I recall a presentation on China at the Asia Society on the eve of the financial crisis, in which an economist commented on China’s extremely low interest rate on deposits (less than 1%) versus its markedly higher inflation rate, and commented that that was a recipe for hyperinflation. Well, that hasn’t been and is unlikely […]
Read more...According to Pimco’s global strategic adviser Richard Clarida and CEO Mohamed El-Erian, the new normal is not normal, and that has profound implications for investors. Some of the conclusions may sound a tad self-serving, in that Pimco is a bond shop, and fat tails implies more risk (or more accurately, higher odds of more extreme […]
Read more...Robert Frank at the Wall Street Journal contends that the rich don’t need the rest of us all that much (hat tip reader Don B): Late last year, the U.S. economy experienced a surprising decoupling. As stocks boomed, the wealthy bounced back. And while the Main Street economy was wracked by high unemployment and the […]
Read more...In case you’ve been paying attention to market action rather than economic news, some key data releases for July have been less than cheery. For instance, consumer confidence has taken a nosedive, the US trade deficit unexpectedly worsened (meaning one of the few key sources of good news, the export sector, has hit an air […]
Read more...It wasn’t all that long ago that the media and banking industry commentators would worry about the coming train wreck in commercial real estate. But peculiarly, that topic has more or less receded from view. It appears the public has only so much interest in banking stories, and the frenzied coverage of financial services non-reform […]
Read more...It should come as no surprise that a financial services industry powerful enough to water down meaningful reform in the US and internationally (Basel III rules were weakened to allow, for instance, that mortgage servicing rights be included in regulatory capital calculations) would probably have its way in blocking the nomination of Elizabeth Warren as […]
Read more...Readers may recall that the Federal Reserve created three vehicles to hold dodgy assets it obtained via the Bear and AIG bailouts, namely Maiden Lane (for Bear), Maiden Lane II (for AIG residential mortgage backed securities) and Maiden Lane III (for CDOs the Fed bought as part of taking out AIG credit default swap counterparties […]
Read more...Why oh why is it that the US media treats financial services compensation levels as a third rail issue? Rent extraction was the driver of the financial crisis, and the financial services sector made it clear in 2009, by paying itself record bonuses on the heels of being saved from certain death, that it had […]
Read more...A news story today provides further confirmation of the rule by the banking classes in the US, with only token gestures to the rule of law. Per Bloomberg (hat tip Tom Adams), Citigroup is ponying up $75 million to settle SEC charges that the giant bank was not sufficiently forthcoming in the runup to the […]
Read more...Augmenting Ed’s recent links re Tom Adams, regular readers will remember Yves got a magazine cover and write-up in Calcalist. Now Tom Adams, another contributor to “Naked Capitalism”, (and ECONned helper, Magnetar sleuth, etc etc), has got a writeup by Calcalist. The main article is here, and it’s all in Hebrew, which Google Translate struggles […]
Read more...GM, with $75 bn in cash in reserves, bought AmeriCredit, a small subprime lender, in an all cash deal for $3.5 bn. GM is also currently in bankruptcy. AmeriCredit, which is rated BB by Fitch, was put on watch by Fitch, after the deal announcement. Fitch is unsure whether the deal will help or hurt […]
Read more...Economists really do seem to struggle with history – and sometimes geography, too. Brad DeLong needs to remember that the Financial Times is published in London. As far as most combatants were concerned, the second world war broke out in September 1939. Niall Ferguson, FT, 20th July 2010. Goodish point. On the other hand, Ferguson […]
Read more...This post first appeared on May 1, 2007 Due to Paul Volcker’s having broken the back of inflation in the early 1980s, and Alan Greenspan performing what appears to be adequately on the substance of his job and masterfully at the showmanship, the Fed’s reputation is at an all time high. And that in and […]
Read more...Felix guessed how this Structured Finance issue pipeline would get sorted out, for the moment. Three not necessarily inconsistent takes on causes and effects: A neat way to embarrass the government. The rating agency logjam and the GM deal announced yesterday are closely related: if there’s one thing GM will think it still needs for […]
Read more...Richard covering for Yves here, in case that maritime internet connection, which seems OK for terse emails, is not so great for navigating 100 eurowebsites, to whizz through as much detail as possible. Just seven failures, making Chris Whalen’s EU stress tests: who knows, who cares? the main takeaway, I suppose. Not enough blood to […]
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