It has been conventional wisdom that China, Japan, and other countries that run trade surpluses with the US, which means they fund our overconsumption by buying assets like US Treauries, would never restrict the flow of credit to us because it would lower their exports and hurt their growth. We’ve long been leery of the […]
Read more...Vikas Bajaj of the New York Times is an able reporter and I have often enjoyed his work. I was therefore taken aback when I read his article, “Plan’s Basic Mystery: What’s All This Stuff Worth?” since it misleads readers as to the intent and thrust of the so-called Troubled Asset Relief Program. This is […]
Read more...Researchers note differences between people and animals on calorie restriction PhysOrg Ban on shorting financial stocks sends betting soaring Independent. You cannot make this stuff up. Why Mark-to-Paulson Accounting Won’t Save Banks Jonathan Weil, Bloomberg Paulson’s vacuum cleaner? Steve Waldman. There is no reason banks couldn’t buy dud assets, say from your friendly hedge fund […]
Read more...As those who are following the banking industry know full well, bank stock prices are so depressed that selling new shares is at best unattractive, at worst massively dilutive. One of the big reasons for the campaign against evil shorts was that one a financial firm’s price falls below a certain level, it is in […]
Read more...As we said when the idea of this bill was first mooted, bye bye US AAA rating, bye bye dollar. Not overnight, but the die is cast. We have also said that the eagerness to pass this measure is based on the faulty premise that this package will actually do something to solve the problem. […]
Read more...Anyone nicknamed Dr. Doom is likely to be a man after my own heart, and Marc Faber is no exception. The Swiss investor has a good record of market calls (for instance, he was a staunch commodities bull till late in the spring, when he reversed his view) and perhaps as important, has a broader […]
Read more...The International Swaps and Derivatives Association reported that the notional amount of credit default swaps outstanding fell from $62 trillion to a bit under $55 trillion as dealers worked to eliminate offsetting trades. This is a step forward, although it is hard to assess how significant it is. While the reduction in systemic risk is […]
Read more...I would not get optimistic yet, since Our Fearless Feckless Leader is on prime time tonight, but Republican legislators are telling the Treasury secretary that trying to rush a skeletal bill through is not going to succeed, and they need time to craft something more fully fleshed out. From Bloomberg: House Republicans warned Treasury Secretary […]
Read more...From Bloomberg (hat tip reader Lewis B. Sckolnick); Responding to questions from lawmakers, Bernanke said that should the rescue succeed and spur an economic recovery, that may lead the Fed to raise interest rates sooner than it otherwise would. For the plan itself, “I don’t expect any effect on inflation,” Bernanke said. The first trading […]
Read more...The bank funding market continues to be under stress. To some degree, this was anticipated, as various market participants saw signs that the year-end liquidity squeeze, and the months preceding it, would be worse than last year, which was bad enough to lead to the creation of the first special liquidity vehicle, the Term Auction […]
Read more...One of the premises of the bailout bill is that the banking industry must have government help to get back on its feet. A banking industry expert, Bert Ely, who has a stellar track record in predicting crises and calling false alarms says that the banking industry can handle this mess internally and does not […]
Read more...Since this blog routinely traffics in bad news, I thought I ought to pass along a positive tidbit: a lot of US companies have considerable cash on hand, so they should not be too badly affected by the credit crunch. However, the fact that they are so well endowed is curious. It is partly because […]
Read more...Reader Lune, who has been a guest contributor on this blog and was once a Congressional aide (health care was his beat) took a gander through his HIll newspapers and was so kind as to write up what they were saying about the Paulson plan. Bottom line: whatever enthusiasm there was for it appears to […]
Read more...Eyebrows raised over city school policy that sets 50% as minimum score Philadelphia Post Gazette Economists against the Paulson Plan (hat tip Greg Mankiw). Quite a list. And there are economists who have written against it on various blogs who aren’t listed here, so the tally is far from comprehensive. Asheville, NC is Out of […]
Read more...We received this via e-mail from reader Jonathan Bernstein. It makes a point that occurred to us in passing, and we’ve been hugely remiss in not pointing it out, namely, the near-meltdown of the financial system was averted. The urgency about passing a bailout bill is completely phony. Jonathan makes the case well: One of […]
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