It seems so long ago that the Treasury’s failed effort to organize an SIV bail-out entity, the MLEC, was regular front page news in the financial press. Citigroup was to be the biggest beneficiary of this operation. Well, the MLEC never came to be, and Citi still has those pesky off balance sheet assets to […]
Read more...One of the insufficiently-covered stories in the business press is the accelerating growth of China’s foreign exchange reserves. That information is treated as old hat. Yes, China has a big trade surplus so it has substantial FX reserves. Next? But a new and volatile element has been added to the mix. The money coming into […]
Read more...I must admit to being hopelessly naive. The Fed opens its discount window to Freddie and Fannie, which is an admission that there is a problem but not much of a solution, since the GSEs are certain not to use it (accessing the discount window is a kiss of death, seen an admission that a […]
Read more...Forests to fall for food and fuel BBC As 300 fires rage, California to get foreign help PhysOrg Decisions Shut Door on Bush Clean-Air Steps New York Times. Eeek. Bush Signs Spy Bill, ACLU Sues Wired This recession could easily tip into a depression William Rees-Mogg Times Online (hat tip reader Saboor). FYI, color rather […]
Read more...It’s a no-brainer that as airlines are cutting service, slapping on new fees and surcharges, and raising prices in increasingly desperate efforts to achieve profitability, the last thing they need to do is strain their cash flows further by buying new aircraft. A Times story assesses the magnitude of the cutback in orders. From the […]
Read more...I received an e-mail that contains the text of a letter allegedly sent to Freddie Mac employees this evening (hat tip reader Jeff). On the one hand, I cannot verify its authenticity. On the other hand, it reads like the real deal. Note particularly the claim that the measures proposed by the Treasury are merely […]
Read more...For those looking for some concrete action (which was what many market participants hoped for), Paulson issued a statement that amounts to hand waving. Full text from Bloomberg: Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies. […]
Read more...So much for merely making reassuring noises, as the Wall Street Journal reported an hour or so ago. Unless the authorities can call in favors and get a strong show of buyer interest at the Fannie sale of $3 billion sale of short-term debt tomorrow, it’s hard to imagine the markets will take well to […]
Read more...Various sightings of motion, but none yet of resolution on the Freddie and Fannie fronts, although there are now indications that an announcement of some sort will come soon. Note that the updated story from the Wall Street Journal suggest a rescue is not in the offing, merely a willingness to rescue. If the powers […]
Read more...With the financial system on the exam table, it has been more than a bit troubling, that certain questions are neglected in serious academic/policy debates. The discussion of possible remedies focuses on regulatory solutions, everything from requiring mortgage brokers to be licensed to increasing financial institution capital requirements and having much greater harmonisation, as the […]
Read more...Even though Greg Mankiw claims in the New York Times today that ” Economists are nearly unanimous in their support of an unfettered system of world trade,” another Harvard economics professor begs to differ. Dani Rodrik, writing for Project Syndicate, finds that some prominent former staunch advocates of liberalized trade regimes are having serious doubts […]
Read more...If the rumor du jour is correct, and the Treasury is going to announce plans to inject $15 billion into Fannie and Freddie before trading starts on Monday, the idea of a conservatorship for the GSEs may be off the table. Nevertheless. Adam Levitin of Credit Slips discusses the legal aspects, and this knowledge is […]
Read more...Fall in tiny animals a ‘disaster‘ BBC President George W Bush lobbyist in ‘cash for access’ row Times Online. The UK paper ran its own sting operation. The WSJ Editorial Page: Fumbling Toward Accuracy II Ken Houghton, Angry Bear Why We Can’t Trust the Ratings Agencies Vox EU ‘People Should Not Worry’ [Uh-Oh…] Michael Panzner […]
Read more...We’ve said that if oil prices don’t retreat significantly before year end, airlines will be asking for bailiouts. One travel agent who is a wholesaler tells me that premium seats (business and first class) are seriously undersold. That’s a major blow in combination with skyrocketing fuel costs. From Reuters (hat tip reader Saboor): There will […]
Read more...The Times appears to have broken the story (hat tip reader Saboor) that the Treasury is seriously mulling an emergency cash injection into the troubled mortgage giants Fannie and Freddie in the form of some sort of senior equity (the article is not clear on this point, but the Wall Street Journal had mentioned a […]
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