A post at VoxEU, “Bank capital and write-downs: Zeno’s paradox and the subprime crisis” by Marco Onado does a nice job of recapping at a high but nevertheless useful level of abstraction, how regulators cast a blind eye to the mess banks managed to create for themselves. It also has some useful information on the […]
Read more...Stories by Bloomberg and Reuters on a talk by Kenneth Rogoff, former chief economist for the IMF and currently a Harvard professor, fail to mention perhaps his most relevant credential as far as opining on the US credit crunch is concerned. He and Carmen Reinhart of the University of Maryland have done an extensive study […]
Read more...We had written in mid July that money supply in the US, as measured by M1 and M2, had been contracting for several month s . Eurozone M1 growth had also fallen to near zero growth levels, and M4, the broadest measure of money in the UK, had actually dipped into negative growth territory. As […]
Read more...A colleague, who is close to a number of fund manager talking heads, observed that there was an uncharacteristic, gaping disparity between what many of them are saying on TV (“it’ll be over in a quarter or two”) and their far more downbeat private views. He did not offer a reason for their lack of […]
Read more...Two very good posts I suggest you read immediately: one by Michael Shedlock, “Implications of the Slowing Global Economy” which at its close makes the case for deflation, and a rebuttal from Steve Waldman, “Why Inflation“. Both are thoughtful, and as much as Waldman has the stronger argument, I suspect he will not be proven […]
Read more...Here we go again. Even though equities are theoretically forward-looking (Barry Ritholtz has pointed out that that ain’t as true as most people believe), bonds are more often the canary in the mineshaft, typically going into a funk before stocks do. Even though the credit markets started getting the heebie jeebies in early June and […]
Read more...One of the preferred ways for regulators to deal with failed or wobbly financial institutions is to get a stronger firm to take the problem off their hands. But as Jon Birger of Fortune reports in a profile of bank analyst Meredith Whitney (hat tip doc holiday), new accounting rules may get in the way: […]
Read more...The bloom has already started to come of the rose, but even so, at least one firm’s analyst saw fit to say something. Merrill Lynch has warned against the “sell energy, buy financials” trade, as reported in the Times of London: Merrill said yesterday that the unwinding of the classic bet of the credit crunch […]
Read more...Ah, how distant early 2007 seems. Remember how the private equity business was going gangbusters, M&A was at record levels, and no deal was too big to get done. Then the credit markets hit the wall, leaving a lot of investment banks holding LBO debt that they hadn’t sold (the most common mechanism had been […]
Read more...Remember a few months ago a big secret in plain sight was that many banks were awfully slow about foreclosing on deadbeat homeowners. Some of this was arguably not due to gameplaying but a function of overloaded servicing departments that were understaffed and backed up. But in many cases, the belief was that the delays […]
Read more...This Bloomberg piece, “Banks’ Subprime Losses Top $500 Billion on Writedowns” has some sloppy writing, but I am featuring it nevertheless because it presents some useful data and its headline factoid will no doubt be misconstrued. The headline refers to subprime when in fact the article tallies total creidt crund losses and writedowns, not just […]
Read more...A post by Jim Fitch of Some Assembly Required. The real purposes of a democratic society cannotbe achieved by violence and destruction. George Kennan. Balance Sheet: The housing market continues to deteriorate. Unemployment is rising. National retailers are seeking Chapter 11. The economy is slowing, if not in recession. Auto sales are non-existent. Americans have […]
Read more...This post is by Jim Fitch of Some Assembly Required. Americans want cheap fuel, no matter what it costs. Sign Here: JPMorgan, Citigroup, Morgan Stanley. The Usual Suspects. Now they want to take over all the pension funds. With Uncle Sam’s help, blessing, and taxpayer backing. Sort of a consolation prize for not getting their […]
Read more...Not only are we getting bailouts, we are now getting Chinese puzzle box bailouts, with new tricks nestled inside other vehicles. Maybe we should quit pretending and just give the American Bankers Association and the National Association of Realtors blank checks from the Treasury Department. We might as well be straightforward about what is happening. […]
Read more...Readers may know I am a big fan of Kenneth Rogoff and Carmen Reinhart, his frequent research partner and co-author. One of my reasons is that he is much more empirically-oriented than most Serious Economists. One recent bit of Reinhart/Rogoff research that has gotten some attention (but in my mind, still not enough) is their […]
Read more...