The ECB, like the Federal Reserve, implemented bank liquidity facilities which (in oversimplified terms) allow them to pledge collateral in exchange for cash. The ECB has been more liberal in the types of collateral that it accepts, which has led to some pretty blatant gaming of the system (and God only knows how much slippery […]
Read more...Bill Gross of Pimco’s monthly newsletter, “There’s a Bull Market Somewhere?” is out and making the rounds. The title refers to a Jim Cramer dictum. The bond chief uses it to argue that asset prices are declining on all fronts, which he then contends that the US government must reverse (boldface his): because in a […]
Read more...UBS analyst Alistair Ryan has taken a stab at the level of use by British banks of the governments’ emergency facilities. His estimate, that it may total £200 billion or perhaps even higher. To put it in context: the UK’s GDP is roughly $2.8 trillion. The US economy is a bit under $14 trillion, or […]
Read more...It’s hard to discern what took place in a closed-door session at a remove, but some of the tidbits coming from last weekend’s Federal Reserve conference at Jackson Hole were worrisome. Note I didn’t have this sense about last year’s meetings, based on a reading of Jim Hamilton’s commentary (which may simply mean Hamilton was […]
Read more...Some of the usual suspects have dutifully noted the closure of $1.1 billion in assets Integrity Bank of Alpharetta, Georgia (weirdly, the links at the Wall Street Journal to two stories lead only to “Page Not Available”). The plot is already familiar: the Friday night, FDIC prepack, in this case, with Birmingham, Alabama-based Regions bank […]
Read more...Bernanke, and now the entire FOMC, keep wanting things to be better than they are. Remember last year, when the cognoscenti were aghast when the Fed chairman forecast that losses from the subprime debacle would be a mere $50 billion (at that point, the lowest private sector estimate was $100 billion) and fell in with […]
Read more...Banks in the UK have retreated from residential mortgages with considerable speed. Even though the falloff in July vs. June was not dramatic, home lending is a such a low level that any further decline is not welcome. The Independent did not try to put lipstick on this pig, although a few sources did attempt […]
Read more...Yes, it’s the end of the summer, but the Fed boys worked over the weekend, so what’s the excuse of Hank Paulson & Co.? The saber rattling for the Fannie and Freddie rescue program to be unveiled is getting louder and louder. We had an unmistakable demand from the Chinese over the weekend, if you […]
Read more...As the Wall Street Journal tells us, the Fed and the Office of the Comptroller of the Currency are issuing more “memorandums of understanding”. The MOUs not only put the bank on notice that its finances or controls aren’t up to snuff, but also call for specific remedies, such as cutting dividends, raising capital, or […]
Read more...While the Fannie/Freddie crisis has come to the fore, the money markets continue to signal heightened worry about risk. Indeed, expert opinion and forward trading suggest that the year end crunch will be worse this year than last. Normally, liquidity starts to fall in December as banks start to square their books; last year, it […]
Read more...I’m told that alcoholics and addicts have to hit bottom before they are able to renounce their self destructive ways. Ironically, their personal collapse makes them more capable of change than scientists, who, according to Thomas Kuhn in his landmark, The Structure of Scientific Revolutions, were so incapable of abandoning core beliefs that it would […]
Read more...A story in the New York Times warns, “Some Fear Commercial Property Loans Will Be Next Stage in Downturn.” This is news? I’m in a lazy mood, so I will merely search old posts. Fitch warned in April 2007 (yes, the year is no typo) of the lousy quality of commercial real estate loans and […]
Read more...A very interesting pair of articles tonight comment on a statement today by ECB governing board member and President of the Dutch Central Bank Nout Wellink to the effect that banks were overly dependent on the ECB’s liquidity facilities and needed to start fending more for themselves. Ed Harrison at Credit Writedowns translated an article […]
Read more...Warning: Josh Rosner is controversial in some circles. He co-authored a simply terrific paper with Joe Mason, “Where Did the Risk Go? How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions.” If you haven’t read it, do so now. If you don’t have the time, we summarized it here. However, […]
Read more...Another day of nervousness and not-exactly-positive developments on the Fannie and Freddie front. What is remarkable about the situation now is that at least some of the trouble elements were entirely predictable, which suggests that a bit of aforethought might have led to a better plan and less bad outcomes (I’m not such as optimist […]
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