Frankly, this is pathetic. If Bernanke and his minions can’t take the heat of some well-deserved criticism from the highly-regarded Martin Wolf of the Financial Times, they don’t belong in public service. To recap: yesterday, Wolf issued a stinging rebuke of Bernanke’s conduct on the Financial Times editorial page, in “Central banks should not rescue […]
Read more...It must be miserable to be a central banker these days. Not only are they confronted with the worst mess in at least a generation, but too many interested parties, from the financial services industry to politicians and some members of the media, expect them to deliver the impossible, namely status quo ante. The reassessment […]
Read more...Lucy Kellaway, a Financial Times columnist who writes about corporate fads, once said no new business technique is too ridiculous to be put into practice. The Springwise newsletter (“New business ideas for entrepreneurial minds”), demonstrates that the same can be said of new business concepts. This week’s edition breathlessly describes what can only be depicted […]
Read more...Oh, I do so enjoy it when the Financial Times’ chief economics editor, the normally measured and thoughtful Martin Wolf, works himself into a lather. Wolf blasts what he reads as the Fed’s vow of last week, uttered by Senate banking committee chairman Christopher Dodd, to keep the markets afloat (Dodd’s exact words were that […]
Read more...BreakingViews (free subscription required) reports that the degree of deleveraging of corporate balance sheets may be exaggerated. Yet another reason to look at stocks with a wary eye. Readers may know that the level of corporate borrowings relative to their equity and total assets has fallen since 2002. For example, Standard & Poors reports that […]
Read more...The Financial Times’ Lex column today takes issue with those who take comfort in the oft-quoted statistic that default rates are at a 25 year low. The article shows a long-term, unrelenting decline in average ratings and notes that bond defaults tend to peak two to four years after issuance. We’ve had an increase in […]
Read more...Has Roubini gone to the Dark Side? Nouriel Roubini, normally the voice of prudence, makes a marked shift in his latest post, “Fiscal versus Monetary Solutions to the Subprime Crisis. ” He sympathizes with those like Bill Gross of Pimco who call on the federal government to rescue mortgage borrowers at risk of losing their […]
Read more...Today, in a comment at the Financial Times, “This is where Freddie and Fannie step in” (subscription required), Harvard’s Larry Summers argued that the subprime crisis highlights three questions. Most commentators focused on the one question he not only posed but answered, namely, what role government should play in aiding the flow of credit to […]
Read more...A reader pointed me to Willem Buiter’s blog, and it is a real find. For those who haven’t heard about him, he (along with Anne Siber) has proposed a rethinking of central bankers’ roles in times of crisis, arguing that they should serve as market makers of the last resort. One reason to read Buiter, […]
Read more...Jim Grant, a Wall Street fixture via his “Grant’s Interest Rate Observer,” a newsletter that provides probing, skeptical, and literate commentary on the credit markets, has a very good op-ed piece in today’s New York Times. Grant takes a big swipe at the US regulatory policy, depicting it as privatizing the profits of banking and […]
Read more...We’ve noticed a new theme among economics writers: Extreme Measures. Commentators have suddenly looked into the abyss, either of the depth of the US subprime/housing problem or the progressing credit crunch that has already caused a seize up in the money markets, and are proposing radical courses of action. Our first sighting was Paul Krugman, […]
Read more...For those of you who have been following the turmoil in the money markets, the problem stems from a near-complete repudiation of asset-backed commercial paper, which constitutes roughly half of commercial paper outstandings. The reason for the concern is most asset-backed CP has mortgages as collateral, and some of those mortgages may be (hold your […]
Read more...Earlier this week, I sought to frame the prevailing views of what the supervising adults, namely central bankers, should do about the turmoil in the financial markets. They break down into four groups (names of representative spokesmen included): The keep the party going types (Jim Cramer and his less histrionic brethren) who argue that markets […]
Read more...An update from Bloomberg tells us that commercial paper outstandings fell 4.2% in a week, which suggests the efforts of central bankers to restore confidence in that market, and particularly in asset backed commercial paper, may not be adequate. 4.2% may not sound like much of a drop until you do some quick and dirty […]
Read more...Part of the hangover that followed the dot-com bubble was rampant accounting fraud. Before then, accounting chicanery was virtually unheard of in Fortune 500 companies. It instead cropped up at high fliers with loose controls and/or overly aggressive cultures (remember Zzzz Best? Miniscribe?). But in 2002, it seemed endemic, and for the first time, involved […]
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