Category Archives: Banking industry

Is Goldman Finally About to be Leashed and Collared?

Goldman may have made a fatal mistake. Fatal not to the existence of the firm, but to its standing, reputation, legitimacy, and ultimately, to the thing it covets most, its profits. Power is most effective when it is used as sparingly as possible. Niall Ferguson, in book The Cash Nexus, stressed the importance of financing […]

Auerback: Bernanke Fesses Up: America Has No ‘Insolvency’ Issue

By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0. Usually, we dread the regular Congressional testimonies of the Fed Chairman. They generally constitute a mix of obfuscation on the part of Mr. Bernanke mixed with political grandstanding on the part of Congress. But occasionally, a glimmer of truth comes […]

A banker’s perspective of the Greece derivatives debt dodge

By Edward Harrison of Credit Writedowns. Last week, Yves wrote her perspective on the Goldman-Greece cross currency swaps. Here’s a slightly different take. Comments are appreciated. By now, you know about the much-discussed swaps that Greece used to conceal it’s debt load. While the amount of debt concealed is low relative to the total, the […]

Martin Wolf is Very Gloomy, and With Good Reason

Martin Wolf, the Financial Times’ highly respected chief economics commentor, weighs in with a pretty pessimistic piece tonight. This makes for a companion to Peter Boone and Simon Johnson’s Doomsday cycle post from yesterday. Let us cut to the chase of Wolf’s argument: Now, after the implosion, we witness the extraordinary rescue efforts. So what […]

Volcker Rule Being Deep Sixed

As readers may recall, we had argued over a series of posts that the proposed Volcker rule, to bar proprietary trading at commercial banks, did not go far enough in reducing systemic risk. While the concept was so sketchy that it was difficult to be certain what it meant, it appeared to have two serious […]

Interview with Chris Whalen of Institutional Risk Analytics

From “Financial Economics, Deregulation and OTC Derivatives: Interview with Yves Smith of Naked Capitalism,” The Institutional Risk Analyst, February 22, 2010 “Wall Street once ran from a graveyard to a river. It now runs from an ocean to an ocean, and beyond. It has become, in Dr. Charles A. Beard’s measured words, a new Appian […]

Administration Ratchets Up PR Campaign for Beleaguered Emanuel and Geithner

The evidence just keeps mounting that Team Obama sees its flagging poll ratings and increasing criticism of key incumbents as a mere communications/imaging problem. Its response is just to slap more lipstick on those pigs. Let’s look at a couple of particularly obvious plants. One is from the Washington Post by Dana Milbank, “Why Obama […]

The U.S. opts for the bailout hustle over the Swedish banking crisis response

By Edward Harrison of Credit Writedowns I referenced Matt Taibbi’s latest work at Rolling Stone “Wall Street’s Bailout Hustle” recently when talking about a movie on Ponzi schemes and fraud that aired on 60 Minutes. I liked the piece and recommend you read it – fully aware of the awaiting hyperbole Taibbi uses to hype […]

Das: Mark to Make Believe – Still Toxic After All These Years!

By Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives In 2007, as the credit crisis commenced, paradoxically, nobody actually defaulted. Outside of sub-prime delinquencies, corporate defaults were at a record low. Instead, investors in high quality (AAA or AA) rated securities, that […]

German Paper Says AIG May Have Sold CDS on Greece

From FAZ,. Note the text below, translated by EuroSavant, replaces an earlier GoogleTranslate version. You can read an English version of the entire article here. In the larger scheme of things, this example shows how AIG could have, and probably did, serve to channel funds from the public at large to speculators. London investment bankers […]

The Safety vs. Easy Money Policy Dilemma Comes Into Focus

I’m surprised the little conundrum has not dawned on the officialdom sooner. Any return to safer practices means less leverage and less freely available credit. Less freely available credit, short term and maybe even intermediate term, means less rapid growth (with a binge as big as we had, the drying-out will take time), although it […]

Thinking the Unthinkable: What if China Devalues the Renminbi?

By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0 and Yves Smith Conventional wisdom holds that the Chinese are due (as in overdue) for a revaluation of their currency, the renminbi. For instance, a recent report from Goldman argues that China will raise the value of the RMB against […]

Why Bank CEO Pay Needs a Hard Look

Readers may recall that I solicited their comments on an FDIC Advanced Notice of Proposed Rulemaking on its proposal to link deposit premiums to executive compensation programs (the high concept is to charge higher premiums to banks that reward executives for undue risk-taking. Now admittedly, a program like this would take some thought to make […]