Wolfgang Munchau often has a dour outlook, but his Financial Times comment today, “A new plan needed as the cycle grows vicious” is gloomy even by his standards. Munchau argues that the heroic seeming measures to aid the banks are insufficient to compensate for the losses they are and will continue to suffer, and that […]
Read more...We’ve warned for some time that this downturn is likely to see more companies entering bankruptcy wind up being liquidated rather than continuing to operate thanks to Chapter 11, which allows companies to hold creditors at bay, renegotiate debt and restructure operations, with the idea that an ongoing concern will be able to provide better […]
Read more...Submitted by Rolfe Winkler, CFA, publisher of OptionARMageddon We’re not quite as healthy as we thought we were. Oops. (WSJ) J.P. Morgan Chase Chief Executive James Dimon said…that March was a little tougher than the first two months of the year….Bank of America…CEO Kenneth Lewis also said that March had been a tougher month for […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns Edward Harrison here. What follows is a post I wrote for Credit Writedowns last night. Before I present the post, I want to make a few editorial comments, however. First, for full disclosure, I support Barack Obama. I voted for him, campaigned for him and contributed […]
Read more...Since I haven’t put together a detailed timeline, I run the risk of having the sequence wrong and therefore being at risk of putting foot in mouth and chewing too. But from where I sit, the only person in the US who seems to be doing anything meaningful to try to contain the looting of […]
Read more...It certainly looks as if Citigroup and Bank of America are using TARP funds, not to lend, which was one of the primary goals of the program, but to scoop up secondary market dreck assets to game the public private investment partnership. And it fleeces the taxpayer a second way: the public has spent enough […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns Edward Harrison here. Yves is away today, so I thought I would spur discussion with a thought regarding the Geithner Plan and Japan. As I see it, the Geithner Plan is inadequate because it assumes illiquidity where insolvency is the problem. The long and short of it, […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns Edward Harrison here. This is a post I published just last night over at Credit Writedowns with some minor edits. Barack Obama’s presidency will likely be decided by one single issue – his ability to deal with this financial crisis. With the release of his Treasury […]
Read more...There have been plenty of takedowns on the plan (Leo provides a good recap in an earlier post tonight). Nevertheless, I thought I’d add a few further thoughts Aside from being busy, I didn’t weigh in because I don’t see that much has changed (obviously, Mr. Stock Market disagrees vehemently, but bonds didn’t move much […]
Read more...The Washington Post reports that Treasury will seek the power to take over insurers, hedge funds, and investment firms. Given the Treasury’s reluctance to assume control over clearly insolvent banks (Citi assuredly, probably Bank of America), it seems curious indeed that it is asking to extend authority that it is patently reluctant to exercise. Moreover, […]
Read more...The Wall Street Journal tonight, in “As It Starts Programs, Fed Weighs How to Stop Them,” broaches the touchy subject of how Federal Reserve unwinds all the “support lending” initiatives it has underway and is on the verge of launching. In general, this piece is more wary of party line than the typical WSJ offering, […]
Read more...Submitted by Swedish Lex, who helped unwind Sweden’s imploded banks in the 1990s: The U.S. Secretary of the Treasury appears to be close to proposing a Faustian bargain that, seemingly, will involve considerable Government subsidies towards a limited number of economic operators. In return for the sacrifice – the creation of massive moral hazard – […]
Read more...Submitted by Rolfe Winkler, CFA, publisher of OptionARMageddon.com According to the NYT, the administration is considering all kinds of new rules in the wake of the AIG bonus scandal. These include tougher rules for mortgage lenders, new oversight powers for the Fed, and a new exchange/clearinghouse for derivatives trading. Most interesting in terms of intra-governmental […]
Read more...Hoisted from comments: Say I am SAC Capital. I get to be one of the bidders on bank assets covered by the program Citi holds $100mm of face-value securities, carried at $80mm. The market bid on these securities is $30mm. Say with perfect foresight the value of all cash flows is $50mm. I bid Citi […]
Read more...The New York Times seems to have the inside skinny on the emerging private public partnership abortion program. And it appears to be consistent with (low) expectations: a lot of bells and whistles to finesse the fact that the government will wind up paying well above market for crappy paper. Key points: The three-pronged approach […]
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