A clever post by Elizabeth Warren at Credit Slips keys off, of all things, a discussion by mystery writer Lisa Scottoline about her experiences with American Express and reward programs generally. Scottoline gives a colorful recap of her inattentiveness about paying on time and its predictable impact on her credit record (“My FICO score was […]
Read more...By way of background, an Extreme Measure is a recommendation to take a radical and, upon examination, unworkable approach to a pressing problem. We’ve only been on this beat recently, but so far, the Extreme Measures we’ve seen have had to do with the US housing crisis or the credit contraction. The first was from […]
Read more...Despite the evidence of some recovery in the credit markets, such as the sale of some formerly-hung LBO debt (at admittedly lower prices) and the return of buyers to the structured credit market, the patient is far from healthy. An article “Is the storm over? Credit market conditions look changeable,” by Gillian Tett in the […]
Read more...From time to time, we’ve written that the hope of many policymakers, that struggling subprime borrowers would be salvaged by loan modifications, aka “mods”, would likely be disappointed. A Financial Times story, “Mortgage lenders in subprime ‘traffic jam’,” bears this thesis out. Let’s back up and note that loan modifications are often the best course […]
Read more...Martin Wolf, the Financial Times’ economics editor, may have called the demise of securitization prematurely in his article, “Securitisation: life after death.” This is an odd piece for the normally thoughtful and pragmatic Wolf. On the one hand, he gives a succinct and colorful of assessment of the credit crisis, depicting it as yet another […]
Read more...Psychologists, when working with patients, need to differentiate between two types of people: internalizers and externalizers. Internalizers are very responsible and tend to blame themselves for Things That Happen, whether they are their fault or not. They fit well in jobs that demand professionalism and personal responsibility. By contrast, externalizers blame everyone else for their […]
Read more...Credit Slips tells us that bankruptcy filings are increasing, but the new bankruptcy law has succeeded in keeping them below the 2005 level (the law became effective late October 2005). They dispute the idea that this represents progress. From Credit Slips: According to the folks at Automated Access to Court Electronic Records (AACER), preliminary figures […]
Read more...The normally cheerleading Wall Street Journal, contrary to its usual form, voices considerable doubts about the near-200-point runup in the Dow yesterday: Stocks soared to a new all-time high….suggesting that investors already are shrugging off the problems that rocked global financial markets only weeks ago….. The scamper to new highs comes despite surging mortgage defaults, […]
Read more...Bill Gross. chief investment officer of bond investment giant Pimco, uses his monthly newsletter to tackle the question of whether the Fed and the Treasury really understand what they are up against. Although he reaches no definitive conconclusion, he suggests they have a bank-centric, and therefore badly outmoded, view of the world. We’ve raised this […]
Read more...Tanta at Calculated Risk, in one of her usual colorful explanations, tells us the real pitfall of stated income loans, and it’s not one you might expect. She works through an example of an entrepreneur who doesn’t report all his income (as an aside, she’s not keen to reward that behavior and works through the […]
Read more...Even though I pointed out that Bear might be on a trajectory to losing its independence, I also expressed skepticism that anyone would be so daft as to want to buy the firm or worse, be a minority shareholder. It’s one thing to take a position as a trade, which is apparently the logic of […]
Read more...The results of the Bank of England’s auction today reveals that ideas that should work in theory may not work so well in practice. The auction was to make funds available at a penalty rate (1% above prevailing interbank rates). The mechanics are different, but intent is similar to the use of the discount window […]
Read more...By happenstance, Bloomberg has an interesting trio of prognostications for the financial markets. Admittedly, they have differing degrees of authority. Most would give the IMF considerably more credence than either Jim Rogers or Goldman. However, all three have a following with investors. Not surprisingly, Goldman’s report is upbeat, the IMF’s is cautious tending towards the […]
Read more...In an intriguing article today, “The Bank loses a game of chicken,” Martin Wolf, the Financial Times’ chief economics writer, followed the lead of the Bank of England’s Governor Mervyn King in backing down from their shared view that central bankers should be willing to let all but those banks “too big to fail” go […]
Read more...Despite the lift the Fed’s rate cut gave to the stock and corporate bond markets, the commercial paper market remains in distress. While CP outstandings are still falling, which is not good, particularly given this month’s maturing CP is much greater than last month’s, the level of decline is not as severe as during the […]
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