and the breathtaking damage of the Lehman bankruptcy, the central bank may have a bit of explaining to do as to why it turned down Lehman’s petition to become a bank in July. The other side of the coin is […]
Read more...As the Fed’s interventions have failed to halt the progress of the credit crisis, the central bank has taken even bigger measures, only to see them provide at best temporary relief. As we have indicated, the Fed’s moves appear to have hit the point of being counterproductive. Why should banks deal with each other when […]
Read more...This report from the New York Times is largely anecdotal but not surprising: In response to the falling value of their homes and high gasoline prices, Americans have become more frugal all year. But in recent weeks, as the financial crisis reverberated from Wall Street to Washington, consumers appear to have cut back sharply. Even […]
Read more...The Fed is pressuring Citi and Wells Fargo to settle their dispute over Wachovia. The assumption that there is a way to divvy the carcass that will leave each side feeling they got more than half a loaf. But the push is on to reach an agreement in principle before the US markets open, and […]
Read more...The latest crisis averted…..From Bloomberg: The German government and the country’s banks and insurers agreed on a 50 billion euro ($68 billion) rescue package for commercial property lender Hypo Real Estate Holding AG after an earlier bailout faltered. Germany’s financial industry agreed to double a credit line for Hypo Real Estate to 30 billion euros, […]
Read more...So far, the statement released this afternoon US time out of a Euro summit amounts to an attempt at reassuring hand-waving but in fact was merely a restatement of the status quo. The group of European leaders did agree on a set of principles, but it remains an open question whether they will be able […]
Read more...In response to the crisis at Hypo Bank, Germany said it will guarantee bank deposits. Note that no action was announced regarding Hypo, whose collapse is expected in the next few days if a rescue is not in place. Hypo is not a depositary institution, but it is sufficiently large (almost as big as Lehman) […]
Read more...John Cassidy, in the New York Review of Books, discusses George Soros’ latest book, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means, emphasizing how the storied investor’s views differ from those of the efficient markets/rational expectations school of economics. It also weaves in a wide-ranging discussion of the […]
Read more...US: Democrats looking at a filibuster proof Senate majority Ed Harrison Behind the Bluster, Russia Is Collapsing Murray Feshbach, Washington Post (hat tip reader Michael). A very interesting piece, but he misses two elements of the equation. First, Russia has a chokehold on key energy supplies to Europe. Second, an authoritarian state with nukes can […]
Read more...I can be painfully slow to see things sometime….. Long-standing readers and finance junkies may remember the Treasury’s structured investment vehicle fiasco of last fall. By way of background, banks had created off balance sheet entities called structured investment vehicles (SIVs) which contained subprime (and sometimes other) assets, funded by commercial paper and short-term debt. […]
Read more...Reader Saboor passed along the day’s updates on the case filed by Lehman creditors last week, alleging that JP Morgan, Lehman’s clearing bank, refused to give Lehman access to $17 billion of excess funds held at the bank, precipitating the firm’s failure. I did not see an link to the case yet in a quick […]
Read more...This interim success by Citigroup, of getting a judge to step into Wells Fargo’s effort to break up a deal that Citi had struck to acquire Wachovia, is surprising, to say the least. Most observers thought that the bank had slim grounds for recourse (the FDIC has broad authority regarding the disposition of failed and […]
Read more...Hypo Real Estate, Germany’s second largest real estate lender, teeters on the verge of collapse. The bank has a €400 billion balance sheet, which would make for a failure of a similar scale to Lehman’s (Hypo’s footings are roughly $550 billion, while Lehman’s were $660 billion as of its last balance sheet date). Even though […]
Read more...Rare white lion cubs born BBC Seeing with Your Skin BizTech Ig Nobel awards: Irrelevant scientific research honoured Telegraph. The economics prize winner was suitably amusing. Fannie Mae forgives loan for woman who shot herself CNN. She managed not to kill herself. Will we now see imitators? A disturbing darn debate Christopher Caldwell, Financial Times […]
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