Just when the worries about AIG have receded from the fore, the longer-standing insurance bugaboos, MBIA and Ambac, may return to center stage. From the Financial Times: Moody’s Investors Service has increased its projections for losses on residential mortgage-backed securities, a move that could result in “multi-notch” credit rating downgrades for bond insurers such as […]
Read more...Political views ‘all in the mind‘ BBC Comrade Paulson seizes the economy’s commanding heights Paul Krugman. Before we all get too excited, remember that this is the man who gave us the MLEC, the Hope Now Alliance, the purchase of Bear for $2 a share, and China opening its financial markets. Fear and loathing in […]
Read more...Reader Dwight pointed out this amusing disparity in reporting. The Financial Time is definitive, It title: “No bidders come for Washington Mutual“: Hopes of finding a buyer for Washington Mutual dimmed on Thursday as an auction for the beleaguered US bank had yet to attract any bids… Goldman has approached a number of banks, including […]
Read more...Reader eh pointed out in comments today that we could see “a monster snapback rally” should the tone of news improve, and one may be in progress. Bloomberg reports that Senator Charles Schumer proposed creating a new agency to provide equity to distressed financial firms. The stock market, and financials in particular, applauded. But in […]
Read more...Large central bank interventions continued today, and while the moves alleviated stress in the money markets, three month rates remain elevated, a sign of continued lack of confidence. From Bloomberg: The Federal Reserve almost quadrupled the amount of dollars central banks can auction around the world to $247 billion in a coordinated bid to ease […]
Read more...Henry Paulson’s Frankenstein Andrew Ross Sorkin The Liquidation Trap Thomas Palley AIG fears lead to commodities sell-off Financial Times (hat tip reader Michael) On Scientific Reasoning, and the Testing of Hypotheses Bob O’Brien (hat tip reader Richard R) How many people have lost their jobs? knzn In Asia, the Bloom Is Off the U.S. Rose […]
Read more...The credit markets had a seizure on Wednesday. To recap the mind-numbing events: Three month T-bills finished at a two basis point yield, and may even have traded at negative yields. Signs of ZIRP. Gold rose $68 and is still going up in Asia. The dollar fell against the yen, a sign of continued carry […]
Read more...The Chicago Tribune, in a truly remarkable story with an anodyne title, “Economist recounts talk with Fed chairman” (hat tip reader Dwight who pointed to Michael Panzner) contains this stunner: “Ben, you are playing a very unique role in world economic history,” {economist David[ Hale recalled telling Bernanke, an expert in the Great Depression. “You […]
Read more...A sound case can be made for pro-cyclical capital requirements, that is, lowering the amount of capital that banks must hold relative to assets in bad times and increasing it in good ones. Indeed, well designed pro-cyclical rules lean against the banks’ propensity to overdo on lending to the point where they blow themselves up. […]
Read more...The independent securities firm model comes under siege as Morgan Stanley and Goldman shares took a beating today. From Bloomberg: Morgan Stanley and Goldman Sachs Group Inc., the biggest U.S. securities firms, tumbled the most ever in New York trading after a government rescue of American International Group Inc. failed to ease the credit crisis. […]
Read more...The Wall Street Journal reports that TPG, which invested over $7 billion in the nation’s largest thrift, Washington Mutual, late last year. gave a waiver which would facilitate an investment or sale. WaMu earlier was reported to be considering selling branches and deposits, but how viable the remaining business (credit cards, plus the mortgage assets) […]
Read more...The end game for Washington Mutual is nigh. From Reuters: U.S. federal regulators recently called a number of banks asking if they would consider buying Washington Mutual Inc should it eventually falter, the New York Post said, citing sources. Federal banking regulators, in recent days, contacted Wells Fargo & Co, JPMorgan Chase & Co, HSBC […]
Read more...Man, it’s ugly out there. While the bailout of AIG prevented what was sure to be a meltdown, conditions in the credit markets show considerable distress: Money market rates spiked up due to major money market fund Reserve breaking the buck and and the TED spread soared due to generalized worries about which firm might […]
Read more...While Goldman, the firm that called for a “super spike” of oil prices this year to $150-$200 a barrel, has now reduced its forecast considerably, it still calls for oil prices significantly above their current level ($92 for Brent as of this writing) before year end. From Bloomberg: Goldman Sachs Group Inc. slashed its forecast […]
Read more...the Treasury is applying some elbow grease too. From Bloomberg: The U.S. Treasury said it will sell bills to allow the Federal Reserve to expand its balance sheet, a day after the government agreed to take over American International Group Inc. “The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at […]
Read more...