I have been waiting for the reappraisal of Greenspan’s tenure to begin, and it might have started. Here you had a Fed chief who was more interested in understanding the stock market than money supply (see a Wall Street Journal May 9, 2000 first page story for confirmation) and who also appears not to have […]
Read more...The Wall Street Journal features a story, “Boom Aside, Not All LBOs Look So Hot,” which reports that some LBOs are in trouble a surprisingly short time after the deal closed. Now the Journal goes to some lengths to present these failures as deal specific by stressing that these cases are isolated, the economy is […]
Read more...A very good post by Roger Ehrenberg at Seeking Alpha, “OTC Derivatives: Risks and Rewards,” which explains that the over the counter derivatives business poses a risk, perhaps a significant risk, to the Wall Street community. For the benefit of readers, over the counter derivatives are those that are not traded on an exchange. Recognize […]
Read more...We had anticipated that the ho-hum initial GDP growth figure for the first quarter of 1.3% might be revised downward. Thursday, the Commerce Department changed its GDP estimate to 0.6% and altered many of the components. In particular, it increased its estimate of consumer spending growth from 3.8 to 4.4%. Not only was the 4Q […]
Read more...Crime and war have a lot in common. The good guys and the bad guys are in a constant battle of escalation, each trying to adapt to and surpass each other’s latest techniques. On the information technology front, one of the fundamental techniques in investigating crime (both the hacker perpetrated sort and routine investigations of […]
Read more...We’ve noted more than once that quite a few government statistics near and dear to analysts and investors, such as GDP, inflation, and employment growth, are pretty iffy. So you don’t think we are unfairly singling out the government, some measures produced by the private sector are also questionable. A prime example is foreclosure statistics, […]
Read more...The Journal’s front page story, “Homeowners Abroad Take Currency Gamble in Loans,” had numerous anecdotes about how Eastern Europeans are active in the carry trade, borrowing in cheaper currencies, gambling that the interest rate savings won’t be offset by currency appreciation. Some have compared the carry trade to picking up nickels in front of a […]
Read more...I have spent the entire long weekend avoiding dealing with this article by David Ranson and Penny Russell, “Does the Fed Matter?” in Friday’s Wall Street Journal. The reason is that if I got going, there is so much in it that is off beam, misleading, or just plain wrong that it would be hard […]
Read more...Nouriel Roubini looked at the various stats released last week – the 16% increase in new home sales versus the 1.4% fall in home prices averaged across 32 metropolitan areas (Federal Housing Finance Board survey) and the 2.6% fall in existing home sales from March to April (National Association of Realtors) and focused on the […]
Read more...This article ran on MarketWatch, and I find it a sign of the times. Despite the supposedly sound state of the economy (if you call a tanking housing market and 1.3% GDP growth, which is negative in real terms, “sound”), MarketWatch nevertheless thought this story would appeal to its target audience, the investing class. The […]
Read more...CFO.com, in “S&P Junks Investment-grade Ratings,” tells us that that ratings agency is of the view that investment grade borrowers aren’t getting enough of a cost advantage for it to be worth it to them to keep a good bond rating: “Borrowers have taken advantage of the cheap money by increasing leverage to finance dividend […]
Read more...From “Mortgage Brokers: Friends or Foes?” in the Wall Street Journal: The National Association of Mortgage Brokers, the main nationwide trade group for brokers, argues that brokers work neither for consumers nor for lenders. Aha. If the mortgage broker worked for the borrower, they’d have to make sure he got the best deal. If they […]
Read more...As a matter of proper usage, I doubt that one can parse bullshit. Bullshit, by nature, comes in big blobs of varying degrees of firmness, depending on the diet of the bull of origin, while parsing is an analytic activity. The inherent unsuitability of bullshit as raw material for logical or syntactical scrutiny is probably […]
Read more...We have Mark Thoma to thank for pointing out this story on research by Nancy Wallace at the Haas School (UC Berkeley). She found serious deficiencies in the risk models used by banks to evaluate residential mortgages and predicted widespread problems a year before the subprime meltdown. She and her colleagues have just completed a […]
Read more...As I have mentioned before, this blog relies a bit more than I’d like on the Financial Times because its writers have a greater understanding of the inner workings of the financial markets and take a jaundiced view of recent developments. One has to wonder if the two traits are linked: if you have a […]
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