One of our regular contributors chatted with a reporter at a major financial media outlet who was frustrated that management was not willing to let him dig into open mysteries from the global financial crisis. Fortunately, the Financial Times takes a broader view, and Gillian Tett today focused on a recent IMF report that describes […]
Read more...The Fed seems to be exhibiting a pretty bad case of “if all you have is a hammer, every problem looks like a nail” syndrome, particularly when it has (or perhaps more accurately, had) other tools at its disposal. In case you somehow missed it, global markets got a bad case of deflation heebie jeebies […]
Read more...By Steve Keen, Associate Professor of Economics & Finance at the University of Western Sydney, and author of the book Debunking Economics, cross posted from Steve Keen’s Debt Deflation. The record $6 billion profit that the Commonwealth Bank is expected to announce today is a sign of an economy that has been taken over by […]
Read more...Wow, the efforts to find and discredit strategic defaulters and other types of mortgage borrower reprobates appear to be picking up steam at the New York Times. Let’s be clear: there are not doubt more than a few people who bought more house than they could afford who had out of control spending habits. But […]
Read more...This post first appeared on August 21, 2007 A gut-wrenching two weeks in the credit markets have been capped by unprecedented moves by central bankers. The ECB’s offer of an unlimited infusion to member banks the week before last was followed last Friday’ by the Fed’s discount rate cut, which included stern warnings that those […]
Read more...The latest stunt from the Obama Administration on the housing front is a peculiar bit of theatrics at the margin. As Bloomberg reports: The Obama administration will offer $1 billion in zero-interest loans to help homeowners who’ve lost income avoid foreclosure as part of $3 billion in additional aid targeting economically distressed areas. The Department […]
Read more...Stress will bring out an organism’s or an organization’s defenses, and the beleagured Obama administration is looking mighty defensive these days. The great unwashed public isn’t buying its PR about its supposed accomplishments, such as the disgrace that it misbrands as financial reform (which 80% are skeptical will prevent a future crisis) and health care […]
Read more...Bloomberg tells us: The Federal Reserve’s decision to buy Treasuries and keep interest rates low will support “risk assets” without bringing down unemployment, said Anthony Crescenzi at Pacific Investment Management Co. “Low volatility tends to be good for the interest-rate climate,” said Crescenzi, who is based in Newport Beach, California at Pimco, manager of the […]
Read more...By Jack Sparrow, who writes at Mercenary Trader The employment picture constitutes yet another headwind and a significant one to the already-faltering U.S. recovery. It will undermine future spending, company earnings and profitability. Indeed, the poorer the employment picture, the greater the likelihood that households will become more cautious and that the corporate sector will […]
Read more...By Yves Smith and Tom Adams, an attorney and former monoline executive Update and correction 4:45 PM: We owe an apology to readers and to Louise Story of the New York Times, for an apparent error in our analysis. We have been informed that, remarkably, there were two separate Pyxis vehicles which were issued in […]
Read more...By Max Bruche. Assistant Professor of Economics, CEMFI and Gerard Llobet i Codina, Associate Professor of Economics, CEMFI. Originally posted at VoxEU Bank bailouts have been controversial from the outset, with some commentators saying that they reward banks for making risky loans. This column investigates the idea of an asset buyback in which a special […]
Read more...As discussed in ECONNED and on this blog, clearinghouses are not a solution to the systemic risk posed by credit default swaps, since there is no way to have a CDS counterparty post adequate margin and have the product be viable (to put it more simply, adequate margin make CDS uneconomic). So for CDS, the […]
Read more...We pointed out that reappointing Ben Bernanke as Federal Reserve chairman would be inconceivable in the private sector, since CEOs who preside over disasters are dismissed (captains have the good taste to go down with their ships). But of course, Bernanke is a failure only if you believe that the Fed’s official mandate – soundness […]
Read more...Gretchen Morgenson is often a target of heated criticism on the blogosphere, which I have argued more than once is overdone. While her articles on executive compensation and securities litigation are consistently well reported, she has an appetite for the wilder side of finance, and often looks a bit out of her depth. Typically, she […]
Read more...Is it any surprise that Wall Street went a bit off the deep end with the (admittedly barmy, but that’s a separate issue) Blanche Lincoln proposal to spin off derivatives desks? Derivatives, which are now deeply integrated in how dealer banks devise customer transactions and how they manage their own risks, are a large proportion […]
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